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                Annual Report For Small Business Issuers Subject
                     to the 1934 Act Reporting Requirements

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-KSB

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

                      For the Year Ended October 31, 1996

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

                          Commission File No. 0-21417

                            CAPITAL TITLE GROUP, INC.
                  --------------------------------------------
                 (Name of Small Business Issuer in its charter)

         Delaware                                         87-0399785
--------------------------------                --------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

4808 N. 22nd Street, Phoenix, Arizona                       85016
----------------------------------------                  ----------
(Address of principal executive offices)                  (Zip Code)

                    Issuer's telephone number: (602) 954-0022
                                              ---------------
                Securities registered under Section 12(b) of the Act:
                                      NONE

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

                          Common Stock, $.001 par value
                          -----------------------------
                                (Title of class)

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

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

Total revenues for the issuer's most recent fiscal year were $2,582,655.

On January 15, 1997, the  aggregate  market  value of the voting stock held by
non-affiliates of the issuer was $4,424,977.  This figure was estimated based on
recent  private  sales of the Company's  common  stock.  The number of shares of
Common Stock outstanding on January 15, 1997 was 10,616,029.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

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                                     PART I
ITEM 1.  BUSINESS

COMPANY HISTORY AND OVERVIEW

         Capital Title Group, Inc., a Delaware  corporation  (the  "Company" or
"Capital  Title  Group"), through its wholly owned  subsidiary, Capital  Title
Agency, Inc., an Arizona corporation ("Capital Title"), operates an independent
title agency and escrow  business  headquartered  in Phoenix, Arizona.  Capital
Title  Group  was  formed  under  the  laws of Utah in 1983 and  redomiciled  in
Delaware in 1989. Capital Title was formed as an Arizona corporation in 1981 and
has engaged in business as an independent  title agency and escrow company since
that time.

         Since  its  formation, Capital  Title  Group  has  had no  significant
business  operations.  On May 23, 1996, the board of directors of Capital Title
Group, (formerly Norvex, Inc.), approved a Share Exchange Agreement with Capital
Title  pursuant to which Norvex, Inc.  changed its name to Capital Title Group,
Inc.  and issued 5.781 shares of Capital  Title  Group's  $.001 par value common
stock (the "Common Stock"), or an aggregate of 6,734,865 shares of Common Stock,
to the existing  shareholders  of Capital  Title for each  outstanding  share of
Capital  Title  (the  "Acquisition  Transaction").   Immediately  prior  to  the
Acquisition  Transaction, Capital Title Group had  1,686,164  shares issued and
outstanding and approximately 75 stockholders. Of the 75 shareholders of Capital
Title Group immediately prior to the Acquisition Transaction, Irwin Jacobson and
Mark Scharmann held 5% or more of Capital Title Group's  outstanding  stock. The
share  exchange ratio was  determined by arm's length  negotiations  between the
respective  boards of directors of Capital Title Group and Capital Title, based
on a number of factors, including the business prospects and financial condition
of the respective entities. As a result of the Acquisition Transaction, Capital
Title Group now operates Capital Title as a wholly owned subsidiary.

         Since 1981, Capital Title has provided  continuous title insurance and
escrow  services  to the  real  estate  industry  in  Yavapai  County, Arizona.
Recently, Capital  Title  expanded its  operations  into  Phoenix, Arizona and
relocated its corporate headquarters from Prescott, Arizona to Phoenix, Arizona.
The  Company  has nine  branch  offices, five of which are  located  in Yavapai
County, Arizona  and four of which were  recently  opened by the Company in the
Phoenix  metropolitan  area.  The Company  plans to expand its  operations  into
Southern  California  and  Nevada  in  1998.  This  planned  expansion  will  be
accomplished   through  acquisition  or  recruitment  of  escrow  officers  with
significant existing revenue production based upon their relationships with real
estate brokers, mortgage lenders and other industry  participants.  The Company
will attempt to attract these significant  producers through employment packages
that  include  stock  options  and  stock   purchase   programs  as  substantial
motivational incentives.

     The principal executive offices of the Company are located at 4808 N. 22nd
Street, Phoenix, Arizona 85016 and the Company's telephone number is:
(602)954-0022.

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COMPANY OPERATIONS

         Capital Title is an independent  title agency providing escrow services
and, as an agent for First American Title Insurance  Company ("First  American")
and Old Republic  Insurance  Company ("Old  Republic"), issuing title insurance
policies  to service the real estate  industry  in Yavapai  County and  Maricopa
County, Arizona.  Capital  Title's  operations  commenced  in 1981 in Prescott,
Arizona.  By 1987, Capital Title was the largest title company in Yavapai County
based on market share, and by 1994, its market share had reached 24%. In early
1994, Money magazine  listed  Prescott, Arizona as the number one place in the
United States to retire.  During the next ten months, the real estate market in
Yavapai County  increased by 38%, but Capital  Title's  staffing levels were not
increased quickly enough to capitalize on this increase. As a result, by the end
of 1994, Capital Title found that its market share in Yavapai County had fallen
to approximately 16%.

         During 1995 and 1996, Capital Title began an expansion program, opening
additional  offices in the Yavapai County population centers of Prescott Valley,
Cottonwood  and Sedona.  Capital  Title  estimates  its current  market share is
approximately  21%, second to First  American Title which has a market share of
approximately  35%.  During 1996, Capital  Title opened four branch  offices in
Maricopa County, Arizona.  In 1997, Capital Title intends to open six to eight
branch offices in Maricopa and Yavapai Counties, Arizona.  Phoenix is currently
the 7th largest city in the United  States with an estimated  population of 1.08
million, and its  projected  growth is  expected  to boost  Phoenix  to the 6th
largest  city  in  the  nation  by the  year  2000.  The  Company  believes  the
surrounding  metropolitan areas in Maricopa County have the potential to grow at
an even more accelerated pace. Capital Title's expansion plans also call for the
opening of offices  in  Southern  California  and  Nevada in 1998.  The  Company
believes that the Southern California real estate market is at its lowest recent
historical  level, and most predictions are that a recovery will commence during
1996, although there can be no assurance in that regard.

INDUSTRY OVERVIEW

         Title  Insurance  has become  accepted as the most  efficient  means of
determining  title to, and the priority of  interests  in, real estate in nearly
all parts of the United  States.  Virtually  all real property  lenders  require
their  borrowers to obtain title  insurance  policies at the time mortgage loans
are made.

         TITLE POLICIES. Title insurance policies state the terms and conditions
upon  which  a  title  underwriter  will  insure  title  to  real  estate.   The
beneficiaries of title insurance  policies are generally buyers of real property
or secured lenders.

         Title  insurance is different from other types of insurance  because it
relates to past events that affect  title to property at the time of closing and
not  unforeseen  future  events.  Prior to issuing  policies, underwriters  can
eliminate future losses by accurately performing searches and examinations.  The
major  expense of a title  company is the search  and  examination  function  in
preparing  preliminary  reports, commitments and policies and is not from claim
losses.  The premium for title  insurance  is due in full on the closing date of
the real estate transaction and is based upon the purchase price of the property
insured or the amount of the secured loan.  Coverage under the policy  generally


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terminates upon resale or refinance of the property.  The terms of coverage have
become standardized in accordance with forms approved by trade associations such
as American Land Title Association and Land Title Association of Arizona.

         Title  insurance  policies  are  issued on the  basis of a  preliminary
report  or  commitment.  These  reports  are  prepared  after a search of public
records, maps and other relevant documents to ascertain title ownership and the
existence of easements, restrictions, rights of way, conditions, encumbrances or
other  matters  affecting  the  title  to, or use of real  property.  A  visual
inspection  of the  property  may also be made prior to the  issuance of certain
title insurance policies.

         To  facilitate  the  preparation  of  preliminary  reports  without the
necessity of manually searching public records, copies of public records, maps
and other  relevant  historical  documents  are compiled and indexed in a "title
plant." Each title plant relates to a particular county and is kept current on a
daily or other  frequent  basis by the addition of copies of recorded  documents
that affect rights in real property in the particular  county.  Title  companies
often  subscribe  to  independent  title  information  services to assist in the
updating of their title plants and the maintenance of title records.

         DIRECT VS. AGENCY SALES. Preliminary reports and commitments to issue a
policy are  prepared  by title  underwriters  (direct  sales) or by  independent
agents on behalf of the  underwriters  (agency sales).  The terms and conditions
upon which the real property will be insured are  determined in accordance  with
the standard policies and procedures of the title underwriter.  In direct sales,
the title underwriter  issues the preliminary  report and commitment and retains
the entire title  premium paid in  connection  with the  transaction.  In agency
sales, the search and examination function is performed by the independent agent
and the  majority of the premium  collected  is retained by the agent, with the
balance remitted to the title  underwriter.  Independent agents may select among
several title underwriters based upon the amount of the premium "split" offered,
the  overall   terms  and   conditions  of  the  agency   agreement,  including
indemnification  obligations of the agent, and the scope of services offered to
the agent by the title underwriter. Agent commissions vary by geographic region.

        THE TITLE POLICY PROCESS. A brief description of the process of issuing
a title insurance policy is as follows:

         (i)      The customer, typically a real estate  salesperson or broker,
                  escrow agent or lender, places an order for a title policy.

         (ii)     Sales  personnel  note the  specifics of the order and place a
                  request with the title department for a preliminary report.

         (iii)    After the relevant historical data on the property is
                  compiled, the title officer prepares a preliminary report that
                  documents (a) the current status of title to the property, (b)
                  any exemptions, exceptions and/or limitations that might be
                  attached to the policy and (c) specific issues that need to be
                  addressed and resolved by the parties to the transaction
                  before the title policy will be issued (such as removal of
                  prior tax liens and payment of prior loans on the property).
                  The preliminary report is circulated to all the parties for
                  satisfaction of any specific issues.

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         (iv)     After all specific issues identified in the preliminary report
                  are  satisfied, the escrow  agent closes the  transaction  in
                  accordance with the instructions of the parties and the policy
                  conditions.

         (v)      Once the  transaction  is  closed  and all  monies  have  been
                  released, the policy is issued (a) to the owner and the lender
                  on a  resale  transaction  or  (b)  to the  lender  only  on a
                  refinancing transaction.

         LOSSES AND  RESERVES.  The maximum  amount of  liability  under a title
insurance  policy is  usually  the face  amount of the  policy  plus the cost of
defending the insured's  title against an adverse  claim.  The reserve for claim
losses is based upon known claims as well as losses the insurer expects to incur
based on historical  experience and other factors, including industry averages,
claims loss history, current legal environment, geographic  considerations and
type of policy written.

         ECONOMIC FACTORS AFFECTING INDUSTRY. Title insurance revenue is closely
related to the level of activity in the real estate market and the average price
of  real  estate  sales.   Real  estate  sales  are  directly  affected  by  the
availability of money to finance purchases.  Other factors affecting real estate
activity  include  demand, mortgage  interest  rates, family income levels and
general economic conditions.

         It is estimated that title industry revenue for 1995 was  approximately
$6  billion, which  reflected  no  significant  change in  comparison  to 1994.
Although  recovery  from a weak year in 1994  appeared to commence in the second
half of 1995, continued weakness in the California  market, which accounts for
25% or more  of all  mortgage  originations  nationwide, precluded  substantial
growth.  The long-term growth rate for the industry  approximates  nominal gross
domestic product growth, or about 5%.

COMPANY STRATEGY

         The  Company's  strategy  is to pursue  aggressive  growth in the title
insurance industry in the Southwestern United States.  Essential elements of the
Company's strategy are as follows:

         COMMITMENT   TO   SERVICE.   The   Company  is  built  on  three  basic
entrepreneurial  premises:  (1) every employee is a salesperson for the Company;
(2) the  Company's  services are a one-stop, computer-based  contact  point for
complete real estate transactions;  and (3) success is achieved through focus on
an unequaled quality of customer service.  Because title insurance  policies and
escrow  functions are generally  standardized, the level of service provided is
the key differentiating  factor among competitors in the title industry.  One of
the  Company's  foremost  objectives  is  to  issue  written  title  reports  in
substantially  all its transactions  within two working days from the opening of
escrow.  Through its commitment to customer service, the Company seeks to build
lasting relationships with its real estate industry clients.

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         MARKET FOCUS.  The Company's market focus is on real estate brokers and
mortgage lenders, which the Company believes generate  approximately 70% of the
transactions  involving  title and escrow fees. To set itself apart as a service
company, Capital Title has developed industry specific  information  technology
that it provides to its clients. The Company trains real estate agents and their
administrative  assistants  in the use of a customized  computer  program  which
enhances  their  client  presentations.  The Company has also  developed  "Plain
Language  Escrow  Instructions"  in an effort to simplify the escrow process and
minimize  the numerous  questions  that can arise in the  preparation  of escrow
documents.  These simplified instructions have been well received in the Yavapai
County real estate  community and have provided the Company with an  opportunity
to conduct educational seminars directed at its real estate agent clients.

          MANAGEMENT STRENGTH. The Company recognizes that its aggressive growth
plan calls for executive  management  with extensive  industry  operational  and
expansion  experience.  Capital  Title  appointed  Mr. Andrew Johns as President
effective April 16, 1996, and Mr. Johns also serves as President of the Company.
Mr. Johns, the former  President of Stewart Title for the State of  California,
has over 28 years of industry  experience, including  the  expansion  of United
Title's Orange County operations  throughout the Southern California market. The
Company  believes  that Mr. Johns has the  leadership, experience  and industry
contacts  required to effect Capital Title's planned expansion into the Southern
California  and  Nevada  markets.  Capital  Title  also has an  experienced  and
dedicated group of executive  officers to support Mr. Johns in this effort.  See
Item 9 - "Directors, Executive Officers, Promoters and Control Persons."

         EQUITY PARTICIPATION BY ESCROW OFFICERS.  Escrow officers are the major
revenue producers for title insurance companies.  It is their relationships with
real estate brokers, lenders and other industry participants that are primarily
responsible for the direction of escrow and title  business.  Capital Title will
seek to attract the most successful  escrow  officers (and the related  revenue)
through  employment  packages  that  include  stock  options and stock  purchase
programs in the Company as added motivational  incentives.  The Company believes
such programs will also promote Company loyalty, which will help to insulate the
Company's escrow officers from  competitive  recruiting  efforts.  The Company's
philosophy of equity participation by its escrow officers is unique in the title
industry.

         EXPANSION.  The Company  intends to  accomplish  its planned  expansion
through  acquisitions  of  existing  title  agencies, the opening of new branch
offices and the development of "Home-Based  Relationship"  ("HBR")  arrangements
with escrow  officers.  The HBR program  will allow  escrow  officers to work in
their own homes doing escrow processing functions through the Company's computer
network, thereby reducing the Company's administrative and office expense.

CAPITAL TITLE OPERATIONS

         In the  years  ended  October  31,  1996 and  1995,  revenues  from the
issuance of title insurance policies represented 56.2% and 53.7%,  respectively,
of the Company's consolidated revenues.  Escrow fees for the years ended October
31, 1996 and 1995 represented  26.9% and 26.6%,  respectively,  of the Company's
consolidated revenue.

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<PAGE>
         MARKETING. The Company believes that the primary source of its business
is from referrals from  participants in the real estate  industry, such as real
estate brokers, mortgage lenders, developers and attorneys. In addition to the
referral  market,  Capital  Title  markets  its  services  directly  to  larger
brokerages and real property lenders.  Marketing activities are performed by the
escrow  officers  of Capital  Title and a  marketing  representative  whose sole
function  is the  solicitation  of business  from major real estate  brokers and
lenders.  Escrow officers, in addition to their escrow service duties, maintain
and further develop relationships  established with current clients for on-going
business.  The  marketing  representative  holds  educational  seminars for real
estate brokers, offers the use of "Dataquick" as a service that provides ease in
placing  valuations  on  surrounding   property  and  trains  brokers  or  their
assistants  in  the  use  of  Capital  Title's  proprietary   industry  specific
information technology.

         ESCROW  SERVICE.  Capital  Title's escrow  department has the fiduciary
responsibility of handling the consummation of real estate sales, exchanges and
a  variety  of other  transactions  involving  the sale or  encumbrance  of real
property, refinance of real property, sales of assets of businesses and sales of
promissory notes secured by deeds of trust.

         The  escrow  officer  and  assistant  typically  prepare  their  escrow
documents pursuant to the real estate contract.  The escrow instructions provide
guidance to all  concerned  parties as to the  conditions  required for the real
estate transaction.  Furthermore, the instructions provide authorization for the
escrow agent to request information  concerning matters appearing of record, the
receipt of all earnest  monies and closing  funds, the  disbursement  of seller
proceeds, payoff of underlying liens, judgments, real property taxes, insurance
and any other  disbursement  as set forth in the  instructions or parties to the
transaction.  The instructions also include  authorization to prepare and obtain
documents necessary to complete the real estate transaction.

         The escrow agent is held accountable by state governmental agencies for
strict  compliance  with its fiduciary  responsibilities  outlined by the escrow
instructions.  The officer must possess a high degree of skill, professionalism
and confidentiality in the handling, preparation, collecting and recordation of
all escrow  matters  between the buyer, seller, real estate  brokers and their
agents, developers, lenders and investors.

         TITLE  DEPARTMENT.  The primary function of the title department is the
accumulation  and analysis of various  documents from the many sources that make
up the  public  record.  From this  analysis, a  preliminary  report is written
showing  the  present  condition  of title.  This  report is given to the escrow
officer  who, in turn, distributes  it to the parties  involved in the purchase
agreement.  After the  preliminary  report has been read and approved by all the
parties and the requirements of the report have been fulfilled, the escrow will
proceed to closing and a final title insurance policy will be issued.

         Capital  Title  owns a "title  plant," a listing  and  history  of each
parcel of ground in a  particular  county, for  Yavapai  County, Arizona.  The
Company can use the  services  of a third party title plant  provider or acquire
additional  title plants for  purposes of  conducting  its title  research as it
expands into additional  geographic  areas. The cost of obtaining "title plants"
varies with economic and market  conditions in the geographic  area to which the
title  plants  relate.  The Company  believes  it will be able to obtain  "title


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plants"  on  terms  and  conditions  that  are  acceptable  to  it  through  the
acquisition of title companies as the Company expands into other markets.
However, there can be no assurance in this regard.

         CLAIMS AND  UNDERWRITING.  Capital Title provides title insurance as an
agent of First American and Old Republic.  First American has a Best's Insurance
rating of A. Old Republic has a Standard and Poor's rating of A+. These services
are provided  pursuant to  Underwriting  Agreements  with First American and Old
Republic, which state the  conditions  on which  Capital Title is authorized to
issue a title  insurance  policy on behalf of First American or Old Republic and
prescribe  the  circumstances  under which  Capital Title may be liable to First
American  or Old  Republic if a policy  loss is  attributable  to errors made by
Capital Title. The underwriting  agreements with First American and Old Republic
provide that the Company:  (1) must fully comply with all requirements  relating
to the  issuance of title  insurance  within  each of the  counties in which the
Company  does  business  and must comply with  generally  accepted  standards of
underwriting;  (2) will be liable for any losses payable on a basis of erroneous
reports or in excess of the stated liability on the policy when an insured makes
a successful claim based on negligence;  (3) may not write a policy in excess of
the stated  contract  amount without prior approval from the insurance  company;
and (4) will be liable for the first  $5,000 of each loss, unless  specifically
waived by the  insurance  company.  The  Company  is not a sole  agent for First
American or Old Republic.

         Claims  against  the policy of title  insurance  normally  arise out of
human  error.  During the  process of  accumulation  and  analysis of the public
record, certain  inaccuracies and  inconsistencies  are often  encountered that
sometimes result in a situation in which interpretation of these documents could
lead to a claim.  Such  claims are  reviewed  by Capital  Title's  staff and, if
warranted, sent to the insurance carrier for final disposition.

         Underwriting  is the  process of  analyzing  risk  assumption.  As each
individual situation arises, the local staff makes a risk analysis. If the local
underwriting  staff decides that the risk assumption is outside its underwriting
authority, the insurance carrier is contacted for its underwriting approval.

         ACCOUNT SERVICING. The account servicing department handles the receipt
and disbursement of monies for accounts with respect to which Capital Title acts
as servicing agent for a transaction. Its responsibility as trustee includes the
maintenance of all records reflecting receipts and disbursements, calculation of
total  interest, principal  and  any  other  sums  due as  required  under  the
agreement/note  between the buyer and the seller. This information is summarized
and reported to the Internal  Revenue  Service  with the  appropriate  Form 1098
and/or  1099  supplied  to the buyer and the  seller.  Following  the  payoff of
accounts, the servicing  agent prepares and records the  appropriate  documents
necessary  to  substantiate  accounts as paid in full in the  applicable  county
records.  Typically, transactions  serviced by Capital Title include promissory
notes secured by deeds of trust and agreements of sale.

         FORECLOSURES.  Both  promissory  notes  secured  by deeds of trust  and
agreements of sale can be foreclosed  nonjudicially  by the servicing  agent. As
trustee of the  documents  being  serviced by Capital  Title, the seller and/or
beneficiary can direct the servicing  agent, at the time of default, to proceed
with foreclosure of the lien.

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<PAGE>
         The  maintenance of accurate  up-to-date  accounting and control of all
original   documents  enable  the   trustee/servicing   agent  to  expedite  the
nonjudicial trustee sale or foreclosure.

          ADMINISTRATION.  Capital Title's  administrative staff handles general
accounting and finance, human  resources, purchasing, management  information
systems and regulatory compliance.

         The Company  has  initiated  its  expansion  plans in Maricopa  County.
Recently, the Company relocated its headquarters to Phoenix, and has opened four
branch  office  locations  in  Maricopa  County.  In  addition, the Company has
retained the services of escrow officers with significant production capacity in
the Phoenix  metropolitan  area.  The Company  plans to open offices in Southern
California and Nevada in 1998.

CUSTOMERS

         Capital Title is not dependent upon any single customer or single group
of  customers.  The loss of any one customer  would not have a material  adverse
effect on the Company.

SEASONALITY

         The title  insurance  business is closely  related to overall levels of
real estate  activity.  Historically, real estate  activity has been  generally
slower in the winter months with volumes showing significant improvements in the
spring and summer months. In addition, the title insurance business is cyclical
due to the effect of  interest  rate  fluctuations  on the level of real  estate
activity.  Periods of high interest rates adversely  effect real estate activity
and therefore premium revenues.

COMPETITION

         The title insurance business is highly competitive. The number and size
of competing  companies  varies in different  geographic  areas.  In those areas
where the  Company  operates  and  intends to  operate, the  Company  will face
competition from major national  insurance  underwriters  and other  independent
agencies, many of which have greater  financial  and other  resources  than the
Company. The Company believes that quality and timeliness of service are the key
competitive  factors  in  the  industry,  because  parties  to  a  real  estate
transaction are usually  concerned with time schedules and costs associated with
delays in the closing of  transactions.  In those  states  where  prices are not
established  by  regulation, the price of title  insurance is also an important
competitive factor.

REGULATION

         Capital Title conducts its business under licenses granted by the State
Banking and Insurance  Departments of the State of Arizona.  The title insurance
and escrow  businesses  generally  are  subject to  extensive  regulation  under
applicable  state laws.  These laws  establish  supervisory  agencies with broad
administrative  powers  relating to issuing and  revoking  licenses, regulating


                                       9
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trade  practices, licensing  agents, approving policy forms and approving rate
schedules. Failure to comply with these regulations or an inability to secure or
maintain any required  licenses could materially  adversely affect the Company's
business. The Company believes that it is in material compliance with applicable
laws and regulations, and that it will maintain and obtain all licenses required
for the conduct of its business.

EMPLOYEES

         As of December 31, 1996, the Company had a total of 112  employees, of
which  59  (including  officers  of the  Company)  were in the  marketing/escrow
department, 20 were in the title department, eight were in customer service, one
was in  trustee  sales, six  were in  account  services  and  eighteen  were in
administration. Capital Title believes that its relations with its employees are
good.

ITEM 2.  PROPERTIES

         The Company conducts its business operations in leased office space. As
of December 31, 1996, the Company leases approximately 14,400 square feet in
Yavapai County and approximately 20,000 square feet in Maricopa County. The
Company currently leases offices at twelve locations with remaining lease
periods ranging from twenty-seven to sixty months. The Company's total monthly
rental payments at the foregoing locations are approximately $40,000.

ITEM 3.  LEGAL PROCEEDINGS

         Capital  Title is involved in certain  legal actions which arise in the
normal  course of its title  business.  The Company  believes that none of these
claims are material, either individually or in the aggregate.

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

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of the fiscal year ended October 31, 1996.

                                     PART II

ITEM 5.  MARKET FOR REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER MATTERS

         No public trading market having the characteristics of depth, liquidity
and orderliness exists for the Company's Common Stock. In the Spring of 1997 the
Company  plans to apply for  quotation  of the  Common  Stock on the  Electronic
Bulletin Board operated by the National Association of Securities Dealers,  Inc.
under the symbol of CGTI.  As of December 31,  1996,  the Company had issued and
outstanding 10,316,029 shares of Common Stock. In addition, 1,000,000 shares are
reserved for  issuance  under the  Company's  1996 Stock Option Plan and 100,000
shares are reserved  for issuance  under the  Company's  Non-Employee  Directors
Stock Option Plan. See Item 11 "Security  Ownership of Certain Beneficial Owners
and Management." On December 10, 1996, the Company's Board of


                                       10
<PAGE>

Directors authorized the issuance in a private placement of an additional
500,000 shares of its Common Stock at $1.00 per share. Of the Company's 
10,316,029 shares of Common Stock issued and outstanding on December 31, 1996, 
1,686,158 shares are eligible for resale under Rule 144. At December 31, 1996, 
there were approximately 100 record holders of the Company's Common Stock.

         The Company has never paid a dividend on its Common Stock.  The Company
does not anticipate  paying any dividends on its Common Stock in the foreseeable
future.  Rather,  the Company  anticipates  that its  earnings,  if any, will be
retained to fund the Company's  working capital needs and the planned  expansion
of its  business.  The  payment  of any  dividends  will be  dependant  upon the
discretion of the Board of Directors. Furthermore, under Delaware corporate law,
in the absence of current or retained  earnings,  the Company may be  prohibited
from paying dividends (whether in cash or otherwise).


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

         The following discussion of the results of the operations and financial
condition of the Company should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto included elsewhere in this
Form 10-KSB. Historical results and percentage relationships among accounts are
not necessarily an indication of trends in operating results for any future
period. The discussion of the results of operations and financial condition is
based solely upon the activity of Capital Title and excludes the activity of
Capital Title Group which was inactive until the Acquisition Transaction.

OVERVIEW

         During the fiscal year ended October 31, 1996, the Company undertook an
expansion program which doubled the number of branch offices and employees. This
expansion  was funded  primarily  through a private  placement of the  Company's
Common Stock which was initiated in July, 1996.  Through the private  placement,
approximately  $1,157,000  was raised, net of offering  costs.  During 1996, an
additional  $325,000 was obtained  through the sale of 165,000  shares of Common
Stock  for  $100,000  and  borrowings  of  $225,000.  Out of  the  approximately
$1,482,000 raised by the Company through financing activities, the Company spent
approximately  $725,000 on fixed assets for the Phoenix  corporate  headquarters
and four (4) new branches in Maricopa County. Approximately $680,000 was used to
fund operations during the growth period and  approximately  $72,000 was used to
pay debt obligations.

         Subsequent to the Company's fiscal year end, the Company obtained a
loan from Imperial Bank for $350,000. The Company's Board of Directors
authorized another placement of 500,000 shares of Common Stock. As of January 
15, 1997, the Company has sold an additional 330,000 shares of Common Stock for 
approximately $314,000, net of offering costs. The approximately $664,000,
subsequently raised, has been used primarily to fund operations and will be used
to open one additional branch in Maricopa County.

                                       11
<PAGE>

RESULTS OF OPERATIONS

          REVENUE.  The  following  table  presents  information  regarding  the
components of the Company's revenue:

                                       For The Years Ended Oct. 31,

                                            1996            1995
                                            ----            ----
Title Insurance Premiums                $1,451,479       $1,099,666
Escrow Fees                                695,995          544,357
Account Servicing                          314,939          263,695
Other Fees and Revenue                      16,947           43,085
Interest Income                            103,295           98,809
                                        ----------       ----------
                                        $2,582,655       $2,049,612
                                        ==========       ==========
Orders Closed by Direct Orders
                                             2,748            2,029
                                        ==========       ==========
Average Fee Per file from Direct
Operations                              $      780       $      810
                                        ==========       ==========

         Title insurance premium and escrow fees revenue increased approximately
$503,000 or 30% from 1995. Of this  increase, approximately  $261,000 or 16% is
from  Maricopa  County  operations.  Capital  Title  opened its first  branch in
Maricopa  County in August, 1996.  The  following  table  presents  information
regarding the approximate monthly revenue from Maricopa operations:


               For The Month Ended                Revenue
              -------------------                -------
                August 31, 1996                  $ 54,000
                September 30, 1996                 99,000
                October 31, 1996                  108,000
                November 30, 1996                 163,000
                December 31, 1996                $215,000

         Management  expects revenues from its Maricopa operation to continue to
grow as the inventory of orders that has been building over the past five months
begins  to close  and  escrow  officers  begin to reach  their  full  potential.
Management  believes  it takes  between  five (5) and six (6)  months  for a new
branch to reach its expected revenue.

         The  remaining  increase  in  insurance  premiums  and  escrow  fees of
approximately $242,000 or 14% is from expansion in Yavapai County, Arizona. The
Company's  market  share in Yavapai  County has  increased  from a low of 16% in
fiscal year 1995 to 23% in November, 1996. Due to the  recruitment of three (3)
escrow officers and the anticipated opening of two (2) new offices, the Company
plans to increase its market share in 1997.

                                       12
<PAGE>

         The decrease in the average fee per file from direct  operations is due
to a decrease in the average fee earned in Yavapai  County  which  dropped  from
$810 for fiscal year 1995 to $750 in fiscal year 1996.  The  decrease was due to
an increase in refinance  business  which  occurred when interest rates dropped.
For 1997, the Company is refocusing on resale business which  typically  charges
higher fees than fees from  refinancing  transactions.  Fees for Maricopa County
for the period end October 31, 1996 averaged approximately $1,240. Orders closed
by direct  operations in Yavapai County increased from 2,029 in 1995 to 2,538 in
1996 or  approximately  25%.  Orders closed by direct  operations  from Maricopa
County were 210 in 1996.

          EXPENSES. The following table presents the components of the Company's
expenses.

                                  For The Years Ended Oct. 31,

                                     1996                 1995
                                     ----                 ----
Personnel Cost                    $1,958,292         $1,161,622
Other Operating Expense            1,526,312          1,059,846
Agent Commissions                     24,768              4,016
Acquisition Cost Write Down          103,441
Interest Expense                      17,835              6,289
                                  ----------         ----------
                                  $3,630,648         $2,231,773
                                  ==========         ==========

         Personnel costs are the most significant  operating expense incurred by
the Company. Personnel costs increased in 1996 compared to 1995 by approximately
$797,000, or 68.5%.  Personnel cost increased  approximately  $402,000, or 34.6%
due  to  employees   being  hired  for  the  Maricopa   County   operations  and
approximately  $395,000  or 33.9% for  increased  staff in  Yavapai  County  and
additional  administrative  and  executive  personnel.  Personnel  costs,  as  a
percentage of total revenue, have increased to 75.8% in 1996 from 56.6% in 1995.
This increase is due  primarily to expansion  into  Maricopa  County.  Personnel
costs, as a percentage of total revenue,  was 152.5% in 1996 for Maricopa County
operations and 63.1% for Yavapai County operations respectively. Personnel costs
fluctuate  as the level of direct  orders  opened and closed  fluctuate.  As the
Company's  current  inventory of orders begins  closing and branches  reach full
potential,   the  Company  believes  Maricopa  County's  personnel  costs  as  a
percentage  of total revenue will  decrease.  The increase from 56.6% in 1995 to
63.1% in 1996 for  Yavapai  County  is due to the  Company's  hiring  additional
employees.  The increase  resulted in a  substantial  increase in the  Company's
market share;  however,  the extra payroll expense prior to the increased orders
closed resulted in an increase in payroll expense compared to total revenue.

         Other  operating  expenses  increased  in  1996  compared  to  1995  by
approximately  $466,000  or  44%.  A  majority  of the  increase, approximately
$368,000 or 34.6%, was due to the expansion into Maricopa County.

         Acquisition  cost write down relates to costs incurred when the Company
initiated its expansion  program.  The Company initially  anticipated  expanding
into the  California  and  Texas  markets  by  December, 1996.  Management  has


                                       13
<PAGE>

postponed  expansion  outside of Arizona  until the beginning of 1998 and is now
considering  the Nevada market instead of Texas.  Accordingly, the  acquisition
costs the Company was capitalizing  have been expensed for the fiscal year ended
October 31, 1996.

LIQUIDITY AND CAPITAL RESOURCES

         Capital Title Group requires capital to expand its  geographical  base,
make acquisitions, further implement its market penetration program, recruit and
train new personnel, and purchase additional property and equipment to implement
its  expansion  program.  During the year ended  October 31,  1996,  the Company
financed its operating and business  development  activities  primarily  through
operating  revenue,  obtaining a $150,000  term loan, a $75,000 short term loan,
and the private  placement of shares of Common Stock,  resulting in net proceeds
to the Company of $1,156,999.

         During the year ended October 31, 1996, Capital Title Group commenced a
private placement of Common Stock intending to sell a minimum of 500,000 shares,
and a maximum of  1,500,000  shares at $1 per share.  As of October 31, 1996, a
total of 1,275,000  shares had been sold in the  offering.  The expenses of this
offering  were  approximately  $118,100  which  generated  net  proceeds for the
Company of  approximately  $1,156,900.  Subsequent  to the fiscal year end, the
Company's  Board of Directors  authorized the issuance of an additional  500,000
shares of its Common Stock at $1.00 per share.  It is anticipated  that expenses
of this offering will be approximately  $40,000 which will generate net proceeds
for the Company of approximately  $460,000.  As of January 15, 1997, the Company
has  sold  330,000  shares  for  proceeds, net of  expenses, of  approximately
$314,000.

         The Company  believes that the net proceeds of this offering, together
with its existing cash resources and  financing, will be sufficient to meet the
Company's expansion, acquisition and working capital needs for the next 12 to 24
months.  The  Company, however, may raise  capital  through  the  issuance  of
long-term or short-term  debt or the issuance of securities in private or public
transactions to fund future expansion of its business either before or after the
end of the 24 month period.  There can be no assurance that acceptable financing
for future transactions can be obtained on terms acceptable to the Company.

         As  of  December  31,  1995,   the  Company  had  net  operating   loss
carryforwards  of  approximately  $1,187,000  that will be  available  to offset
future state income taxes and  approximately  $756,000 that will be available to
offset future federal income taxes. The state net operating  carryforwards  will
expire  October 31, 2001.  The federal net operating  carryforwards  will expire
October 31, 2011.

IMPACT OF NEW ACCOUNTING STANDARDS

         During October, 1995, the Financial  Accounting Standards Board issued
Statement No. 123 (SFAS 123), "Accounting for Stock-Based  Compensation", which
establishes a fair value-based method of accounting for stock-based compensation
plans and requires additional  disclosures for those companies that elect not to
adopt the new method of accounting.   The Company  will  continue to account for


                                       14
<PAGE>

employee purchase rights and stock options under APB Opinion No.25, "Accounting
for Stock Issued to  Employees."  SFAS 123  disclosures  will be  effective  for
fiscal years beginning after December 31, 1995.

RECENT DEVELOPMENTS

         On December  10, 1996, the  Company's  Board of  Directors  elected to
change to corporate year end from October 31 to December 31. A current report on
Form 8-K has been filed announcing this change.











                                       15
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                            CAPITAL TITLE GROUP, INC.
                                 AND SUBSIDIARY

                        CONSOLIDATED FINANCIAL STATEMENTS

                               For The Years Ended
                            October 31, 1996 and 1995











                                       16
<PAGE>


                         REPORT OF INDEPENDENT AUDITORS


The Board of Directors and Shareholders
Capital Title Group, Inc.

We have audited the  accompanying  consolidated  balance sheets of Capital Title
Group, Inc. And  subsidiary 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 and 1995.  These  financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable  assurance about whether the  consolidated  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  make by  management, as well as  evaluating  the  overall  financial
statement presentation. We believe that our audits of the consolidated financial
statements 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 Capital Title Group,
Inc. And  Subsidiary  as of October 31, 1996 and 1995, and the results of their
operations, changes in stockholders' equity, and cash flows for the years ended
October 31, 1996, and 1995, in conformity  with generally  accepted  accounting
principles.


/s/ SEMPLE & COOPER, P.L.C.
Semple & Cooper, P.L.C.
Certified Public Accountants



Phoenix, Arizona
December 30, 1996






                                       17
<PAGE>

                    CAPITAL TITLE GROUP, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
                                                                         October 31,   October 31,
                                                                             1996         1995
                                                                             ----         ----
<S>                                                                    <C>           <C>  
ASSETS
Current Assets:
Cash (Notes 1 and 3)                                                   $    24,664     $  17,354
Accounts receivable, less allowance for doubtful accounts of 
 $5,000 and $3,716 (Note 1)                                                 24,723        14,095
Income taxes receivable                                                     16,358        51,575
Prepaid expenses                                                            17,659         1,604
Deferred income taxes (Notes 1 and 6)                                         --           4,387
                                                                       -----------     ---------
Total Current Assets                                                        83,404        89,015

Property and Equipment, net (Notes 1, 5 and 13)                            914,632       193,806

Other Assets:
Investment in title plant (Note 1)                                         175,000       175,000
Deferred income tax asset (Notes 1 and 6)                                     --          11,971
Deposits                                                                    58,699          --
                                                                       ===========     =========
Total Assets                                                           $ 1,231,735       469,792
                                                                       ===========     =========
LIABILITIES AND STOCKHOLDERS' EQUITY 
Current Liabilities:
Revolving line of credit (Note 9)                                      $      --       $  33,104
Notes payable - current portion (Note 7)                                     6,538         3,197
Notes payable to related parties - Current portion (Note 11)               109,228        16,000
Obligation under capitalized lease - current portion (Notes 1 and 8)        28,638         1,582
Accounts payable                                                           435,730       171,057
Accrued expenses                                                            69,900        26,595
Income taxes payable                                                          --          15,249
                                                                       -----------     ---------
Total Current Liabilities                                                  650,034       266,784

Long-Term Liabilities:
Notes payable - long-term portion (Note 7)                                   6,658         5,547
Notes payable to related party - long-term portion (Note 11)               105,746          --
Obligation under capitalized lease - long-term portion (Notes 1 and 8)      62,830          --
                                                                       -----------     ---------
Total Long-Term Liabilities                                                175,234         5,547
                                                                       -----------     ---------
Commitments and Contingencies: (Notes 10 and 12)                              --            --

Stockholders' Equity: (Note 15)
Common stock, $.001 par value, 50,000,000 shares authorized;
10,286,029 and 1,000,000 shares issued and outstanding, respectively        10,286       480,663
Paid-in capital                                                          1,727,376          --
Accumulated deficit                                                     (1,331,195)     (283,202)
                                                                       -----------     ---------
Total Stockholders' Equity                                                 406,467       197,461

                                                                       -----------     ---------
Total Liabilities and Stockholders' Equity                             $ 1,231,735       469,792
                                                                       ===========     =========
</TABLE>
                   The Accompanying Notes are an Integral Part
                           of the Financial Statements

                                       18
<PAGE>

                    CAPITAL TITLE GROUP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                              Year Ended October 31,
                                                                1996          *1995   
                                                            -----------    -----------
REVENUE:
    <S>                                                    <C>            <C> 
     Title insurance premiums                               $ 1,451,479    $ 1,099,666
     Escrow fees                                                695,995        544,357
     Account servicing                                          314,939        263,695
     Other fees and revenue                                      16,947         43,085
     Interest income                                            103,295         98,809
                                                            -----------    -----------
                                                              2,582,655      2,049,612
                                                            -----------    -----------
EXPENSES
     Personnel costs                                          1,958,292      1,161,622
     Other operating expenses                                 1,526,312      1,059,846
     Agent commissions                                           24,768          4,016
     Acquisition cost writedown                                 103,441           --
     Interest expense                                            17,835          6,289
                                                            -----------    -----------
                                                              3,630,648      2,231,773
                                                            -----------    -----------

     Loss before provision for income taxes                  (1,047,993)      (182,161)

     Income tax benefit                                            --           65,059
                                                            -----------    -----------
     Net Loss                                               $(1,047,993)   $  (117,102)
                                                            ===========    ===========

     Proforma loss per share (Note 1)                       $      (.11)   $      (.01)
                                                            ===========    ===========
     Proforma weighted average shares outstanding             9,281,440      8,770,786
                                                            ===========    ===========
</TABLE>


                     *Adjusted for comparitive purposes only



                   The Accompanying Notes are an Integral Part
                           of the Financial Statements


                                       19
<PAGE>

                    CAPITAL TITLE GROUP, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                               Common Stock           Additional
                                               ------------            Paid-in     Accumulated
                                           Shares        Amount        Capital       Deficit
                                        -----------   -----------    -----------   -----------
<S>                                             <C>           <C>            <C>           <C>
Balance, October 31, 1994                 1,000,000       480,663           --        (166,100)

Net loss for the year ended
    October 31, 1995                           --            --             --        (117,102)
                                        -----------   -----------    -----------   -----------

Balance, October 31, 1995                 1,000,000       480,663           --        (283,202)

Shares issued to officer                    165,000       100,000           --            --


Restructure in reverse merger                  --
    with Capital Title Group, Inc.        7,846,029      (571,652)       571,652

Shares issued in private placement,       1,275,000         1,275      1,155,724          --
net of costs of $118,001

Net loss for the year ended                    --            --             --      (1,047,993)
     October 31, 1996
                                        -----------   -----------    -----------   -----------
Balance, October 31, 1996                10,286,029   $    10,286    $ 1,727,376   $(1,331,195)
                                        ===========   ===========    ===========   ===========
</TABLE>



                   The Accompanying Notes are an Integral Part
                    of the Consolidated Financial Statements



                                       20
<PAGE>
                    CAPITAL TITLE GROUP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOW

<TABLE>
<CAPTION>
                                                        Year Ended October 31,

                                                         1996             1995
                                                         ----             ----
Cash flows from operating activities:
<S>                                                   <C>            <C>
Net income (loss)                                      $(1,047,993)   $  (117,102)

Adjustments to reconcile net income (loss) to
  net cash provided (used) by operating activities:
   (Gain) loss on sale of vehicle                             --           (2,800)
   Depreciation                                            110,746         74,563
   Bad debt expense                                           --            3,716

Changes in Assets and Liabilities:
   Accounts receivable                                     (10,628)       (38,629)
   Income taxes receivable                                  35,217           --
   Prepaid expenses                                        (16,055)        (1,604)
   Refundable deposits                                     (58,699)          --
   Deferred income tax asset                                16,358        (13,484)
   Accounts payable                                        264,673         50,692
   Accrued expenses                                         43,305          1,362
   Income taxes payable                                    (15,249)           258
                                                       -----------    -----------
                                                           369,668         74,074
                                                       -----------    -----------
Net Cash Provided (Used) from
   Operating Activities                                   (678,325)       (43,028)
                                                       -----------    -----------
Cash flows from investing activities:

Purchase of property and equipment                        (724,436)       (16,331)
Proceeds from sale of vehicle                                 --            2,800
                                                       -----------    -----------
Net cash used by investing activities                     (724,436)       (13,531)
                                                       -----------    -----------
Cash flows from financing activities:
   Proceeds from notes payable to related parties          225,000         16,000
   Proceeds from issuance of common stock, net           1,256,999           --
   Net change in revolving credit line                        --           33,104
   Repayment of notes payable                              (33,104)        (2,694)
   Repayment of notes to related party                      (5,052)          --
   Repayment of obligations under capital lease            (26,026)       (12,519)
                                                       -----------    -----------
Net cash provided (used) by financing activities         1,410,071         33,891
                                                       -----------    -----------
Net increase (decrease) in cash and cash equivalents         7,310        (22,668)

Cash and cash equivalents at beginning of year              17,354         40,022
                                                       -----------    -----------

Cash and cash equivalents at end of year               $    24,664    $    17,354
                                                       ===========    ===========
</TABLE>

                   The Accompanying Notes are an Integral part
                           of the Financial Statements

                                       21
<PAGE>

                    CAPITAL TITLE GROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       Summary of Significant Accounting Policies:

         Nature of Corporation:

         Capital Title Group, Inc. (formerly Norvex, Inc.) was organized on
         September 12, 1993 in the State of Utah. In May, 1989, the Company was
         redomiciled as a Delaware corporation. The Company was largely
         inactive until May 23, 1996, at which time it acquired Capital Title
         Agency, Inc. in a reverse merger (See Note 4). The accompanying
         historical consolidated financial statements are based solely on the
         activity of Capital Title Agency, Inc. through the date of
         acquisition, May 23, 1996, since that was the only active business at
         the time of the merger. The intent of Capital Title Group, Inc. is to
         act as the parent holding company of Capital Title Agency, Inc.

         Capital Title Agency, Inc. is a Corporation which has been duly formed
         and  organized  under the laws of the State of  Arizona, and  operates
         under the authority of the State Banking  Commission.  The  Corporation
         was approved by the State of Arizona on November 1, 1981. The principal
         business  purpose of the Corporation is to offer title, collection and
         escrow  services to the general public, primarily in the  southwestern
         United States.

         The  Corporation   currently   operates  eleven  (11)  offices  located
         throughout  Maricopa and Yavapai  Counties in Arizona.  The Company has
         signed lease  commitments  for two (2)  additional  offices in Maricopa
         County.  The two  additional  offices are expected to open in the first
         and second quarter.

         Principles of Consolidation:

         The accompanying consolidated financial statements include the accounts
         of the Company and its wholly-owned  subsidiary, Capital Title Agency,
         Inc. All material  intercompany  accounts  and  transactions  have been
         eliminated in consolidation.

         Pervasiveness of Estimates:

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

                                       22
<PAGE>
                    CAPITAL TITLE GROUP, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1.       Summary of Significant Accounting Policies:  (Continued)

         Cash and Cash Equivalents:

         Cash  and  cash  equivalents  include  all  highly  liquid  investments
         purchased with an initial maturity of three (3) months or less.

         Accounts Receivable:

         The Corporation uses the allowance method to account for  uncollectible
         accounts  receivable.  The allowance is established based upon a review
         of the individual accounts and the Company's prior history.

         Income Recognition:

         Title insurance  premiums, escrow fees and other fees and revenues are
         recognized as revenue at the time of closing of the related real estate
         transaction.  Income  from  insurance  recoveries  when the  dispute is
         settled.

         Property and Equipment:

         Property  and  equipment  are stated at cost and are being  depreciated
         using the  straight-line and  double-declining  methods of depreciation
         over estimated useful lives of five (5) to seven (7) years. Maintenance
         and repairs  that neither  materially  add to the value of the property
         nor  appreciably  prolong its life are charged to expense as  incurred.
         Betterments or renewals are  capitalized as they are incurred.  For the
         years  ended  October  31, 1996 and  1995, depreciation  expense  was
         $110,746 and $74,563, respectively.

         Capital Lease Obligation:

         The  Company is the lessee of office  equipment  under a capital  lease
         agreement  which  expires in November, 2000.  The asset and  liability
         under the capital  lease are recorded at the lower of the present value
         of the minimum  lease  payments or the fair market  value of the asset.
         The asset is  depreciated  over the lower of its related  lease term or
         its  estimated  productive  life.  Depreciation  of the asset under the
         capital  lease  agreement  is included in  depreciation  expense  noted
         above.

         Title Plant:

         Title  plants  are  recorded  at the cost  incurred  to  construct  and
         organize  historical  title  information to the point it can be used to
         perform title searches.  Cost incurred to maintain, update and operate
         title plants are expensed as incurred.  Title plants are not  amortized
         as they are considered to have an indefinite life if maintained.

                                       23
<PAGE>

1.       Summary of Significant Accounting Policies:  (Continued)

         Income Taxes:

         The Company  accounts for income taxes in accordance  with Statement of
         Financial  Accounting  Standards No. 109 "Accounting for Income Taxes".
         The standard  provides  that  deferred tax assets and  liabilities  are
         recognized for the future tax consequences  attributable to differences
         between the financial statement carrying amounts of existing assets and
         liabilities and their  respective tax basis, and the utilization of the
         net operating loss  carryforwards.  Deferred tax assets and liabilities
         are  measured  using  enacted  tax rates  expected  to apply to taxable
         income in the years in which those  temporary  differences are expected
         to be recovered or settled.

         Proforma Loss Per Share:

         The proforma  loss per share  amount is based on the  weighted  average
         number of shares  outstanding for the periods  presented, after giving
         retroactive  effect to the reverse  merger (See Note 4). Fully  diluted
         earnings per share are not shown, as they are anti-dilutive.

2.       Cash in Escrow:

         The  Company is the  custodian  of cash  deposited  by  customers  with
         specific  instructions as to its disbursement from active escrow, trust
         and account  servicing.  The balances in these  accounts  have not been
         included  in these  financial  statements.  As of October  31, 1996 and
         l995, the  accounts   contain  a  reserve  balance  of   approximately
         $2,738,000 and $2,046,499 in the escrow accounts, $22,250 and $6,626 in
         the trust  accounts, and $49,500 and $70,054 in the account  servicing
         accounts, respectively.

3.       Concentration of Credit Risk:

         The Company  maintains cash and cash equivalents with various financial
         institutions.  Deposits not to exceed $100,000 at each  institution are
         insured by the Federal Deposit  Insurance  Corporation.  At October 31,
         1996 and 1995, the Company had uninsured  cash and cash  equivalents of
         approximately $5,700,000 and $2,000,000 respectively.

4.       Business Combination:

         Capital Title Group, Inc. (formerly Norvex, Inc.) was organized on
         September 12, 1983, in the State of Utah. On May 8, 1989, Articles of
         Merger were filed in the State of Utah, merging Norvex, Inc. into
         Pharmaceutics International, Inc., a Delaware corporation.
         Pharmaceutics International, Inc. was the survivor corporation. On or
         about July 9, 1993, the Company amended its Certificate of
         Incorporation, changing its name back to Norvex, Inc., a Delaware
         corporation. The Company was largely inactive from that time until
         May, 1996. On May 23, 1996, the Company acquired Capital Title Agency,
         Inc. in a transaction accounted for as a reverse acquisition, wherein
         the stockholders of Capital 

                                       24
<PAGE>

4.       Business Combination: (Continued)

         Title Agency, Inc. obtained control of the consolidated entity. The
         intent of Capital Title Group, Inc. is to act as the parent holding
         company of Capital Title Agency, Inc. As such, Norvex, Inc. changed
         its name to Capital Title Group, Inc.

         Capital Title Group, Inc. (formerly Norvex, Inc.) had 1,686,164 shares
         issued and outstanding, after a one for 10 (1-10) reverse stock split,
         at the acquisition date. Capital Title Group, Inc. issued 6,734,865
         shares of its common stock to the shareholders of Capital Title Agency,
         Inc. for one hundred percent (100%) of the issued and outstanding 
         common stock of Capital Title Agency, Inc.

         As  part of the  Acquisition  Agreement, the  Company  agreed  to sell
         590,000  shares  of its  common  stock  for  the  price  of $100 to its
         financial  advisor.  The  stock  was  valued  at $.01 per  share in the
         accompanying financial statements, based upon the value of the services
         rendered in performing due diligence procedures.

         The accompanying  financial  statements give retroactive effect to this
         business combination as if it had occurred prior to November 1, 1995.

5.       Property and Equipment:

         The provision for Property and Equipment consists of the following:

                                                  October 31,     October 31,
                                                      1996            1995
                                                      ----            ----
         Office equipment                        $   952,871     $   303,290
         Vehicles                                     47,488          36,984
         Furniture and fixtures                      189,797          61,137
         Leasehold improvements                      141,099          98,272
                                                 -----------     -----------
                                                   1,331,255         499,683
         Less:  accumulated depreciation            (416,623)       (305,877)
                                                 -----------     -----------
                                                 $   914,632     $   193,806
                                                 ===========     ===========



                                       25
<PAGE>

6.       Income Taxes:

         The provision for income taxes consists of the following:

                                        October 31,        October 31,
                                           1996                1995
                                           ----                ----
         Current tax benefit             $    --            $(51,575)
                                                        
         Deferred tax benefit                 --             (13,484)
                                         -------            --------
                                         $    --            $(65,059)
                                         =======            ========
           

         The tax effects of temporary differences and carryforwards that give
         rise to deferred tax assets consist of the following:

                                        October 31,      October 31,
                                           1996              1995
                                           ----              ----

           Accounts receivable           $  1,150            $    558
           Property and equipment          11,650                 886
           Loss carryforwards             208,345              35,000
                                         --------            -------- 
                                          221,145              36,444
           Less:  valuation allowance    (221,145)            (20,086)
                                         ========            ========
                                         $   --              $ 16,358
                                         ========            ========

         A breakdown of current and non-current deferred tax assets as of
         October 31, 1995, consists of the following:

                                        October 31,
                                           1995
                                           ----
            Current                     $  4,387
            Non-current                   11,971
                                        --------
                                        $ 16,358
                                        ========

                                       26
<PAGE>

6.       Income Taxes:  (Continued)

         As of October 31, 1996, the Company has the  following  net  operating
         losses  available  for  carryforwards  to offset  future  Federal state
         taxable income:

               Expiration Date                Amount of Loss
                                          State             Federal
                                          -----             -------
                    1998              $    58,000         $     --
                    2000                  117,000               --
                    2001                1,012,000               --
                    2011                    --                755,510
                                      ===========         ===========
                                      $ 1,187,000         $   755,510
                                      ===========         ===========
7.       Notes Payable:

         Notes payable consist of the following:
<TABLE>
<CAPTION>
                                                                          October 31,    October 31,
                                                                             1996            1995
                                                                             ----            ----
         <S>                                                             <C>               <C>
          8.75% note payable to Primus Automotive, with monthly
          installments of $299, including principal and interest, 
          due June, 1998; secured by a vehicle.                           $    5,796        $ 8,744

          10.5% note payable to First Interstate Bank, with monthly
          installments of $309, including principal and interest, due
          January, 1999; secured by a vehicle.                                 7,400            --
                                                                          ----------        -------
                                                                              13,196          8,744
          Less:  current portion                                              (6,538)        (3,197)
                                                                          ==========        =======
                                                                          $   (6,658)       $ 5,547
                                                                          ==========        =======
</TABLE>

         The maturities of long-term notes payable are as follows:

                        Year Ended
                        October 31        Amount
                        ----------        ------
                           1997          $  6,538
                           1998             5,747
                                              911
                                          -------
                                         $ 13,196
                                         ========


                                       27
<PAGE>

8.       Capital Lease Obligation:

         The Company is the lessee of office equipment with an aggregate cost of
         $118,848, under a capital lease  agreement  which expires in November,
         2000.  Minimum  future  lease  payments  due  under the  capital  lease
         agreement for the next five (5) years, are as follows:

                                                 Year Ended
                                                October 31,        Amount

                                                    1997       $ 37,119
                                                    1998         36,191
                                                    1999         29,860
                                                    2000          3,667
                                                    2001            286
                                                               --------
         Net minimum lease payments                             107,123

         Less:  amount representing interest                    (15,655)
                                                               --------
         Present value of net minimum lease payments             91,468

         Less:  current portion                                 (28,638)
                                                               --------
         Long-term maturities of capital lease obligation      $ 62,830
                                                               ========

         The interest rate is imputed based on the lessor's implicit rate of
         return at the inception of the lease.

9.       Revolving Line of Credit:

         Capital  Title Group, Inc. had an unsecured  revolving  line of credit
         with Bank One of Arizona for a maximum amount of $50,000.  Interest was
         at prime plus two and one-half percent (2.5%). At October 31, 1995, the
         rate was 11%.  Minimum  payment due monthly was 4% of the debt balance.
         All unpaid  principal and interest was due December 1, 1995. The credit
         line was paid in full and has not been renewed.

10.      Operating Lease Commitments:

         The Company  leases  offices at twelve (12)  locations.  The  remaining
         lease periods range from  twenty-seven (27) months to sixty (60) months
         with renewal options up to ten (10) years.

                                       28
<PAGE>

10.      Operating Lease Commitments:  (Continued)

         The future minimum lease commitments are as follows:

                          Year Ended
                          October 31,             Amount
                          -----------              ------
                             1997               $   476,922
                             1998                   467,241
                             1999                   391,822
                             2000                   146,734
                             2001                    59,686
                                                -----------
                      Total lease commitments   $ 1,542,405
                                                ===========
11.      Related Party Transactions:

         As of October 31, 1996, Capital Title Group, Inc. granted options at
         $1 per share to related parties under its 1996 Stock Option Plan (See
         Note 16).

         As of October 31, 1996, Capital Title Group, Inc. granted options at $1
         per share to a related  party  under its  Non-Employee  Director  Stock
         Option Plan (See Note 16).

         The Company receives  management and consulting services from a related
         business.  Charges for these  services were $48,000 for the years ended
         October 31, 1996 and 1995.

         The  Company  has a  lease  with a  related  corporation  for  computer
         equipment.  This is included with the capital leases  disclosed in Note
         7. The balance of this lease as of October 31, 1996 and 1995 was $0 and
         $1,582, respectively.

         In April, 1996, a  corporate  officer  purchased  165,000  shares for
         $100,000.

         During  fiscal 1996 and 1995, Capital  Title  Agency paid  $43,319 and
         $86,546, respectively, to Dale A. Head for legal services rendered to
         Capital  Title  Agency.  Dale A. Head is Donald R. Head's  brother.  In
         September, 1996, the  Company  granted  an  option to Dale A. Head to
         acquire  20,000  shares of Common  Stock of the  Company at an exercise
         price of $1.00 per share.


                                       29
<PAGE>

11.      Related Party Transactions:  (Continued)

         Notes Payable to Related Parties:

         As of October  31, 1996 and 1995, notes  payable  to related  parties
         consist of the following:
<TABLE>
<CAPTION>
                                                                            October 31,     October 31,
                                                                               1996             1995
                                                                               ----             ----
          <S>                                                               <C>              <C>
          10% note payable to a related corporation, in monthly
          installments of $3,187, including principal and
          interest over 60 months; unsecured.                                 $ 131,974         $   --

          8.5% note payable to a related party, due October 11, 1997; 
          unsecured.                                                              8,000           8,000
                                                                                      
          8.5% note payable to a related party, due on demand;
          unsecured.  This note was paid in November, 1996.                      75,000              --

          8.5% note payable to a related party, due October 11, 1997; 
          unsecured.                                                               --              8,000     
                                                                             ----------         --------
                                                                                214,974           16,000

          Less:  current portion                                               (109,228)         (16,000)
                                                                              ---------         --------
                                                                              $ 105,746         $   --
                                                                              =========         ========
</TABLE>

         The maturities of long-term notes payable to related parties, are as
         follows:

                          Year Ended
                         October 31,              Amount
                         -----------               ------
                             1997              $ 109,228
                             1998                 28,974
                             1999                 32,008
                             2000                 35,360
                             2001                  9,404
                                               $ 214,974
                                               =========

                                       30
<PAGE>

12.      Contingencies:

         The Company is a defendant in various lawsuits and claims, which it is
         vigorously defending.  It is management's  contention that such matters
         arise out of the normal course of business, primarily related to title
         disputes.  While the results of  litigation  cannot be  predicted  with
         certainty, management believes, based on the advice of legal counsel,
         that the final  outcome  of such  litigations  will not have a material
         adverse  effect  on  the  Company's  financial  position,  results  of
         operations, or liquidity.

13.      Cash Flow Information:

         Cash paid (refunded) for interest and income taxes for the fiscal
         years ended October 31, 1996 and 1995, is as follows:

                                           October 31,    October 31,
                                              1996           1995
                                              ----           ----

                   Interest                $ 17,835       $  6,034

                   Income taxes            $(36,326)      $   --
 
         The Company recognized investing and financing activities that affected
         assets  and  liabilities, but  did not  result  in  cash  receipts  or
         payments, as follows:

                  During the year ended October 31, 1996, the Company  financed
                  the  purchase  of  property  and  equipment  in the  amount of
                  $107,136 under capital lease and financing agreements.

                  In May, 1996, the Company  issued  6,734,865  shares of common
                  stock to  purchase  all the issued and  outstanding  shares of
                  Capital Title Agency, Inc.

14.      Employee Benefit Plans:

         Profit Sharing Plan:

         The Company maintains a profit sharing plan under Section 401(K) of the
         Internal  Revenue Code.  Under this plan, substantially  all full-time
         employees  may  elect  to defer up to  fifteen  percent  (15%) of their
         salary.  The  Company  contributes  $.25  for  every  $1  the  employee
         contributes, up to a maximum  of one  percent  (1%) of the  employee's
         earnings. Vesting of matching contributions is based on certain service
         requirements. Employes are fully vested after six (6) years of service.
         Employer  contributions  for the years ended October 31, 1996 and 1995,
         were approximately $4,500 and $3,700, respectively.

                                       31
<PAGE>

14.      Employee Benefit Plans:  (Continued)

         Cafeteria Plan:

         The Company  maintains an Internal  Revenue Code Section 125  Cafeteria
         Plan as a benefit to its employees.  The plan provides for employee and
         dependent  coverage to be paid from before tax  compensation.  As such,
         there is no effect on the financial statements.

15.      Private Placement Memorandum:

         The Company  offered  their  common stock  through a Private  Placement
         Memorandum  at $1 per  share, with an  intended  maximum  offering  of
         1,500,000  shares.  A  total  of  1,275,000  shares  were  sold  in the
         offering. The net proceeds received from the offering were $1,156,699.

16.      Stock Option Plans:

         1996 Stock Option Plan:

         On May 23, 1996, the Company adopted its 1996 Stock Option Plan.  Under
         the Plan, the Company  reserved an aggregate  of  1,000,000  shares of
         common stock to be granted at the discretion of the Board of Directors.
         Options  granted under the Plan are not  transferrable  and expire five
         (5) years after the date of grant.  The per share  exercise price of an
         incentive  stock option granted under the Plan may not be less than the
         fair market value of the common stock on the date of grant.

         As of December, 1996, the Board of Directors has authorized  the grant,
         under the 1996 Stock Option Plan, options to purchase 937,600 shares of
         common stock, with the exercise prices of all such options being $1 per
         share. Of such options, 275,000 were granted to related parties. As of
         October 31, 1996, none of the options have been exercised.

         Non-Employee Directors Stock Option Plan:

         On May 23, 1996, Capital Title Group, Inc. adopted a Non-Employee
         Directors Stock Option Plan. Under the Plan, the Company reserved an
         aggregate of 100,000 shares of common stock to be granted.

         Each  non-employee  director  who  joins the  Board of  Directors  will
         receive  an option to acquire  15,000  shares of the  Company's  common
         stock.  In addition to the  foregoing  option  grants, each year every
         non-employee  director  automatically  receives  an option  to  acquire
         10,000 shares of the Company's  common stock on the third  business day
         following the date the Company publicly  announces its annual financial
         results;  provided  that such director has attended at least 75% of the
         meetings of the Board of Directors and of the Board of  Committees of

                                       32
<PAGE>

16.      1996 Stock Option Plan:  (Continued)

         which such non-employee director is a member in the preceding fiscal
         year. The exercise price of all options granted under the Directors
         Plan is the fair market value of the Company's common stock on the
         date of grant.

         As of December 10, 1996, 75,000  options have been granted  under the
         Non-Employee Directors Stock Option Plan at an exercise price of $1 per
         share.  None of these  options  have been  exercised  as of October 31,
         1996.

17.      Subsequent Events:

         On November 15, 1996, the Company  entered  into an  installment  loan
         agreement  with  Imperial  Bank  for  $350,000.  Security  for the loan
         consists of all the Company's personal property.  Payments of $11,000 a
         month begin on December 15, 1996 and continue until November 15, 1999.

         On December 10, 1996, the Company's  Board of Directors  authorized an
         additional  private  placement of 500,000 shares at $1 per share. As of
         January 15, 1997, the Company has sold an additional  330,000 shares of
         common stock for approximately $314,000, net of offering costs.

18.      Continuing Operations:

         As of October  31, 1996 the Company  had an  accumulated  deficit  from
         operations and a deficit in working capital. In addition, management of
         the  Company   anticipates  that  the  Company  will  incur  additional
         short-term  operating  losses during it's expansion  phase. To fund the
         operations  of the  Company  it is  management's  intention  to sell an
         additional  500,000  shares of common  stock at $1 per share  through a
         private placing offering.  Additional funding was also obtained through
         a $350,000  installment loan agreement (see Note 17). As of January 20,
         1997 the Company has raised $330,000 of the proposed $500,000 offering.
         Management  estimates  that the Company  will begin  realizing a profit
         from operations during the first quarter of calendar year 1997.




                                       33
<PAGE>

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

         The Company, which, until the Acquisition Transaction on May 23, 1996,
         had no substantial business  operations, has nevertheless been audited
         in each of the last two fiscal  years.  For the fiscal year ended 1994,
         the  Company's  financial  statements  were audited by Duane V. Midgley
         ("Midgley").  In 1995, with the  approval  of the  Company's  Board of
         Directors, the Company engaged Schvaneveldt & Company ("Schvaneveldt")
         as its independent auditors for the fiscal year ended December 31, 1995
         to replace Midgley.

         The reports of Midgley on the Company's  financial  statements  for the
         fiscal year ended  December 31, 1994  contained  an adverse  opinion in
         that they expressed  substantial  doubt about the Company's  ability to
         continue as a going concern.

         In connection with the audit of the Company's financial  statements for
         the year ended  December 31, 1994, there were no  disagreements  with
         Midgley on any matters of accounting principle or practices, financial
         statement  disclosure, or auditing scope and procedures, which if not
         resolved to the  satisfaction of Midgley, would have caused Midgley to
         make reference to the matter in his report.

         The Company authorized Midgley to respond fully to any inquires from
         Schvaneveldt & Company.

         The Company  requested  Midgley to furnish it a letter addressed to the
         Securities and Exchange  Commission  stating whether it agrees with the
         above statements.  A copy of that letter, dated September 23, 1996, is
         incorporated by reference in this Form 10K-SB.

         The financial  statements  of Capital  Title, the Company's  operating
         subsidiary, for the fiscal years ending October 31, 1994 and 1995 were
         audited  by John E.  Jones, CPA  ("Jones").  After  completion  of the
         Acquisition  Transaction in 1996 and with the approval of the Company's
         Board of  Directors, the Company  engaged  Semple & Cooper, CPA, PLC
         ("Semple")  as its  independent  auditors  for the  fiscal  year  ended
         October 31, 1996 to replace Schvaneveldt and Jones.

         The report of  Schvaneveldt on the Company's  financial  statements for
         the fiscal  year ended  December  31, 1995 and the reports of Jones on
         Capital Title's financial statements for the fiscal years ended October
         31, 1994 and 1995 did not contain an adverse  opinion, or a disclaimer
         of opinion, nor were they  qualified  or  modified as to  uncertainty,
         audit scope or accounting principles.

         In connection with the audit of the Company's financial  statements for
         the year ended  December 31, 1995 and in connection  with the audits of
         Capital Title's financial statements for the fiscal years ended October
         31, 1994 and 1995, there were no  disagreements  with  Schvaneveldt or
         Jones on any matters of accounting  principle or  practices, financial
         statement  disclosure, or auditing scope and procedures, which if not


                                       34
<PAGE>

         resolved  to the  satisfaction  of  Schvaneveldt  or Jones, would have
         caused  either  of  them to  make  reference  to the  matter  in  their
         respective reports.

         The Company and Capital Title have authorized Schvaneveldt and Jones to
         respond fully to any inquires from Semple.

         The Company and Capital Title have requested  Schvaneveldt and Jones to
         furnish them with  letters  addressed  to the  Securities  and Exchange
         Commission stating whether they agree with the above statements. Copies
         of those letters, each of which is dated September 23, 1996, are 
         incorporated by reference in to this Form 10-KSB.


                                       35
<PAGE>

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

         The  following  table  sets  forth the  names, ages and  positions  of
directors  and  executive  officers  of the Company as of January  15, 1997.  A
summary of the  background  and  experience of each of these  individuals is set
forth after the table.

         The directors and executive officers of the Company are:

Name                     Age                      Position
----                     ---                      --------
Donald R. Head           58      Chairman of the Board; Chief Executive Officer

Andrew A. Johns          59      President; Director

James Clifford           36      Vice President

James P. Stamas          36      Vice President

Nick Velimirovich        46      Vice President

Michael J. Benjamin      35      Vice President, Controller

Deborah Campbell         39      Treasurer

Kimberly Sue DeJong      28      Secretary

Jeffrey P. Anderson      46      Director

James R. Evans           50      Director

Theo F. Lamb             54      Director

Robert B. Liverant       67      Director

Stephen A. McConnell     43      Director
  

         Directors hold office until the next annual meeting of  stockholders or
until their successors have been duly elected and qualified. Officers are chosen
by and serve at the discretion of the Board of Directors.

                                       36
<PAGE>

         DONALD  R.  HEAD is  co-founder  of  Capital  Title  and has  served as
Chairman of the Board since its inception.  Mr. Head is also the Chairman of the
Board and Chief Executive  Officer of Capital Title Group.  Mr. Head has engaged
in a number of  entrepreneurial  activities within the real estate industry.  He
was a co-founder of the Prescott  Mining  Company  Restaurant  and developed the
Prescott Air Park, a 35,000 square foot  industrial  and office park, the Plaza
West Commerce Centre, a five acre office park, and a 112 unit townhouse complex,
all in Prescott, Arizona. Since 1988, Mr. Head has lived in Scottsdale, Arizona
where he has continued  his real estate  development.  He  co-founded  Centurian
Development  and  Investments, Inc., which is a custom designer and builder of
residential  homes for some of the most prestigious  residential  communities in
the exclusive North  Scottsdale area. Mr. Head is also a partner in America West
Capital One LC, which acquired 677 acres of land currently under  development as
a residential community in Verde Valley in Yavapai County, Arizona. Mr. Head has
served as a board  member on both U.S. and Canadian  public  companies.  He is a
graduate  of Arizona  State  University  with a BA in  Business  and holds a law
degree from the University of Arizona.

         ANDREW A. JOHNS joined Capital Title in April 1996 as Vice President in
charge of Special Projects and shortly thereafter was named President. Mr. Johns
has also been a Director of Capital Title since March 1996 and a Director of the
Company since the Acquisition Transaction in May 1996. Mr. Johns is also the
President of the Company. Mr. Johns has more than 28 years of experience in the
title insurance industry. Prior to joining the Company, Mr. Johns served in a
senior management position with United Title Company for 12 years, expanding its
operational presence from Orange County, California to encompass the entire
Southern California market. United Title purchased TRW Title, Inc. changing its
name to Nations Title, Inc. When Nations Title, Inc. expanded into Arizona in
1994 through Nations Title of Arizona, Mr. Johns was selected to establish and
implement its operations. Nations Title of Arizona was merged into Network
Escrow Title Agency, which later changed its name to Nations Title Insurance of
Arizona, Inc., and operated under Mr. Johns as Executive Vice President. In
January 1996, Nations Title Insurance of Arizona, Inc., and its operating
entities were acquired by Fidelity National Title Company, one of the top ten
title companies in the nation, for in excess of $30 million. Prior to United
Title Company, Mr. Johns was employed by Stewart Title of California for nine
years holding several executive positions including President. He was directly
responsible for developing fourteen profitable branches for Stewart Title. He
began his career with First American Title Insurance Company in California. Mr.
Johns is a graduate of Compton College.

         JIM  CLIFFORD joined Capital Title in July 1996 as a Vice President and
was named Vice President of the Company in June 1996. Mr. Clifford also serves
as the President of Capital Title's Maricopa County operations. Prior to joining
the Company, Mr. Clifford was employed by United Title Agency, Inc. for more 
than 17 years, where he most recently served as the Chief Operating Officer.

         JAMES P. STAMAS joined the Company in July 1996 as Vice President and
also serves as the Executive Vice President-Legal of Capital Title. Prior to
joining Capital Title Agency, Mr. Stamas was Senior Vice President/General
Counsel for United Title Agency of Arizona, Inc. Mr. Stamas has over nine years
of experience in the industry. He is also an active member of the Land Title
Association of Arizona, its Legislative Committee and California Trustee's
Association.

                                       37
<PAGE>

         NICK VELIMIROVICH joined Capital Title in July 1996 as a Vice President
and was named Vice President of the Company in June 1996. Mr. Velimirovich also
serves as the Chief Executive Officer of Capital Title's Maricopa County,
Arizona operations. Prior to joining the Company, Mr. Velimirovich was employed
by United Title Agency, Inc. for more than 23 years, where he most recently
served as the Arizona District Manager.

         MICHAEL J.  BENJAMIN  joined the  Company in  November, 1996 as a Vice
President and serves as the Corporate  Controller  responsible for all financial
functions  for Capital  Title's  operations.  Prior to joining the Company, Mr.
Benjamin  was  employed  by Semple & Cooper, PLC as an Audit  Manager.  He is a
graduate  of  Florida  Atlantic  University  with  a BA in  Accounting  and is a
Certified Public Accountant.

         DEBORAH L. CAMPBELL is a Vice President of Capital Title. In such
capacity, she is responsible for all administrative functions for Capital
Title's operations. Ms. Campbell has been employed by Capital Title for more 
than 13 years and has held various positions, including serving as a trust
officer and overseeing all compliance regulations. Ms. Campbell is also the
Company's Treasurer. Ms. Campbell is an active member of the Arizona Trustee
Association and Land Title Association of Arizona.

         KIMBERLY SUE DEJONG is the Secretary of the Company and is  responsible
for the accounting services, including escrow services  accounting, of Capital
Title.  Ms. DeJong has been with Capital Title since 1992.  Prior to joining the
Company in 1992, Ms. DeJong was employed by Lifeline Ambulance.

         JEFFREY P.  ANDERSON  has been a Director of Capital  Title Group since
September 1996. From 1992 until 1996, Mr. Anderson was Executive Vice President,
Southwest Region, for First Interstate Bank in Phoenix, Arizona. He also served
concurrently as Chairman of the Board of First Interstate Bank of Colorado. From
1986 until 1992, Mr.  Anderson  was  employed by Security  Pacific  Corporation
serving at various periods as Senior Vice President or Managing  Director in the
Energy/Utilities  Group, Corporate  Finance and Banking  Department and Special
Industries Department.  Mr. Anderson holds a BS degree in Finance and Management
from the  University of Southern  California  and an MBA from  California  State
University, Long Beach.

         JAMES R.  EVANS  has been a  Director  of  Capital  Title  Group  since
September  1996.  Since 1980, Mr. Evans has been the Chairman and  President of
Sunrise  Preschools, Inc. Sunrise  Preschools is a public company that operates
and provides management contracts for child care centers offering  comprehensive
child care services  primarily for children ages six weeks to twelve years. From
1960 to 1980, Mr. Evans was an executive  with  Smitty's, a major  grocery and
general merchandise  retailer in Phoenix, Arizona.  While employed by Smitty's,
Mr.  Evans  was   responsible  for  opening  a  number  of  new  facilities  and
participated in the sale of the corporation in 1981.


                                       38
<PAGE>

         THEO F. LAMB is co-founder of Capital Title and has served as a
Director since its inception. Mr. Lamb has been a Director of the Company since
the Acquisition Transaction in May 1996. He is the owner of Lamb Chevrolet, Inc.
in Prescott, Arizona, a retail car dealership for Cadillac, Oldsmobile,
Chevrolet, Subaru and Nissan automobiles. He has served as a member of the
Chevrolet and Subaru National Dealer Counsels and was elected to the Regional
Dealer Counsels for Oldsmobile and Cadillac. He was the managing partner in
several successful land and commercial property developments in the Prescott
area. Mr. Lamb is a graduate of Southern Methodist University holding a BS
degree in Business.

         ROBERT B. LIVERANT is a retired Chartered Accountant who was a Senior
Partner in the Firm of Liverant Yip and Co. in British Columbia for 20 years,
specializing in audits of public companies. Mr. Liverant was also a partner in
the firm of Smythe Ratcliffe and Associates and a member of the firm of Pannell
Kerr Forester, an international accounting firm. Mr. Liverant has several real
estate investments including significant holdings in Saturna Beach Estates LTD,
an 80-acre recreation and vineyard development in British Columbia, for which he
also serves as a director. He has served as a director of more than 15 Canadian
public companies. Mr. Liverant holds a BA degree with an economics major from
the University of British Columbia. He now resides in Cave Creek, Arizona.

         STEPHEN A.  MCCONNELL  has been a Director of Capital Title Group since
September  1996.  He is the  President of Solano  Ventures, a firm  involved in
private capital  investments.  He has served since 1991 as Chairman of the Board
and  majority  shareholder  in  Mallco  Lumber &  Building  Materials, Inc., a
wholesale  distributor of construction  lumber and doors. From 1991 to 1995, Mr.
McConnell  was President of Belt Perry  Associates, Inc., a property tax appeal
firm.  He was  President  and Chief  Executive  Officer  of N-W Group, Inc., a
publicly held  corporation, from 1985 through  1991.  Mr.  McConnell  presently
serves on the board of a number of public  companies.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         Section 16(a) of the Exchange Act requires the  Company's  officers and
directors, and persons who beneficially own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the SEC.  Officers, directors and greater than 10%  shareholders
are required by Exchange Act  regulations  to furnish the Company with copies of
all Section 16(a) forms they file.

         The Company filed a Form 10-SB with the Securities  Exchange Commission
on September 24, 1996, which became effective under the Securities  Exchange Act
of 1934 on November 25, 1996. The Company's officers, directors and persons who
beneficially own 10% or more of the Company's common stock were required to file
Form 3's with the Securities and Exchange  Commission on or before the effective
date of the Form 10-SB. Such persons failed to timely file their respective Form
3's.

                                       39
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

         The following table summarizes all  compensation  paid to the Company's
Executive Officers (the "Named Executive Officer"), for services rendered in all
capacities to Capital Title during the fiscal years ended October 31, 1996, 1995
and 1994.

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE

                                                                Long Term Compensation
                                                          -------------------------------
                                  Annual Compensation            Awards            Payouts
                           ------------------------------ ----------------------   -------
                                                          Restricted   Securities
     Name and      Fiscal                    Other Annual    Stock     Underlying    LTIP   All Other
Principal Position  Year   Salary    Bonus   Compensation  Award(s)    Option(s)   Payouts Compensation
------------------  ----   ------    -----   ------------  --------    ---------   ------- ------------
<S>                 <C>   <C>         <C>        <C>         <C>         <C>        <C>     <C> 
Donald R. Head      1996  $64,000     $0         $-0-        $-0-          0         $-0-      $-0-
Chairman of the
Board and Chief     1995  $48,000     $0         $-0-        $-0-          0         $-0-      $-0-
Executive Officer
                    1994  $38,000     $0         $-0-        $-0-          0         $-0-      $-0-
</TABLE>

COMPENSATION OF DIRECTORS

         Directors  who are not employees of the Company are entitled to receive
$12,000  annually as a retainer, $1,000 per meeting attended (with a minimum of
four meetings annually), $250 for each telephonic meeting, plus reimbursement of
reasonable  expenses.  Directors who are employees of the Company do not receive
compensation  for such services.  Directors who are not employees of the Company
also participate in the Company's Non-Employee Directors Stock Option Plan.

EMPLOYMENT CONTRACTS

         DONALD R. HEAD:

         On June 1, 1996, Donald R. Head entered into an  Employment  Agreement
with the Company, which  provides for his services as Chairman of the Board and
Chief  Executive  Officer (the "Head  Agreement").  The initial term of the Head
Agreement  expires on May 31, 2001.  The Head  Agreement is subject to automatic
renewal for additional ten-year terms on the initial expiration date and on each
renewal date  thereafter  unless notice of  termination  is provided to Mr. Head
sixty days prior to the expiration  date or if Mr. Head provides  written notice
of resignation  to the Board sixty days prior to the  expiration  date. The Head
Agreement  may be  terminated  by the  Company  for  cause  including  upon  (i)
conviction of a willful or  intentional  crime, (ii) absence from work for more
than 180 consecutive  days and (iii) the material failure by Mr. Head to perform
his duties.

         The Head  Agreement  provides for an initial  salary of $96,000 for the
first year and an annual  salary of $150,000 for the second and each  succeeding
year, plus an annual bonus equal to 6% of the  Company's  pretax net profits on
all Company  operations, calculated  according to generally accepted accounting
principles  applicable to title insurance agencies  consistently  applied.  Such
bonus shall be prorated in the first year of employment for the period remaining
in the  Company's  fiscal year if less than twelve  months.  Such bonus shall be
determined  and paid within three months  following the end of each fiscal year.


                                       40
<PAGE>

Beginning with the second year of employment, estimated compensation can be paid
with appropriate adjustments spread over twelve months in the event of any under
or over estimated payments.  In addition, the Head Agreement provides for a car
allowance of $800 per month.

         The Head  Agreement  provides  that if Mr. Head  resigns or if the Head
Agreement  is  terminated  by the  Company for any reason  during a  sixty-month
period following a  Change-in-Control  (as defined in the Head Agreement) of the
Company, the Company shall continue to pay to Mr. Head all compensation which he
is entitled to under the Head Agreement for its remaining term.

         ANDREW A. JOHNS:

         On June 1, 1996, Andrew A. Johns entered into an Employment  Agreement
with the Company, which  provides  for his  services as  President  (the "Johns
Agreement").  The initial term of the Johns  Agreement  expires on May 31, 2001.
The Johns  Agreement is subject to  automatic  renewal for  additional  ten-year
terms on the initial  expiration date and on each renewal date thereafter unless
notice  of  termination  is  provided  to Mr.  Johns  sixty  days  prior  to the
expiration  date. The Johns Agreement may be terminated by the Company for cause
including upon (i) conviction of a willful or  intentional  crime, (ii) absence
from work for more than 180 consecutive  days and (iii) the material  failure by
Mr. Johns to perform his duties.

         The Johns  Agreement  provides for an initial salary of $72,000 for the
first year and an annual  salary of $114,000 for the second and each  succeeding
year, plus an annual bonus equal to 4% of the  Company's  pretax net profits on
all Company  operations, calculated  according to generally accepted accounting
principles  applicable to title insurance agencies  consistently  applied.  Such
bonus shall be prorated in the first year of employment for the period remaining
in the  Company's  fiscal year if less than twelve  months.  Such bonus shall be
determined  and paid within three months  following the end of each fiscal year.
Beginning with the second year of employment, estimated compensation can be paid
with appropriate adjustments spread over twelve months in the event of any under
or over estimated payments. In addition, the Johns Agreement provides for a car
allowance of $800 per month.

         The Johns Agreement  provides that if Mr. Johns resigns or if the Johns
Agreement  is  terminated  by the  Company for any reason  during a  sixty-month
period  following  a  Change-in-Control  (as  defined in the  Agreement)  of the
Company, the Company shall continue to pay to Mr. Johns all compensation  which
he is entitled to under the Johns Agreement for its remaining term.

         JAMES A. CLIFFORD:

         On May 17, 1996, James A. Clifford entered into an Employment Agreement
(the "Clifford Agreement") with the Company. The Clifford Agreement was based on
certain  conditions  which were met on July 1, 1996, the effective  date of the
Clifford  Agreement, which  provides  for his  services as President of Capital
Title Agency's Maricopa County operations. The term of the Clifford Agreement is
for a period of three (3) years.  Compensation  under the Clifford  Agreement is
$120,000 per year plus additional compensation equal to five percent (5%) of the
Company's pre-tax net profit on operations in Maricopa County.

                                       41
<PAGE>

         JAMES P. STAMAS:

         On July 22, 1996, James P. Stamas entered into an Employment  Agreement
(the "Stamas  Agreement")  with the Company, which provides for his services as
Executive Vice  President/General  Counsel for general  business  operations for
Maricopa  County.  The term of the Stamas Agreement is for a period of three (3)
years. Compensation under the Stamas Agreement is $75,000 per year.

         NICK VELIMIROVICH:

         On May 17, 1996, Nick Velimirovich entered into an Employment Agreement
(the "Velimirovich  Agreement") with the Company. The Velimirovich Agreement was
based on certain  conditions  which were met on July 1, 1996, the effective date
of the  Velimirovich  Agreement, which  provides  for  his  services  as  Chief
Executive Officer of Capital Title Agency's Maricopa County operations. The term
of the Velimirovich  Agreement is for a period of three (3) years.  Compensation
under  the   Velimirovich   Agreement  is  $120,000  per  year  plus  additional
compensation  equal to five percent (5%) of the Company's  pre-tax net profit on
operations in Maricopa County.

STOCK OPTION PLANS

         1996 STOCK OPTION PLAN

         The Company's  1996 Stock Option Plan (the "1996 Plan")  authorizes the
Board  to grant  options  to  employees  of the  Company  to  purchase  up to an
aggregate of 1,000,000  shares of Common Stock.  Officers and other employees of
the Company who, in the opinion of the Board of Directors, are  responsible for
the continued  growth and development  and the financial  success of the Company
are  eligible  to be  granted  options  under  the  1996  Plan.  Options  may be
non-qualified  options, incentive  stock  options, or any  combination  of the
foregoing. In general, options granted under the 1996 Plan are not transferable
and expire five years after the date of grant.  The per share  exercise price of
an incentive  stock option  granted under the 1996 Plan may not be less than the
fair  market  value of the Common  Stock on the date of grant.  Incentive  stock
options  granted  to persons  who have  voting  control  over 10% or more of the
Company's  capital  stock are  granted at 110% of the fair  market  value of the
underlying  shares on the date of grant. No option may be granted after December
31, 2006.

         The 1996 Plan  provides the Board of Directors  with the  discretion to
determine  when  options  granted  thereunder  will become  exercisable.  Unless
otherwise provided, 50% of the options granted may be exercised after two years
from the date of grant and the  remaining  50% of the options  may be  exercised
after  three  years from the date of grant at any time prior to  expiration, so
long as the optionee  remains  employed by the Company.  No option granted under
the 1996 Plan is  transferable by the optionee other than by will or the laws of
descent and distribution, and each option is exercisable during the lifetime of
the optionee only by the optionee.

                                       42
<PAGE>

         As of December 31, 1996, the Board has  authorized the grant under the
1996 Plan of  options  to  purchase  937,600  shares of Common  Stock, with the
exercise  prices of all such  options  being $1.00 per share.  Of such  options,
60,000  were  granted to Mr.  Head, 40,000  were  granted  to Mr.  Johns and an
aggregate  of  470,000  were  granted  to the other  executive  officers  of the
Company.

         NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

         The Company also has a  Non-Employee  Directors  Stock Option Plan (the
"Directors  Plan"), under which only  non-employee  directors  are  eligible to
receive  options.  Options to purchase up to 100,000  shares are  authorized for
issuance under the Directors Plan. As of December 31, 1996, 75,000 options have
been granted under the Directors  Plan at an exercise  price of $1.00 per share.
All options granted under the Directors Plan will be subject to the same vesting
schedule  applicable to options granted under the 1996 Plan. All options granted
or to be granted under the Directors Plan are non-qualified stock options.

         Each  non-employee  director  who  joins the  Board of  Directors  will
receive an option to acquire  15,000  shares of the Company's  Common Stock.  In
addition to the foregoing option grants, each year, every non-employee  director
automatically  receives  an option to  acquire  10,000  shares of the  Company's
Common Stock on the third  business day following the date the Company  publicly
announces its annual financial results; provided that such director has attended
at  least  75% of the  meetings  of the  Board  of  Directors  and of the  Board
Committees  of which such  non-employee  director  is a member in the  preceding
fiscal year. The exercise price of all options  granted under the Directors Plan
is the fair market value of the Company's Common Stock on the date of grant.

         No option  granted  under the  Directors  Plan is  transferable  by the
optionee  other than by will or the laws of descent and  distribution, and each
option is exercisable during the lifetime of the optionee only by the optionee.


                                       43
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The following table sets forth the beneficial ownership of shares of
Common Stock of the Company as of December 31, 1996 by each director and 
executive officer, by all directors and executive officers as a group and by all
persons known by the Company to be the beneficial owners of more than 5% of the
Company's Common Stock.

<TABLE>
<CAPTION>
                                                         Number of Shares        Percent of
Name and Address                                        Beneficially Held(1)      Ownership
----------------                                        --------------------      ---------
<S>                                                      <C>                       <C> 
Donald R. Head(2)                                             2,827,345(3)           24.7%

Andrew A. Johns                                                 963,502               9.3%

Theo F. Lamb(4)                                               2,225,205              21.6%

Robert B. Liverant                                              100,000               1.0%

Stephen A. McConnell                                             50,000                .5%

James R. Evans                                                   25,000                .2%

Dorothy Eichbaum, Trustee of The William and Dorothy Orth       603,791               5.9%
Eichbaum Trust Dated November 19, 1986

John M. Redfield, Jr. And Linda N. Redfield, as Trustees        600,490               5.9%
under a Revocable Declaration of Trust dated October 29, 1982

Mark A. Scharmann                                               606,833               5.9%

Irwin Jacobson                                                  520,833               5.0%

Miller Capital Corporation(5)                                   590,000               5.7%

All directors and executive officers as a group (12           6,191,052              60.0%
persons)
</TABLE>
----------
(1)   Does not include options to purchase shares of the Company's Common
      Stock, none of which are currently vested.  See "Executive Compensation."

(2)   Shares beneficially held in The Head Revocable Trust Dated April 1, 1975.

(3)   Includes 301,895 and 300,245 shares of Common Stock which Mr. Head
      has options to purchase from The William and Dorothy Eichbaum Trust
      dated November 19, 1986 and from John N. Redfield, Jr. and Linda N.
      Redfield, respectively, anytime during the period ending May 23, 1999
      for $.52 per share.

(4)   Shares beneficially held in The Lamb Trust Dated October 11, 1983.

(5)   Capital Title has entered into a financial advisory agreement with
      Miller Capital Corporation dba The Miller Group ("TMG") pursuant to
      which TMG provides certain financial advisory, valuation business
      planning, consulting and other services. Under the financial advisory
      agreement, TMG purchased 590,000 shares of the Company's Common Stock
      for a total of $100 upon completion of the Acquisition Transaction. In
      connection with a private placement by the Company of a maximum of
      1,500,000 shares at a price of $1.00 per share (the "Private
      Placement"), TMG is entitled to receive an amount equal to 7% of the
      gross proceeds of the Private Placement.

                                       44
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In January 1996, Capital Title assumed a 10% note from PWCC, Inc. to
Bank One Arizona, NA in the amount of $150,000. At October 31, 1996, the balance
of the note was $131,974. The terms of the note require Capital Title to make
sixty equal monthly installment payments to Bank One Arizona, NA in the amount
of $3,187.05. In consideration of such assumption, PWCC contributed $150,000 to
Capital Title. PWCC, Inc. is a corporation wholly owned equally by Mr. Head and
Mr. Lamb.

         During  fiscal 1996 and 1995, Capital  Title  Agency paid  $43,319 and
$86,546, respectively, to Dale A. Head for legal services  rendered to Capital
Title Agency. Dale A. Head is Donald R. Head's brother. In September, 1996, the
Company  granted  an option to Dale A. Head to acquire  20,000  shares of Common
Stock of the Company at an exercise price of $1.00 per share.

         Theo F. Lamb has advanced  the Company  $8,000 for  operating  purposes
pursuant to a Note  Agreement.  The eight and a half percent  (8.5%) note is due
October 31, 1997 and is unsecured.

         Donald R. Head has advanced the Company  $8,000 for operating  purposes
pursuant to a Note  Agreement.  The eight and a half percent  (8.5%) note is due
October 31, 1997 and is unsecured.

         The Company  receives  management  and  consulting  services  from Head
Management Group, a Company owned by Donald R. Head.  Charges for these services
were $48,000 and $48,000 for the years ended October 31, 1996 and 1995.

         The Company has a lease with PWCC, Inc.  for computer  equipment.  The
balance owed under this lease as of October 31, 1996 and 1995 was $0 and $1,582,
respectively.  During  fiscal 1995, the Company paid $38,244 in lease  payments
relating to the computer equipment.


                                       45
<PAGE>


ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-16

(a) Index to Exhibits
<TABLE>
<CAPTION>
                                                                       Method of
Exhibit No.      Description                                            Filing
-----------      -----------                                            ------
<S>                                                                     <C>
2          Share Exchange Agreement between Capital Title Agency, Inc.     **
           and Norvex, Inc. dated May 23, 1996 

   3.1     Certificate of Incorporation                                    **

   3.2     Amended and Restated Bylaws                                     **

  10.1     Underwriting Agreement between Capital Title Agency, Inc.       **
           and Old Republic National Title Insurance Company 
           dated March 1, 1996

  10.2     Underwriting Agreement between Capital Title Agency, Inc.       **
           and First American Title Insurance Company dated August 16, 1996

  10.3     Image Service Agreement between Capital Title Agency, Inc.      **
           and Security Union Title Insurance Company dated June 5, 1996

  10.4     Title Plant Service Agreement between Capital Title             **
           Agency, Inc. and Diversified Information Services 
           Corporation dated March 1, 1996

  10.5     Office Lease between Capital Title Agency, Inc. and             **
           4808 Corporation dated June 7, 1996

  10.6     Promissory Note between PWCC, Inc. and BankOne Arizona, NA      **
           dated January 5, 1996

  10.7     Assumption Agreement between Capital Title Agency, Inc. and     **
           PWCC, Inc. dated January 5, 1996

  10.8     Employment Agreement between Capital Title Group, Inc. and      **
           Donald R. Head dated June 1, 1996

  10.9     Employment Agreement between Capital Title Group, Inc. and      **
           Andrew A. Johns dated June 1, 1996

 10.10     Employment Agreement between Capital Title Agency, Inc. and     **
           James A. Clifford dated May 17, 1996

 10.11     Employment Agreement between Capital Title Agency, Inc. and     **
           James P. Stamas dated July 22, 1996
</TABLE>

                                       46
<PAGE>
<TABLE>
<CAPTION>
<S>        <C>                                                                        <C>
 10.12     Employment Agreement between Capital Title Agency, Inc.         **
           and Nick Velimirovich dated May 17, 1996

 10.13     Financial Advisor Agreement between Capital Title Agency, Inc.  ***
           and Miller Capital Corporation dated May 23, 1996

   11      Statement re: Computation of Per Share Earnings                 *

  16.1     Letter from Duane V. Midgley dated September 23, 1996           **

  16.2     Letter from Schvaneveldt & Company dated September 23, 1996     **

  16.3     Letter from John E. Jones dated September 23, 1996              **

   21      Subsidiaries                                                    **

   24      Consent of Semple & Cooper PLC                                  *

   27      Financial Data Schedule                                         *
</TABLE>
----------
*    Filed herewith

**   Incorporated by reference to Form 10-SB filed with the Securities
     and Exchange Commission on September 20, 1996.

***  Incorporated  by reference to Amendment No. I to Form 10-SB filed with the
     Securities  and Exchange  Commission on January 9, 1997.

(b)  Reports on Form 8-K

         On December 12, 1996, the  Registrant  filed a Form 8-K  reporting its
decision to change the Company's year end from October 31 to December 31.


                                       47
<PAGE>

                                   SIGNATURES


         In accordance  with Section 13 or 15(d) of the Securities  Exchange Act
of 1934, the  registrant  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                                 CAPITAL TITLE GROUP, INC.

                                                 By  /s/ Donald R. Head
                                                   -------------------------
                                                     Donald R. Head
                                                     Chief Executive Officer
Date:  January 29, 1997


         In accordance with the  requirements  of the Securites  Exchange Act of
1934, this report has been signed below by the  following  persons on behalf of
the Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
     Signatures                   Title                                                         Date
     ----------                   -----                                                         ----
<S>                      <C>                            <C>                             <C>
Donald R. Head            Chairman of the Board
                                   and
                          Chief Executive Officer        /s/ Donald R. Head          January 29, 1997
                                                         ---------------------------

Andrew A. Johns             President, Director          /s/ Andrew A. Johns         January 29, 1997
                                                         ---------------------------
Michael J. Benjamin      Vice President, Controller
                          (Principal Financial and       /s/ Michael J. Benjamin     January 29, 1997
                             Accounting Officer)         ---------------------------
                             

Jeffrey P. Anderson              Director                /s/ Jeffrey P. Anderson     January 29, 1997
                                                         ---------------------------
James R. Evans                   Director                /s/ James R. Evans          January 29, 1997
                                                         ---------------------------
Theo F. Lamb                     Director                /s/ Theo F. Lamb            January 29, 1997
                                                         ---------------------------
Robert B. Liverant               Director                /s/ Robert B. Liverant      January 29, 1997
                                                         ---------------------------
Stephen A. McConnell             Director                                            January   , 1997
                                                         ---------------------------
</TABLE>

                                       48