FORM 10-K

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

(MARK ONE)
[ X ]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
       ACT OF 1934 [NO FEE REQUIRED]
       FOR THE FISCAL YEAR ENDED OCTOBER 31, 1996        COMMISSION FILE
       NUMBER: 0-7235

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
       EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
       FOR THE TRANSITION PERIOD FROM ................ TO ................

                           FEDERATED PURCHASER, INC.
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

              NEW YORK                                  22-1589344
    (STATE OR OTHER JURISDICTION                     (I.R.S. EMPLOYER
  OF INCORPORATION OR ORGANIZATION)               IDENTIFICATION NUMBER)

        268 CLIFFWOOD AVENUE
        CLIFFWOOD, NEW JERSEY                              07721
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE: (908) 290-2900
                               _________________

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                             TITLE OF EACH CLASS:

                         Common Stock, $.10 par value

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

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

   The aggregate market value of the 1,158,240 shares of  the  common  stock of
the Registrant held by non-affiliates on January 7, 1997 based upon the average
of  the  bid and asked prices was approximately $335,093.  The number of shares
of the registrant's  common  stock  outstanding  as  of  January  7,  1997  was
1,611,317 shares, par value $.10 per share.

                      DOCUMENTS INCORPORATED BY REFERENCE

PART III:               Certain  portions of the Proxy Statement for the Annual
                        Meeting of Shareholders to be held on March 30, 1997.


<PAGE>
                           FEDERATED PURCHASER, INC.

                             Cross Reference Sheet


     Form 10-K                Heading(s) in Proxy Statement for
     ITEM NO.                 THE ANNUAL MEETING OF SHAREHOLDERS

10.  Directors and            Election of Directors
     Executive                Executive Officers
     Officers of the
     Registrant

11.  Executive                Compensation of Directors
     Compensation              and Executive Officers

12.  Security                 Voting Securities and Principal
     Ownership of               Holders
     Certain Bene-
     ficial Owners
     and Management

13.  Certain Relation-        Compensation Committee Interlocks
     ships and Related         and Insider Participation
     Transactions

               The balance of this page is intentionally blank.



<PAGE>
                               TABLE OF CONTENTS

                  ITEM                                               PAGE


PART I.     1.  Business                                              3

            2.  Properties                                            6

            3.  Legal Proceedings                                     6

            4.  Submission of Matters to a Vote of
                  Security Holders                                    6


PART II.    5.  Market for Company's Common
                  Equity and Related Stockholder
                  Matters                                             7

            6.  Selected Financial Data                               8

            7.  Management's Discussion and Analysis
                  of Financial Condition and Results
                  of Operation                                        9

            8.  Financial Statements and Supplementary
                  Data                                               15

            9.  Disagreements on Accounting and
                  Financial Disclosure                               28


PART III.   10. Directors and Executive Officers of
                  the Company                                        28

            11. Executive Compensation                               28

            12. Security Ownership of Certain
                  Beneficial Owners and Management                   28

            13. Certain Relationships and Related
                  Transactions                                       28


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

SIGNATURES



<PAGE>
                                    PART I

ITEM 1. BUSINESS.

      A. GENERAL DEVELOPMENT OF BUSINESS

      Federated  Purchaser, Inc. ("Federated") was incorporated in the state of
New  York in 1928.   On  November  15,  1994,  the  Company  divested  Freedom,
Electronics, Inc. a subsidiary acquired in July 1989 (the "Divestiture").  This
Divestiture  was  based upon a strategic decision by management to re-focus its
efforts on the Company's  traditional  core business:  the marketing of a broad
range of electronics components and related equipment to industrial customers.

      Unless  otherwise  noted,  references   herein  to  the  "Company"  means
Federated and its subsidiary.

      B. SIGNIFICANT FACTORS

        1. CONTINUING SIGNIFICANT LOSSES; ACCUMULATED DEFICIT

        The Company has experienced significant and continuous operating losses
amounting to $1,832,502 during the past five operating  periods.  For the years
ended  October  31,  1996  ("fiscal 1996"), October 31, 1995  ("fiscal  1995"),
October 31, 1994 ("fiscal 1994"),  October 31, 1993 ("fiscal 1993") and October
31, 1992 ("fiscal 1992"), the Company  incurred  losses  of $414,826, $546,062,
$373,849,  $315,621 and $182,144, respectively.  As of October  31,  1996,  the
Company's  accumulated  deficit  was  $1,053,333.   See  Item  7  "Management's
Discussion and  Analysis  of  Financial  Condition  and Results of Operations -
Results of Operations".


        2. IMPAIRED LIQUIDITY

        The Company's liquidity position has been and continues to be adversely
affected by a variety of factors, including continued  losses  from operations.
During  fiscal  1996,  the  Company  used  net  cash  of $190,456 for operating
activities,  primarily as a result of the net loss of $414,826  for  the  year.
Since the Company  currently  has  no  access  to any outside source of capital
(except for an existing equipment financing arrangement),  management must meet
its short-term capital requirements solely from cash from operations  (if  any)
and  existing  cash  reserves.   While  the  Company  enhanced  its  short-term
liquidity  position  through the one-time receipt of $755,845 in cash from  the
Divestiture, those proceeds  have been used to finance the Company's operations
during the past two operating  periods.   At  October  31, 1996,  the Company's
cash reserves amounted to $95,918, which could be insufficient  to  finance the
Company's  operations throughout the upcoming operating period unless  (i)  the
Company's results  of  operations  improve significantly, or (ii) management is
able to secure financing from an outside  source.  To date, management has been
unable to negotiate such financing from any outside source on acceptable terms.
There can be no assurances that the Company's  cash reserves will be sufficient
to  satisfy  the  Company's operating or financing  requirements  or  that  the
Company's inability  to  obtain capital from outside sources will not force the
Company to seek protection under the United States Bankruptcy Code.  See Item 7
"Management's Discussion and  Analysis  of  Financial  Condition and Results of
Operations - Liquidity and Capital Resources."

        3. AUDIT REPORT - UNCERTAINTY

           As  a  result of the Company's repeated operating  losses,  impaired
liquidity and current  lack  of  access to any outside source of financing, the
Company's  independent  accountants  have  included  an  explanatory  paragraph
raising substantial uncertainty  as  to  the Company's ability to continue as a
going concern in their audit report.  See  Note 2 of the Company's Consolidated
Financial Statements.


        4.  NEGATIVE TRENDS IMPACTING SMALL ELECTRONICS  DISTRIBUTORS;  INTENSE
COMPETITION

        The Company's  sales levels have been and may continue to be negatively
impacted by a variety of  factors,  including  the  slowdown in the electronics
segment of the national economy and the loss of certain  customers  due  to the
departure  of  key  sales  personnel  to competitors.  Management believes that
certain industry trends, such as customers  migrating  from  smaller  to larger
distributors  and  the  increase  in  the relative volume of business conducted
directly between suppliers and manufacturers,  have negatively impacted smaller
electronics distributors such as the Company.  In  addition,  the Company faces
intense competition from numerous substantially larger companies having greater
resources,  larger staffs, more extensive facilities and equipment,  and  which
offer a broader range of products, than the Company.  In view of these factors,
there can be  no  assurances  that  the  Company  will  be  able  to  return to
profitability.


      C. NARRATIVE DESCRIPTION OF BUSINESS

      PRINCIPAL PRODUCTS AND SERVICES

      Federated  and its wholly-owned subsidiary are engaged in one segment  of
the electronics industry:  the  assembly  and  marketing  of  a  broad range of
electronic  parts,  components  and related equipment (including, for  example,
such items as semi-conductors, wire,  transformers,  relay  systems, capacitors
and electronic tubes) to industrial customers.

      The Company conducts its business through its two locations in Cliffwood,
New Jersey, and Allentown, Pennsylvania, and through the direct solicitation of
certain industrial customers by the Company's own sales personnel.

      The  Company  assembles  and markets a broad range of products,  none  of
which accounted for 15% or more  of  the Company's consolidated revenues during
fiscal 1996, fiscal 1995 or fiscal 1994.

      SOURCES AND AVAILABILITY OF RAW MATERIALS

      The products marketed and distributed  by the Company are obtained either
through distributorship agreements or are otherwise  normally  available to the
Company from a number of commercial sources on a competitive basis.   While the
Company  has not generally experienced difficulties in obtaining such products,
a  supplier   of   electronic  parts  to  Federated  terminated  the  Company's
appointment as a distributor  in  1993.   There  can  be no assurances that the
Company will not be terminated by any of its other suppliers  or  that any such
termination will not have a material adverse impact on the Company's results of
operations.   See  Item  7  "Management's  Discussion and Analysis of Financial
Condition and Results of Operations."
      PATENTS, TRADEMARKS AND LICENSES

      The Company does not hold any patents,  trademarks,  licenses, franchises
or concessions with respect to its continuing operations.

      SEASONAL BUSINESS

      The Company's business is generally not affected by seasonal factors.

      WORKING CAPITAL ITEMS

      Management  believes  that  the Company's inventory practices  and  other
practices which impact working capital  are  similar to those employed by other
similarly sized distributors doing business in  this segment of the electronics
industry.  See Item 1 "Business - Significant Factors" and Item 7 "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

      MATERIAL CUSTOMERS

      During  fiscal 1996, net sales by the Company  to  its  largest  customer
comprised approximately  4%  of the Company's consolidated net sales. Given the
Company's current liquidity situation  and  the Company's need to significantly
improve its sales revenues, there can be no assurances that the loss of this or
any other customer would not have a material adverse effect on the Company.

      All but a nominal amount of the Company's  sales  are  made to industrial
customers within the continental United States.

      BACKLOG

      As  of October 31, 1996, the Company had a firm backlog of  approximately
$666,687 compared  to  a  firm  backlog  at  October  31, 1995 of approximately
$693,000.

      GOVERNMENT CONTRACTS

      No  portion  of  the  Company's business is subject to  renegotiation  of
profits or to termination of  contracts  or subcontracts at the election of the
Government.

      COMPETITIVE CONDITIONS

      The Company faces intense competition  from numerous companies assembling
and  marketing products similar to those sold by  the  Company.   Many  of  the
Company's  competitors  are substantially larger than the Company, have greater
resources, larger staffs,  more extensive facilities and equipment, and offer a
broader range of products than  the  Company.   Competition  is generally based
upon  price,  service and breadth of product lines offered.  In  addition,  the
Company believes  that the industry is moving towards a reduction in the number
of distributors which  service each customer, a trend which management believes
favors the larger distributors and negatively impacts the Company.  As a result
of these factors, there  can  be no assurances that the Company will be able to
reverse its negative operating results and return to profitability.
      RESEARCH AND DEVELOPMENT

      During fiscal 1996, the Company  did not spend any amount on research and
development activities.

      ENVIRONMENTAL MATTERS

      Management believes that the Company's capital expenditures, earnings and
competitive position have not been affected  by  compliance with Federal, State
and local laws relating to the protection of the environment.

      NUMBER OF EMPLOYEES

      As  of October 31, 1996, the Company had 17 employees,  2  of  whom  were
engaged in  administration,  9  in  clerical  and  shipping positions, and 6 in
sales.   This represents a reduction of 4 employees from  the  prior  operating
period, all  of  whom  were  laid off in February, 1996 as part of management's
plan to reduce overhead expenses.  The Company is not a party to any collective
bargaining agreement and considers its employee relations to be satisfactory.

ITEM 2. PROPERTIES.

      The Company currently operates  its  principal  administrative, sales and
warehousing facilities from a 11,600 square foot facility located in Cliffwood,
New Jersey.  The annual rental during the current term  under the terms of a 6-
year net lease (i.e., the annual rental is exclusive of property  taxes and all
other  property-connected  charges  payable  by  the Company) is $58,000.   The
Company also leases approximately 2,800 square feet in a building in Allentown,
Pennsylvania, on a month-by-month basis for a minimum annual rental of $10,800.

      Management believes that the present facilities  are adequate to meet the
Company's current and reasonably foreseeable needs.

ITEM 3. LEGAL PROCEEDINGS.

      The Company is not a party to, nor is any of its property the subject of,
any material pending legal proceedings, other than ordinary  routine litigation
incidental to its business.

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

      The  Company  did  not submit any matters to a vote of its  shareholders,
through the solicitation of  proxies or otherwise, during the fourth quarter of
fiscal 1996.




<PAGE>
                                    PART II

ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

      Since  July  14,  1992,  the Company's stock has been quoted on the "pink
sheets" by the National Quotation  Bureau,  Inc.   These  quotations  represent
prices  between  dealers  and  do  not  include  retail  mark-up,  mark-down or
commissions and may not represent actual transactions.

<TABLE>
<CAPTION>
                                                     BID PRICES                        ASKED PRICES
<S>                                      	<C>              <C>              <C>           <C>
Quarter ended:                                 	    HIGH            LOW             HIGH          LOW
January 31, 1995                                    5/16             1/4              3/4          9/16
April 30, 1995                                      5/16            1/16              3/4          5/16
July 31, 1995                                        1/4             1/8              3/4          7/16
October 31, 1995                                     1/4             1/8              3/4           1/2
January 31, 1996                                     1/4             1/4              1/2          7/16
April 30, 1996                                       1/4             1/8             7/16           3/8
July 31, 1996                                       7/32            7/32              3/8           3/8
October 31, 1996                                    7/32            7/32              3/8         11/32
</TABLE>

      At January 7, 1997, there were approximately 725 shareholders  of  record
of the Company's Common Stock.

      Given  the Company's repeated operating losses, accumulated deficit,  and
impaired  liquidity  position,  management  intends  to  retain  all  remaining
available cash  for  the  operation  of  the  Company's  business  and does not
anticipate paying cash dividends on its common stock in the foreseeable future.
Any  future  determination  as to the payment of dividends on the common  stock
will depend upon future earnings, capital requirements, the financial condition
of the Company and any other factors the Board of Directors may consider.



<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.

      The  consolidated  selected financial data as of and for each of the five
years in the period ended  October  31, 1996 have been derived from the audited
financial statements of the Company.   This  data should be read in conjunction
with, and is qualified in its entirety by reference  to  the  related financial
statements and notes included elsewhere in this Report.

                                                     OCTOBER                31,

<TABLE>
<CAPTION>
                        	         1996           1995          1994       1993            1992
<S>	       			     <C>             <C>          <C>          <C>           <C>
     Net sales       		         $3,980,560   $4,118,799   $6,281,006   $6,245,276    $6,794,007

     Net loss from
       continuing operations		   (414,826)  (  546,062)    (373,849)    (315,621)    (182,144)

     Net loss per share
       from continuing operations	       (.26)        (.34)        (.22)        (.19)        (.11)

       Cash dividends paid 		          -            -            -            -            -

       Cash dividends paid per share 	        .00           00          .00           .00          .00

       Total assets                       1,287,324    1,605,604    2,768,863     2,788,001    2,995,410

       Working capital                      490,614      871,875    1,452,970     1,852,245    2,210,571

       Current ratio                          2.0:1        3.5:1        2.5:1         4.0:1        5.0:1

       Long-term debt                        18,955       29,697       44,989        69,613           -

       Stockholders' equity                 749,907    1,164,733    1,755,240     2,129,089    2,444,997

       Stockholders' equity per share   $       .47   $      .72   $     1.03   $      1.25   $     1.44










            See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS.

            The Company has experienced significant operating losses throughout
the  past  five  operating periods.  For fiscal 1996, fiscal 1995, fiscal 1994,
fiscal 1993 and fiscal 1992, the Company incurred losses of $414,826, $546,062,
$373,849, $315,621  and  $182,144,  respectively.  As a result of negative cash
flows associated with these losses, as of October 31, 1996, working capital had
decreased 79.5% to $490,614 from $2,389,580 at October 31, 1991 and the Company
had  an accumulated deficit of $1,053,333.   While  management  is  seeking  to
address  these problems by increasing sales and reducing operating costs, there
can be no  assurances  that  the  Company  will be successful in its efforts to
improve  either  its  liquidity position or operating  results.   In  addition,
because the Company currently  has  no  access to any outside source of capital
(except for an existing equipment financing  arrangement), management must meet
its short-term capital requirements solely from  cash  from operations (if any)
and existing cash reserves.  There can be no assurances that the Company's cash
reserves  will be sufficient to satisfy the Company's capital  requirements  or
that the Company's  inability  to  obtain capital from outside sources will not
force the Company to seek protection under the United States Bankruptcy Code.

         In November 1994, the Company  divested  its  subsidiary, Freedom.  In
accordance with generally accepted accounting principles,  the  divestiture  of
the  operations  of  Freedom  has  not  been  accounted  for  as a discontinued
operation  because Freedom was not a separate business entity.   As  a  result,
management's  discussion  compares  (i) the Company's results of operations for
fiscal  1996  (which  do  not include Freedom)  to  the  Company's  results  of
operations for fiscal 1995  (which  do not include Freedom), (ii) the Company's
results of operations for fiscal 1995  (which  do  not  include Freedom) to the
Company's  results  of operations for fiscal 1994 (which include  Freedom)  and
(iii) Federated's results  of  operations  for  fiscal  1995 to Federated's Pro
Forma results for fiscal 1994 (which include Freedom). Management believes this
approach more accurately reflects the Company's recent financial performance.

RESULTS OF OPERATIONS

         The  Company recognized losses of $414,826 for fiscal  1996,  $546,062
for fiscal 1995,  and  $373,849  for  fiscal 1994 on net sales of $3,980,560 in
fiscal 1996, $4,118,799 in fiscal 1995 and $6,281,006 in fiscal 1994.  The loss
of $414,826 for fiscal 1996 represents  a  decrease of $131,234, or 24.0%, when
compared to the loss for fiscal 1995, but represents  an increase of $51,557 or
14.2%  when allowing for the one-time charge of $182,791  attributable  to  the
Divestiture.   The  loss  of $546,062 for fiscal 1995 represents an increase of
$172,213, or 46.1%, when compared  to  the  loss for fiscal 1994, such increase
attributable to the loss realized on the Divestiture.

         Net sales for the Company were $3,980,560  for fiscal 1996 as compared
to $4,118,799 for fiscal 1995, representing a 3.4% decrease.  Net sales for the
Company  were  $4,118,799  for  fiscal  1995  (after  giving   effect   to  the
Divestiture)  as  compared  to $6,281,006 for fiscal 1994, representing a 34.4%
decrease.  This decrease is attributable  to  the  effects  of the Divestiture,
partially offset by a 20.2% increase in Federated's net sales  from  $3,427,049
in fiscal 1994 (without consideration of Freedom).

         The  decrease  in  Federated's net sales for fiscal 1996 represents  a
reversal of the modest sales  increase  achieved  by  Federated  in fiscal 1995
(after giving effect to the Divestiture).  Management expects that  significant
further improvement in the Company's sales along with a reduction in  operating
costs  will  be  required  to  sustain operations during the upcoming operating
period ("fiscal 1997") and in the  future.  There can be no assurances that the
Company will be successful in its efforts  to  increase  sales, reduce costs or
improve  profitability.   Moreover, the likelihood of achieving  the  necessary
sales increase is diminished by a variety of factors, including the slowdown in
the electronics segment of  the national economy, the loss of certain customers
due to the departure of key sales  personnel  to  competitors and certain other
industry trends.  See Item 1 "Business - Significant  Factors".   In  addition,
prior  gains in sales revenue by the Company have necessarily been achieved  at
lower gross  margins, which has mitigated the impact of such sales gains on the
Company's results  of operations.  As a result, there can be no assurances that
any increase in sales  activity can be maintained, (as evidenced by the decline
in sales for fiscal 1996),  or  that  such  sales increases will be achieved at
gross profit margins sufficient to return the  Company  to profitability.  As a
result of these uncertainties, the Company's independent auditors have included
a paragraph which raises substantial doubt regarding the  Company's  ability to
continue  as  a  going  concern.   Moreover,  if  the Company does not generate
sufficient cash flow to sustain operations in fiscal 1997, the Company may have
to seek protection under the United States Bankruptcy  Code.   See,  "Item  1 -
Significant  Factors  - Audit Report - Uncertainty" and Note 2 of the Company's
consolidated Financial Statements.

         Cost of sales  for  the  Company  were  $3,128,019  for fiscal 1996 as
compared   to  $3,172,060  for  fiscal  1995,  (after  giving  effect  to   the
Divestiture)  representing  a  decrease  of  $44,041.   This decrease is solely
attributable to lower sales volume.  For fiscal 1995, cost  of  sales decreased
35.4%  from  $4,907,644 (including Freedom) to $3,172,060, as a result  of  the
Divestiture.   Cost  of  sales  for Federated were $3,172,060 in fiscal 1995 as
compared  to $2,591,436 in fiscal  1994  (without  consideration  of  Freedom),
representing  an increase of $580,624, or 22.4%.  The increase in cost of sales
for Federated in  fiscal  1995  is  primarily  attributable  to the increase in
Federated's sales volume for that period as well as price increases  imposed on
the Company by its suppliers.

         As  a  percentage  of  sales,  the Company's cost of sales were 78.6%,
77.0% and 75.6%, for fiscal 1996, fiscal  1995  and  fiscal 1994, respectively.
The increase in cost of sales as a percentage of sales  and corresponding lower
gross margins is attributable to management's decision to rebuild the Company's
sales  base  by  reducing  prices  to  remain  competitive  with   the   larger
distributors.   While  Federated's  sales  levels for fiscal 1996 remain higher
than sales for fiscal 1994 (without consideration  of  Freedom),  the resulting
decrease  in  gross  margins  has negatively impacted the Company's results  of
operations.   Moreover,  gross margins  have  been  further  reduced  by  price
increases imposed by the Company's  suppliers,  most  of  which  the Company is
unable  to pass along to its customers.  The Company's gross profit  percentage
for fiscal  1996  was  22.0% as compared to 23.0% for fiscal 1995 and 24.4% for
fiscal 1994.  There can  be no assurances that the Company's gross margins will
not be further reduced in  the  future  by  intense  price  competition,  price
increases  imposed  by  the  Company's  suppliers,  or  a  combination of these
factors.

         Selling, shipping, general and administrative ("SSG&A")  expenses  for
the Company were $1,286,444, or 32.3%, of net sales for fiscal 1996 as compared
to  $1,353,609, or 32.9% of net sales, for fiscal 1995 and $1,687,016, or 26.9%
of net  sales  for  fiscal  1994.  The decrease of $67,165 for fiscal 1996 when
compared to fiscal 1995 is the  result  of a reduction in costs attributable to
warehouse salaries, office salaries, insurance  costs  and  bad  debt expenses,
partially  offset by an increase in sales salaries and non-recurring  severance
payments to  certain employees resulting from management's decision to downsize
the Company's  labor  force.   See  Item  1  "Business  - Number of Employees".
Management  anticipates  that  further  reductions  in SSG&A expenses  will  be
necessary  to  reverse  the  Company's  negative  results of  operations.   The
decrease of $333,407 in SSG&A expenses for fiscal 1995  when compared to fiscal
1994  is attributable to the effects of the Divestiture.   SSG&A  expenses  for
Federated  for  fiscal 1995 were $1,353,609, or 32.9% of net sales, as compared
to $1,268,985, or  37.0% of net sales for fiscal 1994 (without consideration of
Freedom).  The increase  of  $84,624  for  fiscal  1995  is attributable to the
increase  in  sales,  purchasing  and office salaries and expenses,  while  the
decrease as a percentage of sales is  attributable  to  the  20.2%  increase in
Federated's sales volume.

         Depreciation  and amortization expenses were $11,575 for fiscal  1996,
$11,260 for fiscal 1995 and $47,337 for fiscal 1994.  The substantial reduction
in fiscal 1996 and fiscal  1995 when compared to fiscal 1994 is attributable to
the effects of the Divestiture.

         Interest  earned  on   the  Company's  cash  reserves  and  marketable
securities was $14,830 for  fiscal  1996 as compared to $32,530 for fiscal 1995
and $1,637 for fiscal 1994.  The decrease  of  $17,700  for  fiscal  1996  when
compared  to fiscal 1995 was attributable to lower cash balances which continue
to deteriorate  as  a  result of the Company's recurring operating losses.  The
increase of $30,893 for fiscal 1995 when compared to fiscal 1994 was the result
of higher cash balances  and  marketable  securities  purchased  with  proceeds
received  from  the  Divestiture,  all  of  which  have  been  used  to sustain
operations during the past two operating periods.

LIQUIDITY AND CAPITAL RESOURCES

         Cash  and cash equivalents decreased by $90,597, $38,500, $40,540  for
fiscal 1996, fiscal  1995  and  fiscal 1994, respectively.  During fiscal 1996,
the Company used net cash of $190,456 from operating activities, primarily from
the $414,826 net loss for the year,  partially  offset by a decrease of $77,835
in  inventory  and  an  increase of $127,913 in accounts  payable  and  accrued
expenses.  The Company generated cash of $110,601 from investing activities for
fiscal 1996, primarily through  the  receipt  of  $99,744  on the redemption of
marketable  securities  and  the  collection  of  $35,000 in notes  receivable,
partially offset by a $23,672 increase in association  membership  costs.   The
collection  of  $35,000  in  notes  receivable  is  due to the renegotiation by
Federated of certain terms relating to debt owed by Freedom  to  Federated as a
result  of  the  Divestiture.   During  fiscal  1996, the Company used cash  of
$10,742 for payments on long-term debt.

         The  Company's  liquidity  position  has  been  and  continues  to  be
adversely affected by a variety of factors, including  the  $414,826  loss  for
fiscal  1996, the loss of $546,062 for fiscal 1995 and the loss of $373,849 for
fiscal 1994.   Moreover,  the  Company's  liquidity  position  may  be  further
negatively  impacted  to  the  extent  that  certain  trends, including intense
competition  from  larger  competitors  in  the electronics  industry  and  the
migration of certain customers from smaller to larger distributors, continue to
decrease the Company's sales levels, gross profit  margins, or both.  While the
Company enhanced its short-term liquidity position through the one-time receipt
of  $755,845 in cash from the Divestiture, those proceeds  have  been  used  to
sustain  operations during the past two operating periods.  Thus, the Company's
ability to satisfy its fixed costs of operations in the future will depend upon
management's  success  in  increasing  sales, improving gross margins, reducing
operating costs, securing additional lines  of  credit  from outside lenders or
entering  into  other  strategic  alliances.   Due  to  the Company's  impaired
liquidity position, negative financial performance, reliance  on  cash from net
profits  to  sustain  operations  and  certain  other  factors,  the  Company's
independent  auditors  have  raised  substantial  doubt regarding the Company's
ability to continue as a going concern.  See "Item  1  -  Significant Factors -
Audit Report - Uncertainty" and Note 2 to the Company's Consolidated  Financial
Statements.  If the Company is not successful in achieving any or all of  these
strategic  objectives,  it  may have to seek protection under the United States
Bankruptcy Code.

         During fiscal 1995,  the  Company  used  net  cash  of  $602,848  from
operating  activities,  primarily  as a result of the $546,062 net loss for the
year,  a  $117,488  increase in accounts  receivable,  a  $52,354  decrease  in
accounts payable and  a  $45,540 decrease in accrued expenses, partially offset
by the effects of the Divestiture, a $51,385 decrease in prepaid expenses and a
$18,546 decrease in inventories.   The  Company  generated  cash from investing
activities of $638,972 for fiscal 1995, primarily from the $755,845 proceeds on
the Divestiture, used cash of $286,224 to purchase marketable  securities,  and
redeemed  marketable  securities  of $192,439.  During fiscal 1995, the Company
used cash of $74,624 to pay off a note  payable  in  the  amount of $63,999 and
long-term debt in the amount of $10,625.

         The Company currently has no access to any outside  source of capital,
except  for  approximately  $19,000  outstanding  under  an existing  equipment
financing arrangement.  While management has sought and will  continue  to seek
new sources of financing from other financial institutions, no such arrangement
has  yet been established.  As a result, management must meet all of its short-
term capital  requirements from cash from operations (if any) and existing cash
reserves, which  continue to deteriorate as a result of the Company's recurring
operating losses.   Given  the  magnitude  of  the  Company's  recent operating
losses,  there  can be no assurances that the Company's current cash  reserves,
which were $95,918  at  October  31,  1996,  will  be sufficient to satisfy the
Company's  operating  and/or  financial  requirements  or  that  the  Company's
inability to obtain capital from outside sources will not  force the Company to
seek protection under the United States Bankruptcy Code.

         In fiscal 1994, the Company received notification from its lender that
its credit line had been withdrawn and that monies borrowed  in  the  amount of
$63,999  were  due  and  payable.  This obligation was paid in full in November
1994.   Prior  to the Divestiture,  the  Company  also  maintained  a  separate
agreement with another  lender under which Freedom could borrow up to $250,000,
such  borrowings  secured  by   Freedom's  eligible  inventories  and  accounts
receivable.  As of October 31, 1994, Freedom had borrowed $250,000 against this
line of credit.  As part of the Divestiture,  the  Company no longer has access
to, nor obligation to repay debt incurred under, this line of credit.

         During  fiscal  1994,  the  Company  used  $294,765   from   operating
activities,  primarily  as a result of the $373,849 net operating loss for  the
year, a $42,624 increase in inventories, a $30,001 increase in prepaid expenses
and a $17,906 increase in  accrued  expenses.   The  Company  used  $35,150  in
investing   activities  for  equipment  purchased  and  additional  association
membership costs.   During  fiscal  1994,  the  Company  borrowed  $400,000  on
available  lines-of-credit, partially offset by payments of $86,001 against the
lines-of-credit and $24,624 against outstanding long-term debt.

         Federated's   ratio  of  current  assets  to  current  liabilities  at
October 31, 1996 declined to 2.0:1 from 3.5:1 at October 31, 1995 (after giving
effect to the Divestiture).   The  decrease  is  primarily  attributable to the
impact  of  the  $414,826  operating loss on the Company's cash position.   The
Company had working capital  of  $490,614 at October 31, 1996 down $381,261, or
43.7%,  from  $871,875 at October 31,  1995,  primarily  as  a  result  of  the
operating loss  for  that period.  Working capital for Federated at October 31,
1995 declined $344,467,  or  28.3%  as  compared to $1,216,342 for Federated at
October 31, 1994 (without consideration of  Freedom) and $581,095, or 40.0%, at
October 31, 1994 (including Freedom).

         The future aggregate minimum commitment of the Company under its lease
on its principal operating facilities is as follows:
<TABLE>
<CAPTION>
         YEARS ENDED OCTOBER 31,                     AMOUNT
<S>                                      <C>
                  1997                              $58,000
                  1998                               58,000
             Due thereafter                           9,667
                                                   $125,667
</TABLE>
         The Company's stockholders' equity in fiscal 1996 amounted to $749,907
which is equivalent to a book value per common  share  of $.47.  In fiscal 1995
and fiscal 1994, comparable figures for stockholder's equity  were  $1,164,733,
or $.72 per common share and $1,755,240, or $1.03 per common share.

         The  Company maintains its records on the accrual basis of accounting.
Income is recorded  when  earned  and expenses are recorded when incurred.  The
Company accounting policies with respect  to  customer  right  of  returns  are
governed  upon  written  authorization  by  Federated  except for special order
items.



<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

      Index  to  Consolidated  Financial  Statements  and  Financial  Statement
Schedules
                                                                      	    	PAGE

      FINANCIAL STATEMENTS

          Independent Auditor's Report                                      	15

          Consolidated Balance Sheets as of October 31, 1996, 1995 and 1994 	16

          Consolidated Statements of Operations for the years ended
            October 31, 1996, 1995 and 1994                                 	18

          Consolidated Statements of Stockholders' Equity for the years ended
            October 31, 1996, 1995 and 1994                                 	19

          Consolidated Statements of Cash Flows for the years ended
            October 31, 1996, 1995 and 1994                                 	20

          Notes to Consolidated Financial Statements                        	22

      SCHEDULES

          Schedule V - Valuation and Qualifying Accounts                    	34



<PAGE>





                         INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholders of
Federated Purchaser, Inc.
Cliffwood, New Jersey

We  have  audited  the consolidated balance sheets of Federated Purchaser, Inc.
and  its subsidiaries  as  of  October  31,  1996  and  1995  and  the  related
consolidated  statements of operations, stockholders' equity and cash flows for
the years ended  October 31, 1996, 1995 and 1994.  These consolidated financial
statements  are  the   responsibility   of   the  Companies'  management.   Our
responsibility  is  to  express  an  opinion  on these  consolidated  financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly,  in  all  material   respects,  the  financial  position  of  Federated
Purchaser, Inc. and its subsidiaries  as  of October 31, 1996 and 1995, and the
results of its operations and its cash flows  for  the  years ended October 31,
1996,   1995  and  1994  in  conformity  with  generally  accepted   accounting
principles.

The accompanying  financial  statements  have  been  prepared assuming that the
Company  will  continue as a going concern.  As discussed  in  Note  2  to  the
financial statements, the Company has suffered recurring losses from operations
which raise substantial doubt about its ability to continue as a going concern.
Management's plans  regarding  those matters also are described in Note 2.  The
financial statements do not include  any adjustments that might result from the
outcome of this uncertainty.


                                          BEDERSON & COMPANY LLP








<PAGE>
                           FEDERATED PURCHASER, INC.
                          CONSOLIDATED BALANCE SHEETS
                           OCTOBER 31, 1996 AND 1995


                                    ASSETS
                                                         1996         1995

CURRENT ASSETS:
  Cash                                                $   95,918   $  186,515
  Marketable securities                                     -          99,744
  Accounts receivable, less allowance for doubtful
    accounts of $26,339 and $22,835, respectively        493,285      486,389
  Inventories                                            314,447      392,282
  Prepaid expenses and sundry receivables                 22,925       36,868
  Note receivable - Freedom Electronics Corporation       20,000         -
  Restrictive covenant receivable                         24,375       22,500

  TOTAL CURRENT ASSETS                                   970,950    1,224,298

PROPERTY AND EQUIPMENT, net of accumulated
  depreciation and amortization                           32,028       43,132

OTHER ASSETS:
  Note receivable - Freedom Electronics Corporation,
    net of current portion                               155,000      210,000
  Restrictive covenant receivable, net of
    current portion                                       24,375       46,875
  Security deposits                                       10,845       10,845
  Association membership                                  94,126       70,454

  TOTAL OTHER ASSETS                                     284,346      338,174

TOTAL ASSETS                                          $1,287,324   $1,605,604

                     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current portion of long-term debt                   $   10,624   $   10,624
  Accounts payable                                       375,851      283,325
  Accrued expenses                                        93,861       58,474

  TOTAL CURRENT LIABILITIES                              480,336      352,423

LONG-TERM DEBT, less current portion                       8,331       19,073

DEFERRED INCOME                                           48,750       69,375

TOTAL LIABILITIES                                        537,417      440,871

STOCKHOLDERS' EQUITY:
  Common stock, $.10 par value,
    Authorized, 5,000,000 shares,
    Issued and outstanding, 1,719,758 shares             171,976      171,976
  Additional paid-in capital                           1,692,342    1,692,342
  Accumulated deficit                                 (1,053,333)    (638,507)
    Total                                                810,985    1,225,811
  Less:  Treasury stock, at cost                          61,078       61,078

  TOTAL STOCKHOLDERS' EQUITY                             749,907    1,164,733

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            $1,287,324   $1,605,604


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






<PAGE>
                           FEDERATED PURCHASER, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                  YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994








                                          1996          1995          1994

REVENUES:
  Sales, net                           $3,980,560    $4,118,799    $6,281,006

COSTS AND EXPENSES (INCOME):
  Cost of sales                         3,128,019     3,172,060     4,907,644
  Selling, shipping, and general
    and administrative                  1,286,444     1,353,609     1,687,016
  Loss on sale of subsidiary                 -          182,791          -
  Depreciation and amortization            11,575        11,260        47,332
  Interest expense                          2,828         3,811        24,340
  Interest income                         (14,830)      (32,530)       (1,637)
  Restrictive covenant                    (20,625)      (20,625)         -
  Other income                                 -         (9,878)       (2,505)

  TOTAL COSTS AND EXPENSES (INCOME)     4,393,411     4,660,498     6,662,190

LOSS BEFORE PROVISION FOR INCOME TAXES   (412,851)     (541,699)     (381,184)

PROVISION (BENEFIT) FOR INCOME TAXES        1,975         4,363        (7,335)

NET LOSS                               $ (414,826)   $ (546,062)   $ (373,849)

LOSS PER SHARE                         $     (.26)   $     (.34)   $     (.22)




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



<PAGE>
                                   FEDERATED PURCHASER, INC.
                        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                          YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994






Common Stock
<TABLE>
<CAPTION>
                                                                         Retained            Held in
                                                           Additional   Earnings            Treasury
                                       COMMON STOCK         Paid-in     Accumulated         AT COST
                                      SHARES     AMOUNT     CAPITAL      (DEFICIT)     SHARES    AMOUNT

<S>				  <C>		<C>       <C>	       <C>             <C>      <C>
BALANCES - October 31, 1993         1,719,758   $171,976   $1,692,342   $   281,404     19,552   $16,633
 Net loss                                -          -            -         (373,849)      -        -

BALANCES - October 31, 1994         1,719,758    171,976    1,692,342       (92,445)    19,552   16,633

  Purchase of treasury stock             -          -            -             -        88,889   44,445

  Net loss                               -          -            -         (546,062)      -        -

BALANCES - October 31, 1995         1,719,758    171,976    1,692,342      (638,507)   108,441   61,078

  Net loss                               -          -            -         (414,826)      -        -

BALANCES - October 31, 1996         1,719,758   $171,976   $1,692,342   $(1,053,333)   108,441  $61,078



                                       The accompanying notes are an
                                integral part of these financial statements.
</TABLE>

<PAGE>
                           FEDERATED PURCHASER, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                  1996        1995        1994
CASH FLOWS FROM OPERATING ACTIVITIES:           <C>         <C>         <C>
  Net loss                                      $(414,826)  $(546,062)  $(373,849)
  Adjustments to reconcile net loss
    to net cash from operating activities:
      Depreciation and amortization                11,575      11,260      47,332
      Allowance for doubtful accounts               4,751      13,235      10,691
      Accrued interest income                        -         (5,959)       -
      Loss on divestiture of Freedom
        Electronics, Corp.                           -        182,791        -
      Freedom Electronics, Corp., net assets
        and liabilities disposed of                  -       (127,802)       -
      Noncash operating expenses                     -          2,154        -
      Deferred income taxes                          -          7,867       5,438
      (Increase) decrease in current assets:
        Accounts receivable                       (11,647)   (117,488)     (8,045)
        Inventories                                77,835      18,546     (42,624)
        Prepaid expenses and sundry receivables    13,943      51,385     (30,001)
        Tax refund receivable                        -          5,119      30,957
      Increase (decrease) in current liabilities:
        Accounts payable                           92,526     (52,354)     83,242
        Accrued expenses                           35,387     (45,540)    (17,906)

  NET CASH USED BY OPERATING ACTIVITIES          (190,456)   (602,848)   (294,765)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds on divestiture of Freedom
    Electronics, Corp.                               -        755,845        -
  Purchase of marketable securities                  -       (286,224)       -
  Sale of marketable securities                    99,744     192,439        -
  Purchase of property and equipment                 (471)     (2,688)     (8,546)
  Collection of note receivable                    35,000        -           -
  Increase in association membership costs        (23,672)    (20,400)    (26,604)

  NET CASH PROVIDED BY (USED BY)
    INVESTING ACTIVITIES                          110,601     638,972     (35,150)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments on notes payable and long-term debt    (10,742)    (74,624)   (110,625)
  Proceeds from bank and equipment loans             -           -        400,000

  NET CASH PROVIDED BY (USED BY)
    FINANCING ACTIVITIES                          (10,742)    (74,624)    289,375

NET DECREASE IN CASH                              (90,597)    (38,500)    (40,540)

CASH - beginning of year                          186,515     225,015     265,555

CASH - end of year                              $  95,918   $ 186,515   $ 225,015

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

</TABLE>

<PAGE>
                           FEDERATED PURCHASER, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994



<TABLE>
<CAPTION>
                                                    	   1996          1995        1994
<S>						    	<C>           <C>           <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the year for:
    Interest                                    	$    2,826    $    3,811    $   24,340

    Income taxes                                        $     -       $      421    $    4,194




NON-CASH INVESTING AND FINANCING ACTIVITY:
  Divestiture of Freedom Electronics Corp.,
    summarized as follows:
      Selling price                             	$     -       $1,100,290    $     -

      Less:  Note receivable                                  -         (210,000)         -
             Restrictive covenant                             -          (90,000)         -
             Treasury stock                                   -          (44,445)         -

      Cash received                                     $     -       $  755,845    $     -










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

</TABLE>

<PAGE>
                           FEDERATED PURCHASER, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        OCTOBER 31, 1996, 1995 AND 1994

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         NATURE OF BUSINESS
         The  Companies  are  engaged  in  the  assembly and sale of electronic
         parts, components and related equipment and contract manufacturing for
         the electronics industry.

         ACCOUNTING 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 reported period.

         REVENUE RECOGNITION
         Federated  Purchaser,  Inc.  and  its subsidiaries, ("the Company"  or
         "Federated")  maintains  their  records   on   the  accrual  basis  of
         accounting.  Income is recorded when earned and  expenses are recorded
         when  incurred.   The Company's accounting policies  with  respect  to
         customer right of returns  are  governed upon written authorization by
         Federated except for special order items.

         PRINCIPLES OF CONSOLIDATION
         The consolidated financial statements  include  the  accounts  of  the
         Company  and  its  subsidiaries,  all  of which are wholly-owned.  All
         significant intercompany items have been  eliminated.   (See  Note 16,
         Sale of Subsidiary.)

         INVENTORIES
         Inventories  are  stated at lower of cost (first-in, first-out method)
         or market.

         PROPERTY AND EQUIPMENT
         Property  and  equipment,   including   significant  betterments,  are
         recorded at cost.  Upon retirement or disposal of properties, the cost
         and accumulated depreciation are removed  from  the  accounts, and any
         gain or loss is included in income.  Maintenance and repair  costs are
         charged to expense as incurred.  Provisions for depreciation are  made
         using  the  straight-line  method over the estimated economic lives of
         the assets.

         AMORTIZATION
         Goodwill is being amortized  over  a  period  of  forty  years  by the
         straight-line method.

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

         LOSSES PER SHARE
         The computations of losses per share are based on the weighted average
         number  of shares outstanding during the  year:   1,611,317  in  1996,
         1,614,726 in 1995, 1,700,206 in 1994.



<PAGE>
                           FEDERATED PURCHASER, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        OCTOBER 31, 1996, 1995 AND 1994




NOTE 2 - GOING CONCERN

         The  Company's  financial  statements  have  been  prepared on a going
         concern  basis which contemplates the realization of  assets  and  the
         satisfaction of liabilities in the normal course of business.

         As shown in  the  financial  statements,  the Company has reported net
         losses of $414,826, $546,062 and $373,849 for  the  fiscal years ended
         October 31, 1996, 1995 and 1994, respectively and working  capital has
         continued to decline.  These factors raise substantial doubt about the
         Company's ability to continue as a going concern.

         The Company's continued operations will depend on its ability to raise
         additional  funds  through  a combination of equity or debt financing,
         strategic alliances, increased  revenues  and  reduction  of operating
         costs.

         The Company's long-term liquidity will depend on its ability  to raise
         substantial  additional  funds.  There can be no assurances that  such
         funds will be available to the Company on acceptable terms, if at all.

NOTE 3 - CONCENTRATION OF CREDIT RISK AND RISK ARISING FROM CASH
               DEPOSITS IN EXCESS OF INSURED LIMITS

         The Company sells its products  to  various customers primarily in the
         Northeast  United  States.   The  Company   performs   ongoing  credit
         evaluations   on   its   customers  and  generally  does  not  require
         collateral.   The  Company maintains  reserves  for  potential  credit
         losses and such losses have been within management's expectations.

NOTE 4 - MARKETABLE SECURITIES

         At October 31, 1995,  marketable  securities represents treasury bills
         with an original maturity in excess of three months and are classified
         as available for sale.  The current  marketable  securities are stated
         at cost, plus accrued interest which approximates  the  current market
         value of the securities.

NOTE 5 - INVENTORIES

         Inventories consist of the following:

                                                  1996       1995

           Merchandise for resale               $314,447   $392,282



<PAGE>
                           FEDERATED PURCHASER, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        OCTOBER 31, 1996, 1995 AND 1994

NOTE 6 - PROPERTY AND EQUIPMENT

         Property and equipment consist of the following:
<TABLE>
<CAPTION>
                                                  1996       1995     USEFUL LIFE
<S>						<C>	   <C>        <C>
           Leasehold improvements               $ 12,522   $ 12,522   5 - 31 years
           Furniture, fixtures and
             equipment                           110,626    110,155   5 - 15 years
           Automotive equipment                   24,139     24,139   4 years
             Total                               147,287    146,816
           Less:  Accumulated depreciation
                  and amortization               115,259    103,684

           Total Property and Equipment         $ 32,028   $ 43,132

</TABLE>

NOTE 7 - ASSOCIATION MEMBERSHIP

         The  Company  is  a  member of a cooperative buying group and has been
         purchasing stock in such  group  pursuant  to  group  guidelines.  The
         total  investment  as  of  October  31, 1996 and 1995 was $94,126  and
         $70,454, respectively.  In the event  that  the  Company were to leave
         the group, the group would be obligated to refund all invested amounts
         over  a  five year period.  The association membership  is  valued  at
         cost, which approximates the current market value.

NOTE 8 - LONG-TERM DEBT

         Long-term debt payable consist of the following:

                                                             1996       1995

             IBM Credit Corporation, payable in monthly
             installments of $1,122, including interest
             at 11% through July 1998, secured by data
             processing equipment.                         $ 18,955   $ 29,697

             Less:  Current portion                          10,624     10,624

             Total Long-Term Debt                          $  8,331   $ 19,073

         Long-term debt matures as follows:

             Year Ended
             OCTOBER 31,

                1997                                       $ 10,624
                1998                                          8,331
                                                           $ 18,955


<PAGE>
                           FEDERATED PURCHASER, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        OCTOBER 31, 1996, 1995 AND 1994



NOTE 9  - ACCRUED EXPENSES

           Accrued expenses as of October 31, consist of the following:

                                                           1996        1995

              Payroll                                    $ 17,693    $  8,290
              Professional fees                            63,470      34,500
              Sundry                                       12,698      15,684

              Total Accrued Expenses                     $ 93,861    $ 58,474

NOTE 10 - EMPLOYMENT AGREEMENT

           The  Company  entered  into  an  employment agreement with the chief
           executive officer effective November 1, 1986, originally terminating
           October 31, 1991 and subsequently  extended  until October 31, 1996.
           This  agreement also provided for cash awards at  10%  of  incentive
           earnings,  as  defined.  No cash awards were earned during the years
           1996, 1995 and 1994.

NOTE 11 - RETIREMENT PLAN

           The Company sponsored  a  profit sharing plan covering substantially
           all employees.  There was no  charge  to  income  for 1996, 1995 and
           1994.  The Board of Directors adopted a resolution  on  December  1,
           1995  to  terminate  the  Company's  sponsored  profit  sharing plan
           covering substantially all employees.

NOTE 12 - INCOME TAXES (BENEFIT) DEFERRED AND PAYABLE

           Components of provision (benefit) for income taxes are as follows:

                                             1996        1995        1994

             Current:
               Federal                     $   -       $   -       $   -
               State                          1,975       4,363      (1,847)

                 Total                        1,975       4,363      (1,847)

             Deferred:
               Federal                         -           -         (5,488)

             Total taxes (benefit)         $  1,975    $  4,363    $ (7,335)


<PAGE>
                           FEDERATED PURCHASER, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        OCTOBER 31, 1996, 1995 AND 1994





NOTE 12 - INCOME TAXES (BENEFIT) DEFERRED AND PAYABLE (Continued)

          In  1992,  the  Company  adopted  Statement  of  Financial Accounting
          Standard 109 ("SFAS").  SFAS 109 provides for an asset  and liability
          approach to accounting for income taxes that require the  recognition
          of  deferred  tax assets and liabilities for the expected future  tax
          consequences of  events  that  have  been recognized in the Company's
          financial statements or tax returns.

          In estimating future consequences, SFAS  109  generally considers all
          expected future events other than proposed changes  in the tax law or
          rates prior to enactment.  A valuation allowance is provided  when it
          is more likely than not that some portion or all of the deferred  tax
          assets will not be realized.

          Temporary   differences  between  the  financial  statement  carrying
          amounts and tax  bases  of  assets  and liabilities that give rise to
          significant portions of the net deferred  tax  asset  relate  to  the
          following:

                                                         1996        1995

             Accounts receivable, principally
             due to allowance for doubtful
             accounts                                  $ 11,326    $  1,720

             Carryforward losses                        672,025     512,861

             Valuation allowance                       (683,351)   (514,581)

             Net deferred tax assets and
               liabilities                             $   -       $   -

          At October 31, 1996, the Company had net operating loss carryforwards
          of approximately $1,500,000 that expire in the years 2008 to 2011.









<PAGE>
                           FEDERATED PURCHASER, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        OCTOBER 31, 1996, 1995 AND 1994

NOTE 12 - INCOME TAXES (BENEFIT) DEFERRED AND PAYABLE (Continued)

          The  consolidated  income tax (benefit) was different than the amount
          computed using the United  States  statutory  income tax rate for the
          reasons set forth in the following table:

                                                1996       1995        1994

             Expected tax (credit) at U.S.
               statutory income tax rate      $   -      $   -       $   -
             State income taxes                  1,975      4,363      (1,847)
             Utilization of loss
               carryforwards                      -          -         (5,488)

                                              $  1,975   $  4,363    $ (7,335)

NOTE 13 - LEASE COMMITMENT

          As of September 30, 1992, the Company moved to  a  new facility under
          an operating lease agreement which will expire on December  31,  1998
          at a minimum annual lease rental of $106,970.  The lease was modified
          on  June  1,  1995 to remove the premises used by Freedom Electronics
          Corporation at a minimum annual lease rental of $58,000.  In addition
          to minimum rentals,  the  Company will be responsible for real estate
          taxes and a pro-rata share  of  all  common charges.  Rent charged to
          operations was $80,979, $82,885 and $163,765,  respectively,  for the
          years ended October 31, 1996, 1995 and 1994.

          The  future  aggregate  minimum  rental payments under this operating
          lease agreement are as follows:

             Years Ended
             OCTOBER 31,

                1997                          $ 58,000
                1998                            58,000
                1999                             9,667

                                              $125,667

NOTE 14 - MAJOR SUPPLIER INFORMATION

          The Company had one supplier from  whom  it  purchased  approximately
          $523,000 or 16% of purchases for the year ended October 31, 1996.

NOTE 15 - RELATED PARTY TRANSACTIONS

          Freedom Electronics Corporation, a 100% owned subsidiary of Federated
          Purchaser, Inc. leased warehouse facilities from the President of the
          Company on a month-to-month basis, at a monthly rental of  $3,500 for
          a total of $42,000 for the year ended October 31, 1994.


<PAGE>
                           FEDERATED PURCHASER, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        OCTOBER 31, 1996, 1995 AND 1994



NOTE 16 - SALE OF SUBSIDIARY

          On  November  15,  1994,  by  unanimous  vote  of  all non-interested
          directors,   Federated  Purchaser,  Inc.  (Federated)  divested   its
          subsidiary, Freedom Electronics Corporation (Freedom).

          In consideration of the divestiture of 100% of the outstanding shares
          of  Freedom  Electronics   Corporation,   Federated  Purchaser,  Inc.
          received  approximately  $354,000,  including  $100,000  in  cash,  a
          $210,000  7%  promissory note due on November  15,  1998  and  88,889
          shares of common  stock  of Federated (representing 4.9% of the class
          outstanding) held personally  by  Freedom's  President.  In addition,
          the parties entered into customary covenants not to compete, pursuant
          to which Federated would become entitled to receive  $90,000  over  a
          period   of   four  years.   As  part  of  this  transaction  certain
          intercompany indebtedness to Federated was satisfied by payment of an
          additional $656,000.

          The loss on the  divestiture  of Freedom amounted to $182,791 or $.11
          per share.

          The following is a summary of net assets and results of operations of
          Freedom Electronics Corporation  as  of  October 31, 1994 and for the
          year then ended.

              Cash                                         $   62,155
              Receivables                                     482,559
              Inventories                                     786,574
              Other current assets                             37,295
              Property and equipment (net)                     94,210
              Other assets                                     28,032

                Total assets                                1,490,825

              Accounts payable                                206,998
              Notes payable                                   254,667
              Other current liabilities                       668,910
              Long-term debt                                     -

                Net assets                                 $  360,250


              Sales                                        $2,853,957

              Cost and expenses                             2,919,342

              Loss before income taxes                        (65,385)

              Income taxes (benefit)                           (5,127)

              Net loss                                     $  (60,258)



<PAGE>

ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

      None.

                                   PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.

        The  information  required  in response to this item is incorporated by
reference  to  the  Company's  Proxy  Statement   for  the  Annual  Meeting  of
Shareholders to be held on March 19, 1997, which the Company will file with the
Securities and Exchange Commission no later than 120  days  after  October  31,
1996.


ITEM 11. EXECUTIVE COMPENSATION.

        The  information  required  in response to this item is incorporated by
reference  to  the  Company's  Proxy  Statement   for  the  Annual  Meeting  of
Shareholders to be held on March 19, 1997, which the Company will file with the
Securities and Exchange Commission no later than 120  days  after  October  31,
1996.

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

        The  information  required  in response to this item is incorporated by
reference  to  the  Company's  Proxy  Statement   for  the  Annual  Meeting  of
Shareholders to be held on March 19, 1997, which the Company will file with the
Securities and Exchange Commission no later than 120  days  after  October  31,
1996.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

        The  information  required  in response to this item is incorporated by
reference  to  the  Company's  Proxy  Statement   for  the  Annual  Meeting  of
Shareholders to be held on March 19, 1997, which the Company will file with the
Securities and Exchange Commission no later than 120  days  after  October  31,
1996.


<PAGE>
                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

      (A)(1) AND (2) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

      These  documents  are  included in the response to Item 8 of this report.
See the index on page 14.

      (3)   EXHIBITS

       The following exhibits are filed with this report:

                                                            SEQUENTIALLY
EXHIBIT NUMBER          EXHIBIT DESCRIPTION                 NUMBERED PAGE

      22                Subsidiaries of the Company

      (C)   REPORTS ON FORM 8-K:

      During the three months  ended October 31, 1996, the Company did not file
any reports on Form 8-K with the Securities and Exchange Commission.

      (D)   EXHIBITS:

      Exhibits are listed above in response to Item 14(a)3.

            FINANCIAL STATEMENT SCHEDULES:

      Schedule V - Valuation and Qualifying Accounts and Reserves

      All other schedules are omitted  because they are either inapplicable, or
not  required,  or  because  the  required  information   is  included  in  the
consolidated financial statements or notes thereto.

      Individual  financial statements of the Company are omitted  because  the
Company is primarily  an operating company and the subsidiaries included in the
consolidated financial statements filed herein are wholly-owned subsidiaries.



<PAGE>
                                  SIGNATURES


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

                                          FEDERATED PURCHASER, INC.



                                          By:/S/ HARRY J. FALLON
                                               HARRY J. FALLON, President
January 28, 1997


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

SIGNATURES:                        TITLE                        DATE


/S/ HARRY J. FALLON          Acting Chairman, President,   January 28, 1997
HARRY J. FALLON              Principal Executive Officer,
                             Principal Financial
                             Officer, Principal
                             Accounting Officer and
                             Director


/S/ EDMUND L. HOENER         Director                      January 28, 1997
EDMUND L. HOENER


/S/ EDWIN S. SHORTESS        Director                      January 28, 1997
EDWIN S. SHORTESS


/S/ JANE A. CHRISTY          Director, Vice                January 28, 1997
JANE A. CHRISTY              President Operations


<PAGE>
                               INDEX TO EXHIBITS


                                                            SEQUENTIALLY
EXHIBIT NUMBER          EXHIBIT DESCRIPTION                 NUMBERED PAGE

      3     (a)         Articles of Incorporation of Company (incorporated by
                        reference to the Company's original Registration
                        Statement).

            (b)         By-laws of the Company (incorporated by reference to
                        pp. 26-55 of the Exhibit Volume of Company's Form 10-K
                        Annual Report for the year ended October 30, 1980).

      10    (a)         Lease dated September 17, 1982 relating to Company's
                        administrative, sales, and warehousing facilities
                        located in Kenilworth, New Jersey (incorporated by
                        reference to Exhibit 10(a) to Company's Form 10-K
                        Annual Report for the year ended October 31, 1982).

            (b)         Lease dated October 31, 1990 relating to Freedom
                        Electronics' assembly and warehousing facilities
                        located in Atlantic Highlands, New Jersey (incorporated
                        by reference to Exhibit 10(b) to Company's Form 10-K
                        Annual Report for the year ended October 31, 1989).

            (c)         Employment Agreement between Company and Harry J.
                        Fallon (incorporated by reference to Exhibit 10(b) to
                        Company's Form 10-K Annual Report for the year ended
                        October 31, 1988).

            (d)         Employment Agreement between Company and Steven J.
                        Carbone (incorporated by reference to Exhibit 10.2 to
                        the Company's Current Report on Form 8-K filed July 24,
                        1990).

            (e)         Employees' Profit-Sharing Plan and Amendment thereto
                        (incorporated by reference to pp. 120-162 of the
                        Exhibit Volume of Form 10-K Annual Report for the year
                        ended October 31, 1980).

            (f)         Employees' Profit-Sharing Trust Agreement and Amendment
                        thereto (incorporated by reference to pp. 163-185 of
                        the Exhibit Volume of Form 10-K Annual Report for the
                        year ended October 31, 1980).

            (g)         Employee Incentive Stock Option Plan (incorporated by
                        reference to Exhibit 10(e) to Company's Form 10-K
                        Annual Report for the year ended October 31, 1982).

            (h)         Employee Incentive Stock Option Plan Amendments
                        (incorporated by reference to Exhibit 10(h) to
                        Company's Form 10-K Annual Report for the year ended
                        October 31, 1989).

            (i)         Stock Purchase Agreement between Company and Steven J.
                        Carbone (incorporated by reference to Exhibit 10.1 to
                        the Company's Current Report on Form 8-K filed July 24,
                        1990).

            (j)         Letter Agreement dated March 28, 1991 Extending the
                        Employment Agreement between Company and Harry J.
                        Fallon (incorporated by reference to the Company's Form
                        10-K Annual Report for the year ended October 31,
                        1991).

            (k)         Letter Agreement dated January 20, 1993 Extending the
                        Employment Agreement between Company and Harry J.
                        Fallon to October 31, 1993 (incorporated by reference
                        to the Company's Form 10-K Annual Report for the year
                        ended October 31, 1992).

            (l)         Letter Agreement dated June 8, 1992 Extending the
                        Employment Agreement between Company and Steven J.
                        Carbone to December 31, 1992 (incorporated by reference
                        to the Company's Form 10-K Annual Report for the year
                        ended October 31, 1992).

            (m)         Letter Agreement dated January 20, 1993 Extending the
                        Employment Agreement between Company and Steven J.
                        Carbone to March 31, 1993 (incorporated by reference to
                        the Company's Form 10-K Annual Report for the year
                        ended October 31, 1992).

            (n)         Lease dated September 1, 1992 relating to the Company's
                        total operations (including Freedom Electronics)
                        located in Cliffwood, New Jersey (incorporated by
                        reference to the Company's Form 10-K Annual Report for
                        the year ended October 31, 1992).

            (o)         Letter Agreement dated March 29, 1993 extending the
                        Credit Facility between Constellation Bank, as Lender
                        and Federated Purchaser, Inc., as borrower
                        (incorporated by reference to the Company's Form 10-K
                        Annual Report for the year ended October 31, 1993).

            (p)         Bank Credit Facility Agreement, dated January 29, 1993
                        between United Jersey Bank, as Lender, and Freedom
                        Electronics, as borrower (incorporated by reference to
                        the Company's Form 10-K Annual Report for the year
                        ended October 31, 1993).

            (q)         Stock Purchase Agreement, dated November 2, 1994 among
                        Federated Purchaser, Freedom Electronics and Steven J.
                        Carbone (incorporated by reference to the Company's
                        Form 10-K Annual Report for the year ended October 31,
                        1994).

            (r)         Lease Modification, dated
                        July 18, 1995 between Cliffwood
                        Avenue Partners and Federated
                        Purchaser (incorporated by reference
                        to the Company's Form 10-K Annual Report
                        for the year ended October 31, 1995)

      22                Subsidiaries of the Company (filed as an exhibit
                        hereto).


<PAGE>


                                  EXHIBIT 22


                          Subsidiaries of the Company


<PAGE>


                          SUBSIDIARIES OF THE COMPANY

                                                      Percentage of Voting
                              Jurisdiction of         Securities Owned by
SUBSIDIARY                    INCORPORATION           THE COMPANY

Federated Purchaser, Inc.     Pennsylvania                  100%



<PAGE>


                                        SCHEDULE V

                                 FEDERATED PURCHASER, INC.
                      VALUATION AND QUALIFYING ACCOUNTS AND RESERVES


<TABLE>
<CAPTION>
         COLUMN A                      COLUMN B                COLUMN C                COLUMN D                   COLUMN E
                                    Balance at Beginning of  Additions Charged to
                                            PERIOD            Profit and Loss OR        Deductions From       Balance at Close
          CLASSIFICATION                                            INCOME                 RESERVES               OF PERIOD
<S>				    <S>			      <C>                     <C>                     <C>
Year ended October 31, 1996:
  Allowance for doubtful accounts               $22,835                  $4,751                  $1,247              $26,339
Year ended October 31, 1995:
  Allowance for doubtful accounts               $28,682                 $13,235                 $19,082              $22,835
Year ended October 31, 1994:
  Allowance for doubtful accounts               $84,224                 $10,691                 $66,233              $28,682

</TABLE>