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

                                   FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE 
    ACT OF 1934
                  For the fiscal year ended: December 31, 1996

                                       or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
        For the transition period from               to
                                      ---------------  --------------

                         Commission file Number: 0-4563

                             THE ENCORE GROUP, INC.
                                  PO Box 69536
                             Portland, Oregon 97201

               I.R.S. Employer Identification Number: 93-0580867
                      Incorporated in the State of Oregon
                        Telephone number: (503) 221-4255


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

                         Common Stock, without par value
                                (Title of class)

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

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

        State issuer's revenues for its most recent fiscal year: $748,660

        State  the   aggregate   market  value  of  the  voting  stock  held  by
nonaffiliates computed by reference to the price at which the stock was sold, or
the average bid and asked prices of such stock, as of a specified date within 60
days  prior to the  date of  filing:     nil      aggregate  market  value as of
December 31, 1996, based on the fact that no stock was traded.    

        Indicate  the  number  of  shares  outstanding  of each of the  issuer's
classes of common equity,  as of the latest  practicable  date:  9,820 shares of
Common Stock, without par value, on May 2, 1997.

                                   ----------

The total number of pages contained in this Form 10-K is 29.
The Exhibit Index is located at sequentially numbered page 15.
<PAGE>
                               INDEX TO FORM 10-K

                      For the year ended December 31, 1996



                                     PART I                          Page
                                                                     ----

Item 1.     Business                                                   3

Item 2.     Properties                                                 4

Item 3.     Legal Proceedings                                          4

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


                                 PART II

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

Item 6.     Selected Financial Data                                    6

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

Item 8.     Financial Statements and Supplementary Data                7

Item 9.     Changes in and Disagreements with Accountants on
            Accounting and Financial Disclosure                        7


                                PART III

Item 10.    Directors and Executive Officers of the Registrant         8

Item 11.    Executive Compensation                                    10

Item 12.    Security Ownership of Certain Beneficial Owners and
            Management                                                13

Item 13.    Certain Relationships and Related Transactions            14


                                 PART IV

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

Index to Exhibits                                                     15
Financial Statements                                                  F-1
<PAGE>
PART I

ITEM 1.   DESCRIPTION OF BUSINESS

Company Overview
----------------
     
         As of this report,  Registrant ("Encore") is defunct, with insufficient
assets to meet its obligations. Registrant's only operating subsidiary, VDO-Pak,
Inc.,  Port Orange,  Florida,  ceased  operations in August 1996. The Registrant
ceased operations in November 1996.  Subsequently,  on February 28, 1997, Encore
vacated its leased  premises at 4800 SW Macadam,  Suite 100,  Portland,  Oregon.
Encore  currently  utilizes a post  office box and a telephone  voice  messaging
service for its communications.

         Encore is the  successor  corporation  of American  Guaranty  Financial
corporation   (formerly  American  Guaranty  Life  Insurance   Company),   which
originally  experienced financial  difficulties beginning in the late 1970's due
to  extremely  unprofitable  investments  in  ill-chosen  development  projects.
Although  the  Registrant  was  once  a  company  of  sizable  proportions,  the
unprofitable  investments were disastrous.  In 1989 the net worth of the company
was  essentially  depleted.  In  addition  to the  losses,  the company was also
involved in substantial litigation regarding failed operations.

         In 1989  approximately  one-third  of  Registrant's  common  stock  was
acquired by Bruce L. Engel. New management was installed and efforts were set in
motion to resolve the  litigation and rebuild the company.  Registrant  acquired
VDO-Pak,  Inc., Port Orange,  Florida,  a supplier of power packs,  rechargeable
batteries and accessories for cellular telephones.  A bank loan of approximately
$1,200,000 was arranged,  secured by VDO-Pak's assets,  accounts  receivable and
inventory. The loan, from the Bank of California, now known as the Union Bank of
California, was guaranteed by registrant's controlling shareholder.

         Also in 1989, Registrant acquired Vidcom Manufacturing,  Inc., Livonia,
Michigan, a fabricator of nickel-cadmium  batteries for cellular phones. In 1991
Vidcom Manufacturing, Inc. was closed due to the lack of a customer base.

         Registrant changed its name to The Encore Group, Inc. in 1990.

         From 1992 through 1995 Registrant conducted a series of activities
devoted to clearing up unresolved legal matters and attempting to strengthen the
company. In 1995, Encore approached the bank and offered to satisfy the loan on
a reduced and modified basis. Throughout the calendar year 1996 the bank gave
continuing assurances that the settlement proposal would be accepted. Based upon
these statements, Encore continued operating VDO-Pak and prepared to attract new
capital by securing shareholder approval of a 1 for 500 reverse stock split. In
the second half of 1996 the bank reneged on its acceptance of the restructuring
proposal.

                                       3

<PAGE>
         On  December  6, 1996,  the bank  reversed  itself  again and granted a
settlement.  However, by this time both VDO-Pak,  Inc. and Encore were shut down
and insolvent.

Future Efforts to Revive the Business.
--------------------------------------

         Registrant's  controlling  shareholder is working to revive the company
by settling the claims of the creditors.  These creditors include trade vendors,
the Internal Revenue  Service,  and the Pension Benefit  Guarantee  Corporation.
Should  these  settlement  arrangements  be  made,  it  will be  necessary  for
Registrant  to secure  working  capital  to fund the  arrangements.  There is no
assurance that this effort will succeed.


ITEM 2. DESCRIPTION OF PROPERTIES

         The company has no facilities or premises.  Vacant land, carried on the
books as "Land held for sale" was sold in 1997, subsequent to this report.


ITEM 3. LEGAL PROCEEDINGS

         The Company is not currently subject to any material litigation nor, to
the  Company's  knowledge,  is any material  litigation  threatened  against the
Company.


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

         On April 23, 1996, the shareholders  approved a 1 for 500 reverse stock
split, in accordance with the Proxy Statement issued February 28, 1996.

                                       4

<PAGE>
PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Price Range of Common Stock:
                                   1996                1995
                              ---------------     --------------- 
                               High      Low       High      Low
                              -----     -----     -----     ----- 
          First Quarter       $0.05     $0.05     $0.06     $0.05
          Second Quarter         Not traded        0.06     $0.06
          Third Quarter          Not traded        0.06     $0.05
          Fourth Quarter         Not traded        0.05     $0.05


         In   conformance   with  the  reverse  stock  split   approved  by  the
shareholders on April 23, 1996,  shareholders  with less than 500 shares had the
right to receive $0.10 per share for their holdings.

         The source of the above  quotations is published by the National  Daily
Quotation  Service  known as "the  pink  sheets",  and may  reflect  interdealer
prices,  without  mark-up,  mark-down  or  commission,  and may not  necessarily
represent actual transactions.

         No dividends have been paid since a 1983 stock dividend, and no cash or
other dividends are contemplated for the foreseeable future.

         The number of outstanding shares of the Registrant's common stock as of
May 2, 1997,  after giving  effect to the  1-for-500  reverse  stock split,  was
9,820.

         As of May 2, 1997,  there were 202 record  holders of the  Registrant's
common stock.

                                       5

<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

             (In thousands, except per share amounts)
<TABLE>
<CAPTION>
                          1996        1995         1994         1993         1992          1991
                        --------    --------    ---------    ---------    ---------     --------
<S>                     <C>         <C>         <C>          <C>          <C>
Sales                   $   749     $ 2,015     $  3,113     $  2,919     $  3,590      $  4,213
                        ========    ========    =========    =========    =========     ========


Net income (loss)       $   693     $  (384)    $     55     $   (193)    $    134 (1)  $   (642) (1)
                        ========    ========    =========    =========    =========     =========  

Net income (loss) per
  common share:         $   .07     $  (.06)    $    .01     $   (.03)    $    .02      $   (.10)
                        ========    ========    =========    =========    =========     =========

Cash                    $    10     $     8     $     31     $     30     $     36      $     27
Fixed assets, net            15           8           19           42           59            76
Other assets                  9       1,036        1,304        1,391        1,630         1,732
                        --------    --------    ---------    ---------    ---------     --------

   Total assets         $    34     $ 1,052     $  1,354     $  1,463     $  1,725      $  1,835
                        ========    ========    =========    =========    =========     ========

Current liabilities     $   294     $ 1,709     $  1,645     $  1,849     $  1,918      $  2,162
Pension liability           267         248          176          105          105           105
                        --------    --------    ---------    ---------    ---------     --------

    Total liabilities   $   561     $ 1,957     $  1,821     $  1,954     $  2,023      $  2,267
                        ========    ========    =========    =========    =========     ========
Total
  stockholders deficit  $  (527)    $  (905)    $   (467)    $   (491)    $   (298)     $   (432)
                        ========    ========    =========    =========    =========     =========

Cash dividends per common
  share                 $  -        $  -        $   -        $   -        $   -         $   -
                        ========    ========    =========    =========    =========     =====
</TABLE>


--------
(1)  In 1991, the Company ceased  operations and liquidated the remaining assets
of Vidcom Manufacturing, Inc. (Vidcom),  a wholly  owned  subsidiary  located in
Livonia,  Michigan.  Vidcom's  liquidation resulted in a restructuring charge of
$323 in the year ended December 31, 1991.  During 1992, Vidcom was dissolved and
its remaining obligations were discharged,  resulting in a restructuring gain of
$217 in the year ended December 31, 1992.

                                       6

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

         During 1995 the Company  advanced the majority  shareholder  $87.5,  of
which $13 was repaid.  Subsequent to the 1995 year-end,  the  shareholder  began
working with the Bank of California to restructure his personal debts as well as
the  Company's  debt.  There  was no  guarantee  that the  shareholder  would be
successful in his efforts to restructure the debt, and the Company  reserved for
the entire balance of $74.5 at December 31, 1995. This reserve was recorded as a
non-operating  expense.  This note was  written  off on  December  6,  1996,  in
recognition of the insolvency of the majority shareholder.

         On December 6, 1996,  the Union Bank of  California  (successor  to the
Bank  of  California)  entered  into a  Settlement  Agreement  with  Registrant,
Registrant's  wholly-owned subsidiary,  VDO-Pak, Inc., and Registrant's majority
shareholder. This Settlement Agreement discharges all obligations under the note
in  exchange  for 1,005  shares  of Encore  common  stock  held by the  majority
shareholder.  Other  provisions  of  the  Settlement  Agreement  pertain  to the
majority shareholder.  Registrant gave effect to this transaction as of December
31, 1996.  The entire profit for 1996 was due to the loan settlement.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The financial  statements and supplementary  data required by this Item
are  included  on  pages  F-1 to F-16 of this  Annual  Report.  These  financial
statements are unaudited.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
        ACCOUNTING AND FINANCIAL DISCLOSURE

         Not applicable.




                                       7

<PAGE>
PART III

 
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The Registrant's  Restated Articles of Incorporation and Bylaws provide
for a Board of Directors  consisting  of not less than three nor more than seven
directors, with the exact number within this range to be determined from time to
time only by the Board of  Directors.  The current  number of directors is five.
All directors stand for election annually. Officers are elected to a term of one
year or less, serve at the pleasure of the Board of Directors,  and are entitled
only to such compensation as is fixed by the Board.

         The Directors and Executive  Officers of the  Registrant as of December
31, 1995, are as follows:

                      Director  Officer    Positions and/or
Name                  Since     Since      Offices Held                     Age

Bruce L. Engel        1988      1991       Director; President and           56 
                                           Chief Executive

Teri E. Engel         1989      1989       Director; Corporate Secretary     47

Robert G. Fligg       1988         -       Director                          48

Fred J. Kupel         1995         -       Director                          67

Kenneth L. Wright     1995      1991       Director;                         47
                                           Executive Vice President and
                                           Chief Financial Officer

Note:  Mr. Wright resigned as an Officer and Director as of December 15, 1997

         The  following  family  relationships  exist  among  the  directors  or
executive  officers:  Bruce L. Engel and Teri E. Engel are husband and wife; Mr.
Fligg's spouse is a niece of Mr. Engel.

         Mr. Engel was elected  President and Chief  Executive  Officer on March
19, 1991.  For over five years,  Mr.  Engel's  principal  employment has been as
President and Chief Executive Officer of WTD Industries, Inc., Portland, Oregon,
a  manufacturer  of lumber whose  common stock is traded on the NASDAQ  national
market  system.  

         Ms. Engel has been a director and Secretary of the Company since 1989.
She served as an executive officer and a director of WTD Industries, Inc. from
1989 to 1994.

                                       8

<PAGE>
ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - Continued

         Mr. Fligg has been  employed  since March of 1991,  as Chief  Financial
Officer of Dee Forest Products,  Inc., in Hood River,  Oregon, a manufacturer of
hardboard.  He resigned as an Officer  March 22,  1991,  and was employed by the
Registrant as Corporate  Secretary  starting August 9, 1988.  Effective November
19, 1988, he was elected to the additional office of Vice President-Finance. Mr.
Fligg held both  positions  until June 30, 1989, at which time he was elected as
Vice President,  Treasurer and Assistant  Secretary.  Beginning in December 1986
and ending in March 1991, he served as Vice President, Treasurer of Encore.

         Mr. Fred J. Kupel has been an  independent  management  consultant  for
over  five  years.  Prior to 1989 he  served  as  Chief  Financial  Officer  and
Corporate  Development Officer for various public and private  corporations.  He
has served the Company as a consultant since 1993.

         Mr. Kenneth L. Wright was elected Executive Vice President on March 19,
1991.  Prior to that date he was an independent  management  consultant.  During
1987 and the balance of the prior five  years,  he was Chief  Operating  Officer
with Industrial Leasing  Corporation,  Portland,  Oregon, a lessor of industrial
equipment. Mr. Wright is also an Officer of Encore, serving as Vice President.
Mr. Wright resigned as an Officer and Director as of December 15, 1997

                                       9

<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE


                                                                          Long-Term Compensation
                                    Annual Compensation                     Awards          Payouts
      (a)             (b)      (c)       (d)       (e)         (f)           (g)         (h)        (i)
                                                                          Securities
                                                  Other                    Underly                  All
                                                  Annual    Restricted       ing                   Other
Name and                                         Compen-      Stock        Options/     LTIP       Comp-
Principal                    Salary     Bonus     sation     Award(s)        SARs      Payouts   ensation
Position             Year      ($)       ($)       ($)         ($)           (#)         ($)        ($)
-------------------  ----    ------     -----    -------    ----------    ---------    -------   ---------
<S>                  <C>     <C>        <C>      <C>        <C>           <C>          <C>       <C>
Bruce L. Engel, CEO  1996       -         -         -           -             -           -          -

                     1995       -         -         -           -             -           -          -

                     1994       -         -         -           -             -           -          -
</TABLE>

         No executive  officer received cash compensation from the Registrant in
1996 in excess of $100,000.

         Directors of the Registrant received no compensation for their services
as directors.

         The  Registrant  has a cash  bonus  plan for  officers  and  other  key
employees of the  Registrant  and for managers and employees of its  subsidiary.
Under the terms of the plan,  the  President  is eligible to receive a quarterly
bonus of 5% of pretax profits earned by the  Registrant  and/or its  subsidiary;
other officers and key employees share ratably on the basis of their base pay in
a quarterly bonus of 15% of consolidated pretax profits of the Registrant. Under
this plan, cash distributions of $0 were made during the year ended December 31,
1996,  and $11 were  paid in 1995.  Cash  bonuses  to  subsidiary  managers  and
employees  is  based  on a  percentage  of  subsidiary  pretax  profits  and are
distributed ratably each month.

                                       10

<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION - Continued

Pension Plan

         The Registrant has a defined  benefit  retirement  plan (the "Plan") in
which  participation  has been frozen since 1990.  Until 1990,  employees of the
Registrant  were  automatically  covered by the Plan  provided  they met certain
criteria.  Normal  retirement  under  the  Plan is the  first  day of the  month
following the employee's  65th  birthday.  An employee's  retirement  benefit is
determined  according  to his final  average  yearly pay over a  five-year  base
period,  years of service and covered  compensation.  An employee could elect to
retire  as  early  as 55,  but his  retirement  benefits  will be  reduced.  All
contributions  to  provide  benefits  under the Plan and all  expenses  are paid
entirely by the  Registrant.  A trust fund has been  established  to receive and
hold all Plan  contributions,  interest  and other  income  to pay the  benefits
provided by the Plan. There were no  contributions  made to the Plan in 1996 and
1995 for the Executive Officers named above.

         Below is a table  demonstrating  the general  method of  calculation of
benefits upon retirement using the average of the highest  compensation paid for
five  years,  exclusive  of a  portion  of the  lesser  of the  highest  average
compensation or covered compensation:

                          Years of Service
Remuneration    15         20         25         30         35
------------ --------   --------   --------   --------   --------
$   25,000   $  7,500   $  8,750   $ 10,000   $ 11,250   $ 11,250
    50,000     15,000     17,500     20,000     22,500     22,500
    75,000     22,500     26,500     30,000     33,750     33,750
   100,000     30,000     35,000     40,000     45,000     45,000
   150,000     45,000     52,500     60,000     67,500     67,500
   200,000     60,000     70,000     80,000     90,000     90,000


Stock Option Plan

         The  Registrant has a stock option plan for key employees and directors
that provides for the granting of incentive stock options (within the meaning of
Section 422A of the Internal  Revenue Code) or  nonqualified  stock options,  to
purchase  shares of the  Registrant's  common  stock at 100% of the fair  market
value at the date of the grant. The plan is administered by a committee of three
or more  disinterested  persons  designated  by the Board of  Directors,  and it
terminates  on the earlier of January 8, 1999 or the issuance of the full number
of shares  allocated.  The  aggregate  number of shares for which options may be

                                       11

<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION - Continued

granted under the plan is 1,400, subject to such adjustments as may be necessary
or  appropriate  upon  the  payment  of  stock  dividends  or by a  split-up  or
split-down of the stock.  Option shares are made  available  from the authorized
but  unissued  shares  of the  Registrant's  common  stock.  The  plan  includes
restrictions as to annual carryover limits on the fair market value of incentive
stock options,  as well as provisions  with respect to expiration,  cancellation
and the surrender of any repayment for exercisable options.

         All  options  granted  under the plan  through  December  31,  1996 are
nonqualified options, have a maximum duration of ten years, and are exercisable,
cumulatively,  in annual  increments of 20% commencing six months after the date
of the grant.

         As of  December  31,  1996,  no  options  have  been  granted  for  the
Registrant's  stock.  No options are  expected  to be issued in the  foreseeable
future.

                                       12

<PAGE>
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
          AND MANAGEMENT

         The  following  table sets  forth the number of shares of common  stock
beneficially  owned as of May 2,  1997 by (i)  persons  known  to be  beneficial
owners of more than five percent (5%) of the  Registrant's  common  stock,  (ii)
each of the directors,  and (iii) all officers and directors as a group.  Except
as otherwise  indicated by  footnote,  the owner has sole voting and  investment
power with respect to such shares.

                                               Amount and Nature
Name and Address of Beneficial Owner     of Beneficial Ownership(1)(2)   Percent
------------------------------------     -----------------------------   -------



                              Amount and Nature of           Percent
Beneficial Owner              Beneficial Ownership           of Class
--------------------------    --------------------           --------
Bruce L. and Teri E. Engel              3,017  (3)            30.72 %
Bruce L. Engel                            259                  2.64 %
Robert G. Fligg                           -                      -   
Fred J. Kupel                              40                   .41 %
Kenneth L. Wright                         562  (4)             5.72 %
                                    ---------                 -----
                                        
All Directors and Officers
  as a group (5 persons)                3,878  (5)            39.49 %
                                    =========                 =====


(1)  As  determined  by reference to the  transfer  agent's  report of May 2,
     1997, or the beneficial owner's most recent Form 4 or 13D filing.

(2)  Beneficial Ownership is calculated as of May 2, 1997.

(3)  Mr. and Mrs. Engel, whose business address is P.O. Box 5805,  Portland,  OR
     97228, own these shares jointly and share voting and investment power.

(4)  Shares  subject to option  under the  Registrant's  Stock  Option  Plan are
     deemed to be  outstanding  only for the purpose of computing the percent of
     class owned by the individual optionee.

(5)  Mr. Wright owns these shares  jointly with his spouse and shares voting and
     investment power.

                                       13

<PAGE>
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         During 1995 the Company  advanced the majority  shareholder  $87.5,  of
which $13 was repaid.  Subsequent to the 1995 year-end,  the shareholder,  being
unable  to repay  the Bank of  California  in  accordance  with the terms of the
obligation,  began  working  with  the Bank of  California  to  restructure  his
personal  debts as well as the Company's  debt.  There was no guarantee that the
shareholder  would be successful in his efforts to restructure the debt, and the
Company  reserved for the entire  balance of $74.5 at December  31,  1995.  This
reserve was recorded as a  non-operating  expense.  This note was written off on
December  6,  1996,  at the time the  majority  shareholder  settled  the note
payable to the Union Bank of California (successor to the Bank of California).

         On  December  6, 1996,  the Union  Bank of  California  entered  into a
Settlement  Agreement with  Registrant,  Registrant's  wholly-owned  subsidiary,
VDO-Pak, Inc., and Registrant's majority shareholder.  This Settlement Agreement
discharges all obligations under the note in exchange for 1,005 shares of Encore
common  stock  held  by  the  majority  shareholder.  Other  provisions  of  the
Settlement Agreement pertain to the majority shareholder. Registrant gave effect
to this transaction as of December 31, 1996.

PART IV


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)(1)     Financial Statements.  The Financial Statements are
           listed in the Index to Consolidated Financial
           Statements on page F-1 of this Annual Report.

(a)(2)     Exhibits:

Exhibit    Description

           27          Financial Data Schedule(1)

(b)        Reports on Form 8-K.  During the quarter ended
           December 31, 1996, the Company filed no reports on
           Form 8-K.
----------
           (1)  This  schedule  has  been  submitted  in  the  electronic   form
           prescribed by EDGAR.

                                       14

<PAGE>
                                   SIGNATURES


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

                            THE ENCORE GROUP, INC.



Date:  3/31/98              /s/ Bruce L. Engel
                            Bruce L. Engel
                            President, Principal Executive Officer and Director



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


Date:  3/31/98              
                            Kenneth L. Wright
                            Executive Vice President and Chief Financial Officer
                            Mr. Wright resigned as an Officer and Director as 
                            of December 15, 1997

Date:  3/31/98              /s/ Bruce L. Engel
                            --------------------
                            Bruce L. Engel
                            Director


Date:  3/31/98              /s/ Fred J. Kupel
                            --------------------
                            Fred J. Kupel
                            Director


Date:  3/31/98              /s/ Robert G. Fligg
                            --------------------
                            Robert G. Fligg
                            Director


Date:  3/31/98              /s/ Teri E. Engel
                            --------------------
                            Teri E. Engel
                            Secretary and Director


                                       14

<PAGE>
                             THE ENCORE GROUP, INC.

                               INDEX TO EXHIBITS

27  Financial Data Schedule

    This schedule has been submitted in the electronic form [rescribed by EDGAR.







                                       15

<PAGE>
                             The Encore Group, Inc.
                   Index to Consolidated Financial Statements
                                  (Unaudited)
                                     -------




                                                                    Page
                                                                    ----
Consolidated Balance Sheet as of December 31, 1996                   F-1

Consolidated Statements of Income for the years ended
     December 31, 1996 and 1995                                      F-2

Consolidated Statements of Changes in Shareholders' Equity
     (Deficit) for the years ended December 31, 1996 and 1995        F-3

Consolidated Statements of Cash Flows for the years ended
     December 31, 1996 and 1995                                      F-4

Notes to Consolidated Financial Statements                           F-5





<PAGE>
                      THE ENCORE GROUP, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)



                                                        DECEMBER 31,
                                                  1996              1995
                                               -----------       ----------
ASSETS

CURRENT ASSETS
     Cash                                      $       10        $        8
     Accounts receivable, net                          (1)              291
     Inventory                                          0               200
     Prepaid expenses                                  10                23
                                               -----------       ----------

                  Total current assets                 19               522
                                               -----------       ----------

NON-CURRENT ASSETS
     Land held for sale                                15                15
     Fixed assets, net                                  0                 8 
     Goodwill, net                                      0               507
                                               -----------       ----------

                                                       15               530
                                               -----------       ----------

     Total assets                              $       34        $    1,052
                                               ===========       ==========


LIABILITIES AND STOCKHOLDERS' DEFICIT          

CURRENT LIABILITIES
     Accounts payable                          $      275        $      371
     Accrued liabilities                               19               100
     Note payable                                       0             1,238
                                               -----------       ----------

                  Total current liabilities           294             1,709

PENSION LIABILITIES                                   267               248
                                               -----------       ----------

                  Total liabilities                   561             1,957
                                               -----------       ----------

STOCKHOLDERS' DEFICIT
     Common stock  without  par  value,  
stated  value $1 per share,  
10,000,000 shares authorized; 
6,156,110 shares issued,
       6,112,848 outstanding                        6,113             6,113
     Additional paid-in capital                    20,975            20,975
     Retained deficit                             (27,458)          (27,836)
     Pension liability adjustment                    (157)             (157)
                                               -----------       -----------

                  Total stockholders' deficit        (527)             (905)
                                               -----------       -----------

     Total liabilities and 
          stockholders' deficit                $       34        $    1,052
                                               ===========       ==========

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

                                       F-1

<PAGE>
<TABLE>
<CAPTION>
                      THE ENCORE GROUP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except share and per share data)





                                                             YEAR ENDED DECEMBER 31,
                                                       1996             1995             1994

<S>                                                <C>              <C>               <C>      
SALES                                              $     749        $   2,015         $   3,113

LESS COST OF SALES                                       756            1,283             1,965
                                                   ----------       ----------        ---------

GROSS PROFIT                                              (7)             732             1,148
                                                   ----------       ----------        ---------

SELLING, GENERAL & ADMINISTRATIVE EXPENSES               339              808               998
                                                   ----------       ----------        ---------

         Operating income (loss)                        (346)             (76)              240 
                                                   ----------       ----------        ----------

NON-OPERATING REVENUES & EXPENSES
     Other income                                         -                -                  1
     Write-down of real estate investment                 -               (45)               -
     Settlement of note payable and adjustments        1,049
     Other expense                                        -              (112)              (63)
     Interest expense                                    (10)           (151)             (123)
                                                   ----------       ----------        ----------

         Total non-operating revenues & expenses       1,039             (308)             (185)
                                                   ----------       ----------        ----------

NET INCOME (LOSS)                                  $     693        $     (384)       $      55 
                                                   ==========       ==========        ==========

PER SHARE
     Net income (loss) per share                   $     .07        $    (.06)        $     .01 
                                                   ==========       ==========        ==========

     Average common shares outstanding (1)             9,820        6,112,848         6,112,848
                                                   ==========       ==========        =========
</TABLE>
----------
(1)After giving effect to the 1 for 500 reverse stock split of April 23, 1996.


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

                                       F-2

<PAGE>
<TABLE>
<CAPTION>
                      THE ENCORE GROUP, INC. AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
                   YEAR ENDED DECEMBER 31, 1996, 1995 AND 1994
                       (In thousands, except share amount)





                                           COMMON STOCK          ADDITIONAL                  PENSION
                                     OUTSTANDING                  PAID-IN      RETAINED     LIABILITY
                                        SHARES       AMOUNT       CAPITAL       DEFICIT     ADJUSTMENT       TOTAL

<S>                                <C>            <C>          <C>           <C>            <C>           <C>
Balance, December 31, 1993            6,112,848       6,113        20,975       (27,507)           (72)       (491)

    Net income for 1994                      -           -             -              55            -           55

    Pension liability adjustment             -           -             -             -             (31)        (31)
                                   -------------  ----------   -----------   -----------    -----------   ---------

Balance, December 31, 1994            6,112,848       6,113        20,975       (27,452)          (103)       (467)

    Net loss for 1995                        -           -             -           (384)            -         (384)

    Pension liability adjustment             -           -             -             -             (54)        (54)
                                   -------------  ----------   -----------   -----------    -----------   ---------

Balance, December 31, 1995            6,112,848   $   6,113    $  20,975     $  (27,836)    $     (157)   $   (905)

    Net loss for 1996                        -           -             -           (384)            -         (384)
                                   -------------  ----------   -----------   -----------    -----------   ---------

Balance, December 31, 1996 (1)            9,820   $   6,113    $  20,975     $  (27,836)    $     (157)   $   (905)
                                   =============  ==========   ==========    ===========    ===========   =========

</TABLE>
----------
(1)  Number of shares after reverse stock split.

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

                                       F-3

<PAGE>
<TABLE>
<CAPTION>
                      THE ENCORE GROUP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)




                                                                YEAR ENDED DECEMBER 31,
                                                              1995       1995       1994
                                                             ------     ------     ------
<S>                                                          <C>        <C>        <C>
CASH FLOWS RELATED TO OPERATING ACTIVITIES
  Net income (loss)                                          $ 693      $(384)     $  55 
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
      Depreciation                                               6         13         23
      Allowance for stockholder receivable                       -         75          -
      Amortization of goodwill                                   -         25         26
      Pension liability adjustment                               -        (54)       (31)
      Loss (gain) on disposal or writedown of assets             -         45         (1)
      Accounts receivable                                      292         64         42
      Inventory                                                200        105         19
      Prepaid expenses and other                                13         29          - 
      Accounts payable                                         (96)        97       (138)
      Pension liability                                         19         72         71
      Accrued liabilities                                      (81)        (3)       (36)
                                                             ------     ------     ------

         Net cash provided by operating activities           1,046         84         30
                                                             ------     ------     ------

CASH FLOWS RELATED TO INVESTING ACTIVITIES
  Loan to stockholder                                            -        (75)         -
  Proceeds from sale of fixed assets                            (8)         -          2
  Purchases of fixed assets                                      -         (2)        (1)
  Closure of facilities, net                                   202                              
                                                             ------     ------     ------

         Net cash provided by (used in) investing activities   194       (77)         1 
                                                             ------     ------     ------

CASH FLOWS RELATED TO FINANCING ACTIVITIES
  Settlement of note payable                                (1,238)
  Principal payments on notes payable                            -        (30)       (30)
                                                             ------     ------     ------

         Net cash used in financing activities              (1,238)       (30)       (30)
                                                             ------     ------     ------

NET INCREASE (DECREASE) IN CASH                                  2         23          1  

CASH, beginning of year                                          8         31         30

CASH, end of year                                            $  10      $   8      $  31
                                                             ======     ======     ======

INTEREST PAID                                                $  10      $ 151      $ 119
                                                             ======     ======     ======
</TABLE>


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

                                       F-4

<PAGE>
                      THE ENCORE GROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1996, 1995 AND 1994
                (In thousands, except share and per share data)


NOTE A - BASIS OF PRESENTATION AND MANAGEMENT'S PLANS

         The  consolidated  financial  statements  include  the  accounts of The
Encore Group, Inc., and its wholly owned subsidiary,  VDO-Pak, Inc. (referred to
hereafter  as  the  "Company").   All  significant   intercompany  accounts  and
transactions have been eliminated.

         VDO-Pak, Inc. has ceased operations and is defunct.


NOTE B - SIGNIFICANT ACCOUNTING POLICIES

         Accounts  receivable - The allowance for doubtful  accounts was $ 0 and
$31 at December  31, 1996 and 1995,  respectively.  Assets for which the Company
has credit risk are trade accounts  receivables which amount to $(1) and $322 at
December  31,  1996 and 1995,  respectively.  The  Company  no longer  has trade
customers.

         Inventory  -  Inventory  is  stated  at the  lower  of cost  (first-in,
first-out  method)  or market at  December  31,  1995.  Inventory  consisted  of
components  and  products  for  manufacture  and resale.  At December 31, 1995 a
reserve of $127 was provided to record  slow-moving  inventory at its  estimated
net realizable value.  At December 31, 1996, there was no inventory.

         Fixed  assets - Fixed  assets  are stated at cost,  net of  accumulated
depreciation of $174 in 1995.  There were no fixed assets in 1996.  Expenditures
for  additions  to property and  equipment  have been  capitalized.  The cost of
repairs and  maintenance is expensed as incurred.  Depreciation  of property and
equipment is computed  principally on the straight-line basis over the estimated
useful  lives  of  the  assets  (generally  three  to  eight  years).  Leasehold
improvements  are  amortized on the  straight-line  basis over the lesser of the
term of the lease or estimated useful lives of the improvements.

         Income  taxes - Income  taxes are  recognized  during the year in which
transactions  enter into the  determination  of financial  statement income with
deferred taxes provided for temporary  differences between amounts of assets and
liabilities for financial reporting purposes and such amounts as measured by tax
laws.

                                      F-5

<PAGE>
NOTE B - SIGNIFICANT ACCOUNTING POLICIES - continued

         Amortization of goodwill - Goodwill relates to the original acquisition
of VDO-Pak and was amortized on a straight  line basis over the expected benefit
of 20 years. Accumulated amortization was $143 at December 31, 1995 and
fully written off at December 31, 1996.

         Income  (loss)  per  share - Income  (loss)  per  share is based on the
weighted  average  number  of shares of common  stock  outstanding  during  each
period.

         Use of  estimates - The  preparation  of the  financial  statements  in
conformity with generally accepted accounting  principles requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.


NOTE C - LAND HELD FOR SALE

         In June  1988,  the  Company  took  title  to  commercial  property  in
Gillette,  Wyoming as resolution of the land development project.  This property
is carried at its estimated fair market value of $15 at December 31, 1996.


NOTE D - OFFICER RECEIVABLE

         During 1995 the Company  advanced the majority  shareholder  $87.5,  of
which $13 was repaid.  Subsequent to the 1995 year-end,  the  shareholder  began
working with the Bank of California to restructure his personal debts as well as
the  Company's  debt.  There  was no  guarantee  that the  shareholder  would be
successful in his efforts to restructure the debt, and the Company  reserved for
the entire balance of $74.5 at December 31, 1995. This reserve was recorded as a
non-operating  expense.  This note was  written  off on  December  6,  1996,  in
recognition of the insolvency of the majority shareholder.



                                       F-6

<PAGE>
NOTE F - ACCRUED LIABILITIES

         Accrued liabilities consisted of the following at December 31:

                                                  1996           1995
                                                --------       --------
         Accrued salaries and payroll taxes     $    -         $    15
         Professional fees                           -              12
         Other                                       19             73
                                                --------       --------

                                                $    19        $   100
                                                ========       ========


NOTE G - INCOME TAXES

         Income taxes are accounted for using an asset and liability approach,
which requires the recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between the financial
statement and tax basis of assets and liabilities at the applicable enacted tax
rates. There was no income tax expense or benefit recorded in 1996, 1995 or
1994. 

         As of December 31, 1996,  the  Company has federal operating loss (NOL)
carryforwards of approximately $14,218 available to offset its future income tax
liability. The NOL carryforwards expire as follows:


         Year                      Federal  
         of Expiration             Amount   
         -------------            -------- 
         1997                     $  1,555
         1998                     $  2,971  
         1999                        1,598  
         2000                        3,675  
         2001                        2,010  
         2002                          373  
         2003                        2,373  
         2004                           16  
         2005                           44
         2006                          611  
         2008                          161  
         2010                          383  
                                  --------- 

                                  $ 15,770
                                  ========= 

         Additionally,  the Company has an investment tax credit carryforward of
approximately $9. This carryforward expires, if not utilized, through 1999.

         Management  periodically  reviews the items comprising the net deferred
tax assets as to the likelihood of their future  deductibility for assessing the
need for a valuation allowance. As of December 31, 1996, the deferred tax assets
have been completely  offset by a valuation  reserve.  The valuation reserve was
established due to the uncertainty  surrounding the continued  operations of the
Company (see Note A).











                                      F-7

<PAGE>
NOTE H - LEASE AND RENTAL COMMITMENTS

         The  Company  leased its  principal  office  space;  the lease  expired
February  28,  1997.   The   lease   provided  for  an  annual  rent  of
approximately $23.  VDO-Pak entered into a lease on July 1995, for
plant and office space,  which expired in August 1996. Annual rent and fees were
approximately  $35  per  year.  There  were no  future  minimum  payments  under
noncancellable  operating leases and rental agreements with initial terms of one
year or more at December 31, 1996.


NOTE I - RETIREMENT PLAN

         The Company  has a  noncontributory  defined  benefit  retirement  plan
covering certain former corporate employees.  During 1990, the Company froze the
participation in the plan with the intention of eventually terminating the plan.
As of December 31,  1995,  there are only seven past  employees  who are covered
under the plan.  The assets held by the plan are primarily  invested in a mutual
fund that invests in a  diversified  portfolio of equity  securities,  corporate
bonds, and short-term investments.

                                       F-8

<PAGE>
NOTE I - RETIREMENT PLAN - continued

         The  components  of net  periodic  pension  expense  for the year ended
December 31 are as follows:

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

         Service cost                   $     -      $     -      $     -
         Interest cost                                     44           41
         Actual return on assets                          (74)         (19)
         Unrecognized net (gain) loss                       4            3
         Deferred asset (gain) loss                        44          (12)
                                        ---------    ---------    ---------

         Net periodic pension expense   $  N/A       $     18     $     13
                                        =========    =========    =========


         The funded status of the plan at December 31 is as follows:

                                                        1996           1995
                                                     ---------      ---------
         Accumulated benefit obligation,
           including vested benefit obligation
           of $660,254 at December 31, 1995          $    660       $   660
                                                     =========      =========

         Plan assets at fair market value            $    412       $   412
         Projected benefit obligation                    (660)         (660)
                                                     ---------      ---------

         Funded status                                   (248)         (248)
         Unrecognized net (gain) loss                     157           157
         Adjustment for minimum liability                (157)         (157)
                                                     ---------      ---------

         Accrued pension liability                   $   (248)      $  (248)
                                                     =========      =========


         The weighted  average  discount rate used in determining  the actuarial
present value of the projected  benefit  obligations  was 7% for 1995 and 8% for
1994. The expected long-term rate of return on assets was 7% and 8% for 1995 and
1994, respectively.


NOTE J - STOCK OPTION PLAN

         The stockholders ratified a stock option plan in 1989 for key employees
and directors  that provides for the granting of incentive  stock option (within
the meaning of Section 422A of the Internal Revenue Code) or nonqualified  stock
options to  purchase  shares of the  Company's  common  stock at the fair market
value at the date of grant.  Pursuant to the plan,  options to purchase  700,000
shares may be issued.  All options are  nonqualified and have a maximum duration
of ten years.  There are no  outstanding  options  eligible  for  exercise as of
December 31, 1995.

                                       F-9

<PAGE>
NOTE K - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

         The  unaudited  quarterly  financial  information  for the years  ended
December 31, 1996 and 1995, is as follows:


                                              1996 QUARTER ENDED
                                ---------------------------------------------
                                March 31     June 30     Sept. 30    Dec. 31
                                --------    ---------   ---------   ---------

         Sales                  $    381    $    279    $     77    $     12
                                =========   =========   =========   =========

         Gross profit           $    119    $     92    $     (9)   $   (209)
                                =========   =========   =========   =========

         Net income (loss)      $    (66)   $   (120)   $   (133)   $  1,012 
                                =========   =========   =========   =========

         Per share - net loss   $   (.01)   $   (.02)   $   (.02)   $    .12
                                =========   =========   =========   =========


                                              1995 QUARTER ENDED
                                ---------------------------------------------
                                March 31     June 30    Sept. 30     Dec. 31
                                --------    ---------   ---------   ---------

         Sales                  $    380    $    449    $    506    $    680
                                =========   =========   =========   =========

         Gross profit           $    160    $    165    $    183    $    224
                                =========   =========   =========   =========

         Net loss               $    (83)   $    (63)   $    (50)   $   (188)
                                =========   =========   ========    ========= 

         Per share - net loss   $   (.01)   $   (.01)   $   (.01)   $   (.03)
                                =========   =========   =========   =========



                                      F-9


<PAGE>