UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB

                Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

For the Fiscal Year Ended                       Commission file number 000-21725
March 31, 1997

                           THE TRANSLATION GROUP, LTD.
                           --------------------------
                 (Name of small business issuer in its charter)



Delaware                                         23-3382869
-------------------------------            -----------------------
(State or other jurisdiction of           (I.R.S. Employ.Ident. No.)
incorporation  or organization)

332C Haddon Avenue                                     08108
Westmont, NJ                                         ----------
---------------------------------------              (Zip Code)
(Address of principal executive offices)             


Issuer's telephone number: (609) 858-4665

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

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

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

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15 (d) of the  Exchange Act during the past 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   .
   ---   ---

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will 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. { }

     Issuer's revenues for its most recent fiscal year: $3,193,068 million

     Aggregate  market  value of the  voting  stock  held by  non-affiliates  of
registrant  (based on  average  of the bid and asked  price on  June 15,  1997):
$15,930,720.  See  "Market  of  the   Registrant's   Common  Stock  and  Related
Stockholder Matters."

     The number of shares  outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 1,991,340 shares of Common Stock, par
value $.001 per share, as of June 15, 1997

Transitional Small Business Disclosure Format: Yes     ; No  X
                                                  -----    -----

                                       1



                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

THE COMPANY

         The Translation Group, Ltd. ("TTGL") was incorporated under the laws of
Delaware  on July 7, 1995.  On January  17,  1996,  TTGL  consummated  its first
acquisition  when  the  shareholders of Bureau of Translation  Services, Inc., a
Pennsylvania  corporation  ("BTS")  exchanged their shares of BTS,  treated as a
business  combination,  for  shares  of TTGL so that BTS  became a wholly  owned
subsidiary  of TTGL.  TTGL and BTS are  referred to herein  collectively  as the
"Company."  Prior to the acquisition of BTS, TTGL's only activity was related to
the  negotiations  and other matters  pertaining to the raising of funds under a
private placement. The corporate office of the Company is located at 332C Haddon
Avenue,  Westmont,  NJ 08108 and its telephone  number at that location is (609)
858-4665.  The administrative  office and operating facilities are located at 44
Tanner Street,  Haddonfield,  New Jersey 08033 and its telephone  number at that
location is (609) 795-8669.

         The Company translates  conventional  documents and software written in
one language into other  languages,  and  specializes as a provider of high tech
translation  and  localization  services in the  Information  Technology  ("IT")
sector of the translation market. Localization is the art of converting from one
language to another  giving  careful  consideration  to the customs of the local
area.

         As of March 31, 1997, the Company  entered into an agreement to acquire
various corporations that comprise the Word House Group (Word House) for 375,000
shares of it's Common Stock.  Word House has been in operation  since 1984,  and
currently has offices in The Netherlands, France, England and China. The Company
has also  entered  into a  marketing/production  joint  venture with World Tech.
Corp.(WTC),  a Korean corporation,  subject to Korean government  approval.  BTS
will initially  operate as a branch in Seoul to exploit the translation  markets
from English to Korean and other Asian languages.  TTGL will also have an option
to  acquire  WTC by the  issuance  of  shares  of  Common  Stock  based on WTC's
performance.

         These  agreements are more fully  described  below under the heading of
Recent Agreement and Acquisition.

BUSINESS OF THE COMPANY

         The Company translates  conventional  documents and software written in
one language into other languages.  The Company functions in the so-called "high
tech" niche of the translation industry,  providing  translation,  localization,
software and tools to a range of world wide companies who have needs in computer
related  hardware  and/or  software  fields,  referred  to in  the  industry  as
Information Technology ("IT").  Localization is the art of converting documents,
contracts,  marketing tools,  advertising,  engineering specs, computer hardware
and software support materials,  packaging, TV shows, etc. into local languages,
giving  careful  consideration  to custom and tradition  indigenous to the local
area.

         The process of localization  for the information  technology  market is
highly labor intensive, with much of the hands on work being done principally by
independent  translators  and  editors  as well as  Company  employees.  Various
machine tools (also  referred to as  translation  tools "TT") are also used that
are  software  applications  for  extracting  and  formatting  data,  for online
dictionaries,  for  presentation  of text  (e.g.,  prepress)  and  for  customer
networking.  On  the  other  hand,  the  Company's  machine  translation  ("MT")
abilities  depend  upon the  storage  of and  access  to  previously  translated
material in machine  usable form.  Thus,  the ability to take  advantage of this
type of MT depends on the stability of customers, types of products, material to
be   translated   and   customers   requirements.   If   variables   upset  this
storage-


                                       2


access-use of previously  translated  material,  such as occurs with  first-time
customers  or when  translating  materials  in new topics,  the Company  will be
unable to exploit  this  advantage.  For this reason the Company is embarking on
the production of its own phased in system of document  translation  which would
not  be  limited  to   previously   translated   material.   See  "Research  and
Development."

COMPETITIVE POSITION

         The  Company  believes  it has a  good  position  in  the  localization
industry, in part because, through BTS, it entered this market early. Initially,
the Company  provided  translation of technical  material in various  industries
heavily weighted toward engineering and analytical instrumentation.  However, by
the mid-1980's, the Company recognized the opportunity in the computer industry.
Thus, the Company made the transition from a "generic"  translation  bureau,  to
one whose business emphasizes translation services for IT customers.

         The Company has leveraged ten years of  localization  experience into a
set of processes which it considers its principal competitive  advantage.  Every
operational process,  from bidding through delivery of the completed project, is
tracked and accounted for, making job costing accurate and predictable, while at
the same time  offering  savings to its  customers.  The Company  seeks to build
long-term relationships with clients, who will continue to work with the Company
over several years and many projects.

         At present,  key  markets  for the  Company's  services  are  customers
located in Japan,  Europe  (including  Scandinavia)  and in "the Americas",  the
dialects of Canadian French,  Latin American  Spanish and Brazilian  Portuguese.
The Company  does not provide  Middle and Near  Eastern  languages at this time.
Growth  markets are  primarily in Asia.  Japanese now  represents  the Company's
largest single language,  by volume,  and the Company believes that Chinese will
also become  significant in the near future.  The Company's business in Japan is
primarily in translation for manufacturers of applications software, including a
substantial  volume of Unix-based  systems and customized  implementations.  The
principal   applications   are   financial  and   manufacturing,   with  systems
encompassing  everything from order entry to distribution.  The Company believes
these are strong growth application areas in Asia.

         The IT  translation  industry is highly  fragmented and is dominated by
numerous  small to  medium  size  companies,  each  with a  handful  of  clients
competing  for IT products in global  markets.  The Company  believes  that this
industry phenomenon provides  substantial  opportunities for consolidation.  The
Company  is  pursuing a strategy  which  will  enable it to expand its  business
through identifying companies that fit the Company's  consolidation  guidelines,
acquiring these  companies,  and  integrating  the acquired  operations into the
Company's existing  operations.  Management believes that such acquisitions will
enable the Company to achieve economies of scale, maintain its gross margins and
eventually become one of the world's largest translation companies.  The Company
may retain senior management and other employees of the acquired companies after
the  acquisition.  Additionally,  the  Company  intends to expand  its  existing
translation  services  and to  continue to research  and develop  more  advanced
technologies,  particularly  relative  to machine  translation.  There can be no
assurances  that  suitable  acquisitions  can  be  identified,   consummated  or
successfully  operated or that the Company's  goals will  otherwise be achieved.
The Company is currently  reviewing  potential  candidates for acquisition.  See
Recent Agreement and Acquisition, below.

SERVICES AND CLIENTS

         The Company  provides  translation  and  localization  services  (i.e.,
translating so that the result is reader  friendly,  using local dialect so that
it is easily  readable  and not stilted) to a range of  industries  and sectors,


                                       3



with an emphasis on IT companies. During fiscal 1996 and 1997, approximately 80%
of the Company's  revenues came from localization work for software  publishers,
computer hardware  manufacturers and computer and peripherals vendors.  Customer
concentration  decreased  for the  fiscal  year  ended  March 31,  1997 when two
customers accounted for 31% of revenues in comparison to 37% and 70% for the two
prior fiscal years.  The Company also has an active  business in the legal area,
translating  depositions,   patents,  and  material  relating  to  international
contracts and law suits for large law firms in the Philadelphia area.

         The Company has a large number of IT-based clients. The Company has not
entered into any long-term  contracts with any of its clients in accordance with
industry practice.  The Company has a long-standing  relationship with SAP-AG (a
leading  software  producer)  whereby the Company is  responsible  for  Japanese
translation  of  its  "Financial  Accounting"  support  materials.   The  strong
relationships  the Company has developed with its IT clients have also generated
a volume of more  conventional  translation  work.  For example,  the Company is
translating  software  messages and conventional  documentation  for Okidata,  a
peripherals manufacturer. Bentley Systems, a leading CAD/CAM software developer,
relies  on the  Company  for  Korean  and  Japanese  software  localization  and
translation of related  documentation.  Syncro,  Inc.(now Intel), a developer of
telephony software,  uses the Company to localize the software into at least ten
languages, and  Matrox  Electronics  Systems, is a leading manufacturer of video
boards for whom the Company also translates into at least 18 languages.  Because
many American companies have a large number of Hispanic and Vietnamese employees
in the United  States,  the  Company  has been  engaged to  translate  corporate
personnel materials into Spanish and Vietnamese.

         At the  request of clients,  the  Company may also expand its  software
localization services to include video and multi-media translation.  While these
translation  contracts  require an investment in equipment and  facilities,  the
Company  believes  the costs may be  justified  by the  higher  value  contracts
generated by this  application.  In  addition,  the Company has been testing and
exploring multimedia  localization.  Currently,  the Company performs multimedia
localization  using  external  studio  facilities.  If it  proves  feasible  and
attractive,  the Company may consider  establishing its own studio,  and broaden
its  localization  services to full  multimedia  capability.  The  Company  sees
multimedia  localization  as similar in process to other  software  localization
that it already performs, and while it adds additional technical complexity,  it
does not require a substantially different skill set.

THE TRANSLATION PROCESS

         The Company considers its highly detailed project management,  tracking
and  costing  procedures  to be at the heart of its  specialized  services.  The
Company  places a strong  emphasis on efficient  processes,  and  believes  that
centralized  project  management is essential to efficiency.  Thus,  even when a
project  may  have  team  members  in many  different  locations,  most  work is
coordinated centrally in the United States via electronic communication. Certain
core  functions  such as editing,  proofreading,  desktop  publishing and client
coordination  are part of central  project  management.  In  preparing  work for
translation into multiple  languages the project editor may identify problems or
issues  which  are  relevant  across  the  entire  project.   Similarly,   in  a
multiple-language  project,  problems may be picked up by the translators in one
or two languages that are relevant to others.  The Company believes that central
control of the  process is the only way  certain  situations  can be  adequately
handled, such as identification of software bugs.

         All the Company's translators are native speaking  professionals in the
target  language,  and are  required to know the  subject  matter of the area in
which they translate. In addition, a project must have technically knowledgeable
staff in the source language, preferably a specialist in that area.


                                       4


         The Company  supports an extensive range of  communications  facilities
linking its internal systems to both clients and  translators.  These include an
in-house  local area  network  ("LAN"),  dial-up  bulletin  board  (BBS),  modem
transfer and multiple Internet and CompuServe connections. Some of the Company's
staff  have  remote  connections  to  clients'  LANs as well.  Most  translation
projects use one or the other of the following processes to exchange files:

         -        the client  dials into the  Company's  own  systems and "drops
                  off" files,  usually via FTP (file  transfer  protocol) at any
                  time;  the files are then  picked  up,  and  entered  into the
                  translation process.

         -        the client shares a common messaging platform with the Company
                  (either  LAN-to-LAN or using a wide-area service provider) and
                  files are sent back and forth on the internal  network systems
                  between the Company and the client.

         -        the  client  is  connected  via a high  speed  dedicated  line
                  directly to the Company's network and several of the Company's
                  machines may be connected, via a router, directly through this
                  line so that  translators are able to work directly inside the
                  client environment.

         Files are prepared for translation by the Company's technical staff and
are distributed  electronically  to translators  either locally or in applicable
country.  Translated  versions are  returned to the  Company's  central  project
management  for  checking  and proofing  (and also  compilation,  if software is
involved) and the target language versions are distributed to appropriate client
locations which may be multiple locations or a central site.

         In terms of process,  the Company  considers itself an extension of the
client's  documentation  department.  All project activities are closely tracked
using  spreadsheets  which are fully  available to the client.  Thus, the client
always knows the status of the project.

TRANSLATION TOOLS

         The Company has an internal IT standard  which is based around a Novell
LAN and Windows NT for handling Japanese and Microsoft applications.  All client
projects, however, are handled on a customized basis.

         As the Company uses  increasingly  advanced  technological  translation
tools (i.e., pieces of software that make the translation process quicker),  the
most  notable  impact has been a change in the  structure  of the project  team.
Under the old,  "pre-tools"  model, a typical project might consist of a project
manager  with  50  translators  and  editors   working  in  various   languages.
Translation tools have created an entirely new type of team,  particularly where
translation memory databases are used to leverage previously translated material
for re-use in new or updated programs and  documentation.  The same project team
includes a project manager, 2 technical analysts, and 15 translators/editors.

         The  Company  believes  it  was  one  of the  first  extensive  outside
commercial users of a workbench environment for software translation called XL8.
It has  selected  as its  corporate  standard  the  integrated  Transit/Termstar
Translation  Management  System. The product was designed for use in translation
and editing of software,  help and documentation.  The manager controls the flow
of  materials  and  translators  use limited  version  workstations.  Transit is
thought to be the most versatile product of its kind  commercially  available on
the market; it runs in Windows environment, and may be used for Asian as well as
European  languages.  In 1995 BTS was selected as the sole  distributor in North
America for Transit  and  Termstar translation software products. These software
applications,  or "memory translation tools",  assist in the translation process


                                       5


by increasing efficiency through reuse of prior translations. BTS is an industry
leader in its use of  software  tools and is  expanding  its efforts to increase
their distribution.  The sole distributor  agreement is currently in force, with
no expiration date.

         The Company has followed the progress of machine  translation (MT) over
the years.  After much careful review and  consideration,  the Company concluded
that to the best of its  knowledge no one system exists that meets its standards
of accuracy, efficiency and efficacy. Therefore, the Company recently contracted
to  complete  its own MT system  which it hopes  will be  capable  of  automatic
document  translation.  Until  such a machine is  available,  the  Company  will
continue to upgrade  both its hardware  and  software as  technology  in this or
other adaptable fields progress. The Company intends to take necessary action to
maintain its  position as a leader in the use of MT. No  assurance  can be given
that other companies will not develop a competitive  machine which could have an
adverse affect on the Company. See "Business - Research and Development."


RESEARCH AND DEVELOPMENT

         In mid-1995,  the Company entered into a five year Agreement with debis
Systemhaus KSP- Kommerzielle Systeme und Projekte GmbH ("debis"), a wholly owned
subsidiary of Daimler Benz,  whereby the Company  acquired  license  rights to a
software  product  known  as  KEYTERM.   KEYTERM  is  a  concept-oriented  fully
relational  proprietary  database  running under UNIX and Windows for developing
and  maintaining  glossaries.  It  has a  customizable  structure  for  entering
terminology  and  lexicographical  information.  The  product has been in use in
Germany for several years and is being further developed, marketed and supported
by the  Company.  The  Company  has no  obligations  to  assume  previous  Debis
obligations, will receive fees for all current and future services and will have
the exclusive right to market KEYTERM  throughout  North America,  and elsewhere
non-exclusively.  Finally, under the debis Agreement,  the Company is allowed to
use the  indication  "Bureau of Translation  Services in partnership  with debis
Systemhaus".  The  Company  has  continued  to  develop  this  system  since its
acquisition.

         During the past fiscal year,  the Company has also  continued to expand
its tailored  processes  and  disciplines  used in the  translation  field.  The
Company is committed to invest significant amounts on machine translation ("MT")
with  specific  emphasis  on  developing  a  proprietary   real-time  completely
automated  machine  translation  system.  The proposed  system would operate via
standard  telecommunications  systems and  ultimately  would have the ability to
instantaneously  translate voice from one language into another. The Company has
entered  into a licensing  agreement  with the  inventor,  Dr.  Cherny,  for the
exclusive rights to such technology as they regard translation  applications and
have a right of first refusal for all other  applications  covered by the patent
application.  Part of the proceeds of the initial public offering (IPO) has been
allocated  for this  project  and the  Company  currently  intends  to finance a
portion of the balance through proceeds received from the potential  exercise of
the Warrants and the remainder  through other  external  financing.  The Company
intends to closely  monitor the  progress  of the  project and will  discontinue
financing the project unless  certain  development  milestones are reached.  The
initial phase is directed  towards  generating  specific  context  dictionaries,
i.e.,  relationships  between  words  in  different  languages  but in the  same
context. In any given language words have multiple meanings. In addition,  words
of one  language  do not often  translate  on a one to one basis,  into  another
language.  Context is the key to  translating  a message from one language  into
another.  The first milestone of the first phase will take the many thousands of
documents  already  translated  and amassed by the Company and organize  them by
context and analyze them through the use of appropriate  neural network  systems
for  the  purpose  of  generating  specific  context  dictionaries.  The  second
milestone of the first phase will  generalize the context  dictionary  generator
making it capable of generating context dictionaries from written


                                       6


materials in different languages on the same topic, not previously translated or
amassed. The Company has contracted to pay the Gedanken Corporation  (Gedanken),
the owner of the patent by  assignment  from Dr.  Cherny,  the following for the
development of the machine translation system:  $250,000 over a 12 month period,
which began  February  15, 1997 for the  Specific  Topic  builder and  $500,000,
beginning  September 15, 1997,  over an 18 month- period for the  development of
the General  Topic  Dictionary.  The  Company  also  acquired  the rights to the
development  of a Real Time Voice  Translation  System  based on  providing  the
necessary  funding  estimated  at  $4,000,000. The Company is  obligated  to pay
royalties  on all  revenues  generated  that use in whole or in part the  patent
rights and  know-how.  The  Company has the right to stop  funding at  specified
times or  accomplishment  periods.  If the first two milestones are  successful,
even  if  the  instantaneous  voice  translation  machine  is  ultimately  never
completed,  the Company  will still  benefit from using the specific and general
context dictionary generators.

COMPETITION

         Berlitz,  Bowne(IDOC),  and Lernout &  Hauspie(Mendez),  and many other
smaller companies offer similar services and currently compete with the Company.
Some of these competitors have substantially  greater financial resources,  more
extensive experience, and better established research and development, marketing
and servicing  capabilities than the Company.  The Company must compete not only
on the basis of price, but also delivery time and quality.

SUPPLIES AND MATERIALS

         The materials  and supplies used to produce the Company's  products are
obtainable  from a wide variety of suppliers.  There is not  currently,  nor has
there been in the recent past, a shortage of any of these materials. The Company
believes  that its  current  sources of supply are  adequate  to meet its future
needs.

EMPLOYEES

         The  Company  presently  employs   thirty-two  (32)  full-time  people,
comprised of seven (7)in Management positions, three (3) in Administration, four
(4) in Sales and Marketing,  and eighteen (18) in Production.  In addition,  the
Company also uses the services of freelance and/or  independent  translators and
editors on an as needed  basis from a roster of  approximately  900. The Company
has never had a problem  with  access to  qualified  personnel.  The Company has
entered into written  employment  agreements with each of Ms. Theodora  Landgren
and Mr. Charles  Cascio,  and an oral agreement  with Mr.  Richard  Herson.  See
"Management - Employment Agreements".



                                       7


RECENT AGREEMENT AND ACQUISITION

     In February 1997, the Company entered into a  marketing/production  venture
with WTC, a Korean corporation.  Subject to Korean government approval, BTS will
operate  initially as a branch in Seoul to exploit the translation  markets from
English to Korean and other  Asian  languages.  TTGL will also have an option to
acquire  WTC, for shares of its Common  Stock based on  performance  criteria of
WTC.  To  date,  this  venture  has  had  negligible  impact  on  the  financial
statements.

     On  March 31,  1997,  the Company  entered into an agreement to acquire the
various  corporations  that  comprise  The Word House  Group (Word  House),  for
375,000 shares of its Common Stock.  Word House has offices in The  Netherlands,
France,  Great Britain and China. Word House translates and localizes  documents
and software,  concentrating on European  languages.  Three principal  customers
accounted for approximately 77% of sales in calendar 1996. The Company currently
believes that this transaction will close during the early part of July.  During
calender 1996, Word House had unaudited  revenues of approximately  $3.2 million
and net income of $297,000.

ITEM 2. DESCRIPTION OF PROPERTY.

         The Company's  principal  operating facility is located in Haddonfield,
New Jersey, where it occupies  approximately 3,600 square feet at a monthly rate
of $2,875  pursuant to a lease that extends until March,  1998.  The Company has
another domestic operating facility in Westmont,  New Jersey,  where it occupies
approximately  1,100 square feet at a monthly rate of $1,200 pursuant to a lease
that extends until June,  1998. Under both leases the Company is responsible for
utilities and certain other  expenses.  In January 1997,  the Company moved it's
Pennsauken  corporate office to it's Westmont location and in April 1997, closed
its German operating  facility,  because of the agreement to acquire Word House.
In June  1997,  the  Company  opened a London  office  at an  annual  rental  of
approximately  $9,000.  The  Company  believes  that all of its  facilities  are
currently adequate and further believes that, if necessary,  adequate facilities
could be located in the event the Company needs to replace or expand its current
facilities.

         In connection with the proposed Word House acquisition, subsidiaries to
be acquired own a condominium floor in France and are also subject to a lease in
The  Netherlands.  In May 1997,  Word  House  moved its  principal  location  to
Amsterdam. It's lease for 5,500 square feet is for a period of 5 years at a rate
of approximately $95,000 per year.


ITEM 3. LEGAL PROCEEDINGS.

         The Company has been given notice that it will be sued by a stockholder
who is seeking  monetary  damages,  specific  performance,  equitable relief and
costs in the amount of $3,000,000. The Company and its counsel believe that this
suit is completely  without merit and will vigorously  defend it. At this time a
complaint  has not been  served.  The Company is not a party to, or involved in,
any other legal proceedings.


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

         Not applicable.



                                       8


                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The Company  completed its initial public offering on December 2, 1996. Its
Common Stock is reported on the NASDAQ  "pink  sheets"  over-the-counter  market
under the symbol  THEO for the Common  Stock,  and THEOW for the  Warrants.  The
following  table sets forth the range of prices for the Common Stock as reported
for the periods indicated and represents prices between broker-dealers, which do
not  include  retail  mark-ups  and   mark-downs,   or  any  commission  to  the
broker-dealer. The bid prices do not reflect prices of actual transactions.


Common Stock

<TABLE>
<CAPTION>

                                         WEEKLY SUMMARY

     DATE             HIGH             LOW             CLOSE         AVG TRADE         VOLUME
     ----             ----             ---             -----         ---------         ------
  <S>                <C>              <C>             <C>             <C>             <C>    
   12/02/96           15.00            7.00            13.50           12.17           1491800
   12/09/96           12.50            5.00             6.50           10.01            241000
   12/16/96            8.50            6.00             6.50            6.78            367900
   12/23/96            9.00            7.00             7.00            7.53             27900
   12/30/96            9.00            7.00             9.00            7.60             25600
   01/06/97            9.00            7.00             9.00            7.92            137900
   01/13/97           10.00            7.50            10.00            9.22             82000
   01/20/97           10.75            7.75             9.50            9.64            107800
   01/27/97           10.00            7.87             9.50            9.05            110400
   02/03/97            9.50            8.00             9.50            8.94             33400
   02/10/97            9.75            6.37             8.00            7.93             77300
   02/17/97            9.25            7.75             8.25            8.58             76800
   02/24/97           10.00            8.25             9.75            9.39            147800
   03/03/97           10.00            9.00            10.00            9.60             60700
   03/10/97           10.00            8.75            10.00            9.51            150100
   03/17/97           10.00            9.00            10.00            9.60             58900
   03/24/97           10.00            8.75             9.25            9.32             58600
   03/31/97            9.87            8.62             9.12            9.48             39800

</TABLE>

     The  approximate  number of record  holders of Common Stock as of March 31,
1997 was 600.

DIVIDEND POLICY

     The Company has not  declared or paid any  dividends  nor does it expect to
pay dividends on its Common Stock in the foreseeable  future intending to retain
earnings to finance the growth of its operations.

TRANSFER AGENT

     The Company uses American Stock  Transfer & Trust Company,  40 Wall Street,
New York,  New York 10005,  to act as Transfer  Agent for the  Company's  Common
Stock and Warrants.

                                       9









ITEM 6.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF RESULTS OF  OPERATIONS  AND
FINANCIAL CONDITION.( stated in thousands).

         The following  discussion  and analysis  should be read in  conjunction
with the consolidated  financial  statements and notes thereto contained in this
Prospectus.

                  (a)      GENERAL

                  The Company has been in business since 1984. Generally,  sales
have been increasing year to year. Net sales for its fiscal year ended March 31,
1997, were approximately 20% higher than its net sales for its fiscal year ended
March 31, 1996,  which in turn were 20% higher than for the year ended March 31,
1995.

                  (b)      RESULTS OF OPERATIONS

Fiscal  Year Ended  March 31,  1997 as  Compared  to Fiscal Year ended March 31,
1996.

         For the year  ended  March 31,  1997 net sales  increased  23% over the
corresponding  period in 1996, from $ 2,586.3 to $ 3,193.1.  However, net income
declined  by 56% in  comparison  to the period,  from $ 347.9 to $ 154.0.  Gross
profit decreased from $ 1,068.6 (41% of sales) to $ 991.6 (31% of sales), or 7%.
Selling,  general  and  administrative  expenses,  (the  current  year  includes
approximately  $100,000 of expenses of the IPO as described  below) increased in
the amount of $326.5,  from $485.1 to $811.6,  or 67%, from  19% to 25% of sales
respectively.  Interest income amounted to $ 76.3  (there was no net interest in
the prior period).


Discussion

         The net  income  for the year  ended  March  31,  1997  was  negatively
impacted by the following factors:

(i)  The Company's  initial public  offering (IPO) became  effective in December
     1996.  The outside  costs of  underwriting,  legal,  accounting,  blue sky,
     printing and other expenses of the underwriting  incurred during the period
     were charged to the proceeds received.  Internal expenses such as officers'
     salaries and staff time were  charged to  operations.  The chief  executive
     officer  (CEO)  devoted full time during this period to  negotiations  with
     underwriters,  preparation  of the  registration  statement,  meetings with
     various  professionals  (legal and  accounting),  printers,  etc. The CEO's
     salary and related  expenses  of  approximately  $ 100,000 are  included in
     selling, general and administrative expenses.
(ii) The Company was unable to utilize machine  translation as effectively as in
     the prior  periods,  since it expanded  its base of  customers,  topics and
     languages.  Without  repeat  business,(by  customer,  topic  and  language)
     additional lead time is required to effect efficiency in the use of machine
     translation.
(iii)The Company  expanded its project  management  and  customer  communication
     facilities  in  comparison  to  a  year  ago,  approximately  doubling  its
     computers  and related  operating  systems  and  software;  this  expansion
     involved additional hiring and training costs.
(iv) The  Company  added to its sales and sales  support  personnel  to  promote
     regular business as well as sales under license agreements.

The statements  presented for the comparative  periods are reclassified to agree
with the classifications of the current statements.


                                       10


Fiscal Year Ended March 31, 1996 as Compared to Fiscal Year Ended March 31, 1995

         Net sales for the fiscal year ending March 31, 1996 increased to $2,586
from  $2,149.1 or  approximately  20% over net sales for the prior  fiscal year,
ending March 31, 1995.  The Company  believes  this increase is primarily due to
the growth of its reputation  with regard to its ability to deliver quality work
on a timely basis.  During the fiscal year 1996, 54% of the Company's sales were
to four major customers in the high-tech area, of which two accounted for 37% in
fiscal year 1996 and 70% in the prior fiscal year ended March 31, 1995.

                  The Company's operating income for the fiscal year ended March
31, 1996,  was $583.5 in  comparison  to $130.4 for the prior fiscal year, or an
increase of 350%. Of this increase of $453.0,  approximately  $331.0 (or 73%) is
attributable  to the increase in gross margin -- from 20% to 33%;  approximately
$87.0 (or 19%) is  attributable  to the increase in sales volume of $436.0;  and
$35.0  (or 8%) to the  decrease  in  general  and  administrative  expenses  and
depreciation.

                  There was a  significant  increase in gross profit from 20% to
33%. The company  benefited from the increasing use of translation  tools due to
the unusual amount of repeat business from existing  customers.  Therefore,  the
relative  stability of  customers'  requirements  and contents  permitted a more
effective use of translation memory storage,  i.e. machine tool translation.  In
addition,  there  were  the  gains  derived  from  an  organizational  structure
established for a two million dollar level, increasing its sales by 20%.

                  The increase of gross profit was not  maintained at this rate.
In anticipation of increasing  volume,  the Company had increased its production
staff  to  concentrate  on job  flow,  quality  control,  editing  and  customer
communications.   Likewise,  the  type  of  translation  products  and  customer
requirements  did not permit the use of machine tool  translation  of previously
stored memory data to the previous extent.

                  Total  general and  administrative  expenses and  depreciation
decreased in the amount $35.0 for fiscal 1996 in comparison to fiscal 1995, from
$299.6 to $264.2.  This  decrease was caused by the  providing  for bad debts in
prior years ($36.0 in fiscal year ended March 31, 1995) and recovering  $45.0 in
the current  fiscal year.  Excluding  such  accounts for bad debts,  general and
administrative  expenses increased by $25.0 (12%) over the prior fiscal year and
depreciation by $19.0 (35%).

                  (c)      LIQUIDITY AND FINANCIAL RESOURCES

         UNDERWRITING

         On December 2, 1996,  the  Company  completed  its IPO with the sale of
705,000 shares of its Common Stock at a price of $6.00 per share,  and 1,840,000
Warrants at a price of $.20 per share.  The Company had net  proceeds  from this
underwriting   of   $3,582,065   after   underwriting   discounts   of  10%,   a
non-accountable  expense  allowance  of 3% and other  expenses  in the amount of
$443,195.  In  connection  with the IPO,  the Company has given  warrants to its
underwriters  to purchase 68,572 shares of Common Stock at an excercise price of
$7.80. The Company has agreed to register (or file a  post-effective  amendment)
to acquire a similar number of shares of Common Stock at $7.80 per share.


                                       11



         Under the IPO the Company registered 705,000 shares sold by the Company
for its  benefit,  100,000  shares  sold by its  Chairman  and  Chief  Operating
Officer,  1,840,000 redeemable Common Stock Purchase Warrants, 241,000 shares of
Common Stock owned by other selling shareholders,  and 300,000 warrants received
by certain existing shareholders.

         As noted above,  the Company  received net proceeds of $3,582,065  from
its IPO. The Company also issued  12,000  shares in payment of  indebtedness  of
approximately  $48,000.  The Company generated cash from operations for the year
of $229,223 and invested  $261,040 in equipment and related  software.  Accounts
receivable  and other  assets  net of  accounts  payable  and other  liabilities
increased  by  $455,821.   Accordingly,   cash  and  equivalents   increased  by
$3,128,967,  from  $530,340 as of March 31, 1996 to  $3,659,307  as of March 31,
1997.

         Net  working  capital at March 31,  1996 was  $777.0,  an  increase  of
approximately  $650.0 from the end of the prior fiscal year. The increase in net
working  capital was primarily  due to the Company  completing in January 1996 a
private offering of 120.5 units of its securities at a price of $5,000 per unit,
each unit  consisting of 4,000 shares of Common Stock.  The gross  proceeds from
the offering were $602.5;  the net proceeds were $463.0.  On March 31, 1996, the
Company had $530.0 in cash or cash  equivalents.  See Statement of Cash Flow for
other sources and uses of working capital contained in the attached Consolidated
Financial Statements.

         Inflation  has  not  been  a   significant   factor  in  the  Company's
operations.

                  (d)      FOREIGN CURRENCY FLUCTUATIONS

         The Company has changed its policy and now only bills its  customers in
US Dollars at agreed upon amounts of exchange.  Accordingly,  the Company is not
impacted by exchange rate fluctuations.


ITEM 7. FINANCIAL STATEMENTS.

     The  information  called  for  by  Item  7 is  included  in  the  Financial
Statements contained in this Annual Report of Form 10-KSB.

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

     Not applicable.



                                       12



                                    Part III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act.

         As at March 31, 1997, the directors  and/or  executive  officers of the
Company are as follows:

Name                            Age     Position

Theodora Landgren               49      Chairman of Board and Chief Operating
                                        Officer
Charles D. Cascio               57      President, Chief Executive Officer and
                                        Director
Richard J.L. Herson             78      Chief Accounting Officer and Director
Luis M. Garcia-Barrio, Ph.D     52      Vice President/Special Projects
John Wetter                     47      Vice President/Operations
Julius Cherny, Ph.D             60      Director
Gary M. Schlosser               46      Director
James W. Grau                   57      Director

THEODORA  LANDGREN  has been the  Chairman of the Board of  Directors  and Chief
Operating  Officer of the Company since  January 17, 1996. In addition,  she has
been  Chairman  and  President  of BTS since the  founding of that firm in 1984.
Prior to starting  BTS she  studied  linguistics  and  computer  programming  at
several  universities  including  Universities of Denver and Innsbruck (Austria)
and  USC  College  of  Continuing  Education,  as well as  teaching  English  to
non-English  speaking  students at the  University  of  Stockholm,  Sweden.  Ms.
Landgren is active in the American  Translator's  Association (ATA),  Society of
Technical   Communication   (STC)  where  she  annually  speaks  on  translation
processes,  and serves as an elected executive  committee member on the board of
the Localization  Industry  Standards  Association  (LISA).  LISA is the leading
association and is head-quartered in Geneva, Switzerland, dedicated to promoting
standards  for the  computer  industries.  She also serves as the newly  elected
president  of the Logos User's Group in the United  States.  Logos,  Inc. is the
developer  of a machine  translation  system.  She is a respected  authority  on
product  globalization  and has  published  articles in major  magazines  on the
subject.  Ms.  Landgren  lived many years in Europe prior to opening BTS thereby
gaining hands on expertise in multi-lingual product adaptation.

CHARLES D. CASCIO became a Director,  President and Chief  Executive  Officer of
the Company in May of 1996. He had previously been engaged by the Company,  from
inception,  as a full time financial consultant.  From late 1992 until July 1996
he was Chairman and President of Electro-Kinetic  Systems, Inc., a publicly held
provider of laboratory testing products.  From 1990 to late 1992, Mr. Cascio was
employed as a full time  marketing and  financial  consultant to John B. Canuso,
Inc., a large privately held  development,  building and  entertainment  company
located in Southern New Jersey.  From 1987 to 1990, he was a full time financial
and  marketing  consultant  to Drug  Screening  Systems,  Inc., a publicly  held
manufacturer  of drug  screening  systems  to detect the  presence  of "drugs of
abuse".  From  1984 to 1987,  Mr.  Cascio  managed  a wholly  and  family  owned
sporting,  entertainment  and  recreational  facility,  known  as the  Coliseum,
located in Voorhees,  N.J.,  which was sold. Mr. Cascio holds a Bachelors Degree
in Economics from Iona College.

RICHARD  J.L.  HERSON was  Secretary,  Treasurer  and a  Director  of TTGL since
inception  until  February 1, 1996,  when he resigned as Secretary and Treasurer
and was appointed Chief Accounting Officer.  Mr. Herson was previously a General
Partner in the firm of Hertz,  Herson  and  Company,  CPA's with  offices in New
York, and Charlotte.  He is currently Secretary of the Bruner Foundation,  where
he is responsible  for its  investments  and accounting  operations.  He holds a
Bachelor's  Degree from the City  College of New York and an M.S. in  Accounting
from Columbia  University.  He has also authored numerous articles and a book on
accounting.


                                       13


LUIS M. GARCIA-BARRIO,  PH.D has been the Vice President/Special Projects of the
Company  since  April 1996.  Prior  thereto,  since  January  1991,  he held the
position of  International  Production  Manager.  Dr. Barrio also is the head of
Research and  Development.  Dr. Barrio holds degrees in Linguistics,  Education,
and the Humanities,  including a Masters Degree and Ph.D. from the University of
Pennsylvania.  He is a certified  State and Federal  Court  interpreter  and has
served  on  the  faculty  as  Chairman,   Associate   Professor  and  Curriculum
Development  Administrator  of  several  major  universities  in both the US and
abroad.  In addition,  he has published  over two (2) dozen papers on literature
and linguistics.

JOHN WETTER is now Vice  President/Operations for the Company. Since his arrival
in July 1995, he has been  responsible for the significant  increase in the turn
around  time and  quality of the  Company's  project  work by  concentrating  on
increased  productivity  through  computerization and training.  From 1989 until
June 1995, Mr. Wetter owned and operated Colortech  Graphics,  Inc., a specialty
music printing company.  Mr. Wetter holds an MBA in Business from the University
of Scranton and has served as an adjunct professor at the University of Vermont.

JULIUS  CHERNY,  PH.D has been a Director  since May 10, 1996.  Dr.  Cherny is a
founder  and  partner of  Mottola,  Cherny and  Associates,  a  consulting  firm
specializing  in  providing  financial,  organizational  and systems  consulting
services.  Dr. Cherny holds a Ph.D.  in accounting  and is currently on staff at
the NYU  Graduate  School of  Business  and  previously  at the Hagen  School of
Business at Iona College. Dr. Cherny has held positions as Director, Senior Vice
President,  and Chief Financial  Officer with firms in the securities  industry.
Dr.  Cherny has  published  numerous  papers  and books  dealing  with  Finance,
Accounting and Advanced Mathematical Theory.

GARY M. SCHLOSSER was appointed a Director in August 1996. Since August 1, 1994,
Mr.  Schlosser has been the  President  and a director of Jefferson  Bank of New
Jersey.  From October 1989 through July 1994 he was Executive  Vice President of
Glendale  National Bank of New Jersey and prior thereto,  from July 1988, he was
President of Glendale  Mortgage Services  Corporation,  a subsidiary of Atlantic
Bancorporation.  Mr.  Schlosser  is  a  member  of  the  Camden  County  Bankers
Association and the South Jersey Security Bankers Association.

JAMES W. GRAU is President and Founder of Charisma  Communications,  Ltd,  which
specializes in producing programs, industrials, live events and concerts for the
networks,  cable and industry.  During its 19 year history  Charisma has created
programs  earning  the  highest  industry  awards and  accolades  and has eleven
productions in THE MUSEUM OF TELEVISION AND RADIO.

Prior  thereto,  Mr. Grau was under  contract to some of the major  networks and
corporations including ABC, CBS, MetroMedia,  the U.S. Congress Sub-Committee on
Communications and the National Cable Television  Association.  In the late 80's
Mr. Grau served as the only outside consultant to CBS Ventures Committee and has
served under two U.S.  Presidents on the National  Advisory Council of the Small
Business  Administration.  Presently,  he is the  Entertainment  Director of the
Mar-a-Lago  Club, Palm Beach,  Fla., and the executive  Producer of contemporary
concerts for the Trump Organization.

Mr. Grau is a Graduate of the Medill School of Journalism at Northwestern and is
married to Elizabeth Trump Grau.

Following are some of Mr. Grau's involvements

     o    Trump Palace - Treas. and Board of Managers
     o    Friars Club  - Governor/Lifetime Secretary
     o    Congressional Select Committee on Crime.
     o    FBI - Marine Corps Law Enforcement Foundation
     o    Daytop Village - Board of Directors

BOARD OF DIRECTORS

         Each   director  is  elected  at  the  Company's   annual   meeting  of
stockholders and holds office until the next annual meeting of stockholders,  or
until his successor is elected and qualified.  At present,  the Company's bylaws
require no fewer than one  director.  Currently,  there are six directors of the
Company.  The bylaws  permit the Board of  Directors to increase the size of the
board and to fill any  vacancy  and the new  director  may serve  until the next
annual meeting of  stockholders or until his successor is elected and qualified.
Officers  are elected by the Board of  Directors  and their terms of office are,
except to the extent governed by employment contracts,  at the discretion of the
Board.  There are no family  relations  among any  officers or  directors of the
Company.  The officers of the Company,  other than Richard J.L.  Herson,  devote
full time to the business of the Company.  The Company has established  separate
Audit and Compensation Committees. The Audit Committee, consisting of Mr. Herson
and Dr. Cherny,  makes  recommendations to the Board of Directors  regarding the
selection of  independent  auditors,  reviews the results and scope of the audit
and of the services provided by the Company's independent auditors,  and reviews
and  evaluates  the  Company's  internal  control  functions.  The  Compensation
Committee,  consisting of Ms. Landgren and Mr. Herson, makes  recommendations to
the Board of  Directors  concerning  compensation  for  executive  officers  and
consultants of the Company.  While the  Underwriter has the right to designate a
member to the Board of Directors  during the next two years,  it has advised the
Company that it has no current intent to exercise this right.

Section 16(a) Beneficial Ownership Reporting Compliance

         During the fiscal year ended March 31, 1997, all of the Directors filed
their Form 3 late and each  executive  officer did not timely file one Form 4 to
report a grant of stock  options.  The  Company  is  instituting  procedures  to
prevent future untimely filings.



                                       14




ITEM 10. EXECUTIVE COMPENSATION.

EMPLOYMENT AGREEMENTS

         As of  December  7, 1995,  the  Company  entered  into formal five year
written employment contracts with the Company's Chairman/Chief Operating Officer
and its President/Chief  Executive Officer for an annual base salary of $104,000
each  during  each of the  five  years  thereof,  plus  annual  cost  of  living
adjustments.  These  agreements also (i) contain  restrictions on competing with
the Company for two years following termination of employment,  (ii) provide for
severance  payments in the event of termination  without cause by the Company in
an amount  equal to the  aggregate  amount of payments due under the term of the
Agreement  (without regard to extensions),  but in no event less than one year's
compensation,  (iii)  provide  that the Company will  purchase a life  insurance
policy naming as  beneficiary a person chosen by each officer in an amount equal
to 2.5 times such  officer's  salary and (iv) provide a car or a car  allowance.
The Company has also entered into an oral  agreement  with Mr. Herson to pay him
an annual compensation of $25,000 to begin following the close of the IPO.

         The estimated  value of benefits to each officer not available to other
employees was less than $10,000.


EXECUTIVE COMPENSATION

         The following  table  summarizes  the total  compensation  of the Chief
Executive  Officers of the Company for the fiscal year ending March 31, 1997 and
since inception (the "Named Executive  Officer").  There were no other executive
officers of the company who received  compensation in excess of $100,000 for the
fiscal year ending March 31, 1997.

SUMMARY COMPENSATION TABLE

Name/                            Annual Compensation      Long Term Compensation
Principal Position             Year    Salary    Other           Options (#)
------------------             ----    ------    -----           -----------
                              
Michael C. Cascio/             1997    $4,615     N/A                N/A
 President and Chief           1996    $8,462     N/A                N/A
 Executive Officer (i)         
                              
Charles D. Cascio/             1997    $87,000    N/A                100,000
 President and Chief          
 Executive Officer (ii)       
                              
Theodora Landgren/             1996    $20,000    N/A
 Chief Operating Officer (iii) 1997    $104,000   N/A                100,000
-----------------------    
(i)   From inception (July 7, 1995) through May 9, 1996.
(ii)  From May 10, 1996.
(iii) Covers the period  January  17, 1996  through  March 31, 1997 and does not
      include the period when an officer of Bureau of Translation Servies, Inc.

STOCK OPTION PLAN

         The Board of Directors and  stockholders  of the Company have adopted a
Stock  Option Plan (the  "Option  Plan") as an  incentive  for, and to encourage
share  ownership by, the Company's  officers,  directors and other key employees
and/or  consultants  and  potential   management  of  possible  future  acquired
companies.  The Option  Plan  provides  that  options  to  purchase a maximum of
2,500,000   shares  of  Common   Stock   (subject  to   adjustment   in  certain
circumstances)  may be granted under the Option Plan,  2,200,000 of which shares
may not be issued for 18 months from  December  2, 1996,  without the consent of
the  Underwriter.  The  Option  Plan  also  allows  for the  granting  of  stock
appreciation rights ("SARs") in tandem with, or independently of, stock options.
Any SARs granted will not be counted against the 2,500,000 share limit.

         The  purpose of the Option  Plan is to make  options  (both  "incentive
stock options"  within the meaning of Section 422A of the Internal  Revenue Code
of 1986,  as  amended  (the  "Code"),  and  non-qualified  options)  and  "stock
appreciation  rights" (with  non-qualified  options  only)  available to certain
officers, directors and other key employees and/or consultants of the Company in
order to give such individuals a greater personal interest in the success of the
Company  and, in the case of  employees,  an added  incentive  to  continue  and
advance in their employment.

         The  Plans  are  currently  administered  by  the  majority  vote  of a
Committee (the "Committee") appointed by the Board of Directors and comprised of
at least two members of the Board who, in the case of the Option  Plan,  are not
eligible to receive options, other than pursuant to a formula, it being intended
that such plan shall  qualify  under Rule 16b-3 as  promulgated  pursuant to the
Securities Exchange Act of 1934, as amended.  The Committee will designate those
persons to receive  grants  under the Plans and  determine  the number of shares
and/or options,  as the case may be, to be granted and the price payable for the
shares of Common Stock  thereunder.  The price  payable for the shares of Common
Stock under each option will be fixed by the Committee at the time of the grant,
but, for incentive stock options, must be not less than 100% (110% if the person
granted  such  option  owns  more than 10% of the  outstanding  shares of Common
Stock)  of the fair  market  value of  Common  Stock at the time the  option  is
granted,  and 85% of such  price  for  non-qualified  stock  options.  The above
notwithstanding, the Company intends shortly to amend the Option Plan so it will
conform to the recent revisions of Rule 16b-3.


                                       15


         The  Company  issued  100,000  options  to  each  of its  Chairman  and
President.  Pursuant to the agreement with the Underwriter, the Company will not
issue more than an  additional  100,000  stock  options,  for a total of 300,000
stock options,  during the 18 months  following the date of the IPO, without the
consent of the  Underwriter.  The following  table sets forth  information  with
respect to each Executive  Officer and Director and other employees  relative to
the granting of options  during the year ended March 31, 1997,  and  unexercised
options  held as of the end of the fiscal year (no option was  exercised  during
the year):

<TABLE>
<CAPTION>


                         Number of       % of        Exercisable Within 18    % of      Estimated Value of Sale of Such
                        Securities      Grants             Mos.              Market on            Options ***
                        Underlying                   (April 30, 1998)         Date of        5 Years        10 Years
                         Options                                              Grant
<S>                      <C>               <C>          <C>                    <C>          <C>            <C>      
Theodora Landgren        100,000           15.1         100,000                110          $166,800       $ 381,600
                                                     
Charles D.Cascio         100,000           15.1         100,000                110           166,800         381,600
                                                     
Richard J.L.Herson        65,000            9.9          13,000 *              100           108,400         248,000
                                                     
Luis Garcia-Barrio        25,000            3.8           5,000 *              100            41,700          95,400
                                                     
John J. Wetter            25,000            3.8           5,000 *              100            41,700          95,400
                                                     
Gary M. Schlosser         10,000            1.5          10,000                100            16,700          38,200
                                                     
Other Employees          335,000           50.8          67,000 *              100           558,800       1,278,400
                                                     
TOTAL                    660,000          100.0         300,000 **
</TABLE>


*        Exercisable 20% per year.                     
**       Per Agreement with Underwriter.
***      Based on assumed increase in value of 5% per annum of the underlying
         Common Stock securities.

         Subsequent to March 31, 1997 all of the options which were  exercisable
within the 18 month period were registered on Form S-8.

COMPENSATION OF DIRECTORS

         Directors of the Company are not  compensated  for their  services,  in
that  capacity.  See  "Executive   Compensation  -  Employment  Agreements"  for
descriptions  of  other  agreements  between  the  Company  and  certain  of its
directors.



                                       16



 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following  table sets forth  information  regarding the  beneficial
ownership of the Company's  Common Stock,  as of  June 15, 1997, (a) each person
known by the Company to own beneficially more than five percent of the Company's
outstanding  shares of Common Stock, (b) each director and executive  officer of
the Company who owns shares and (c) all directors and executive  officers of the
Company as a group. Unless otherwise  indicated,  all shares of Common Stock are
owned by the individual named as sole record and beneficial owner with exclusive
power to vote and dispose of such shares.



                                                    COMMON STOCK
                                                        OWNED         PERCENTAGE
NAME AND ADDRESS                                    BENEFICIALLY       OF CLASS
----------------                                    ------------       --------

Theodora Landgren                                       285,000           14.6
(1)(2)(3)
Charles D. Cascio                                       200,000           10.3
(1)(2)(4)
Richard J.L. Herson                                      57,500            3.0
(1)
James W. Grau                                            20,000            1.0
(1)(5)
All Executive Officers and
  Directors as a Group                                  562,500           28.9

(1)      Uses the Company's address at 332C Haddon Avenue,  Westmont, New Jersey
         08108.

(2)      Does  not  include   100,000   Warrants   subject  to  restrictions  on
         transferability for 18 months from December 2, 1996.

(3)      Does not include an additional 112,500 shares of Common Stock held in a
         Voting Trust under which she has sole voting  control until December 2,
         1998. With such shares she controls 20.46% of the shares.
  
(4)      Does not  include  an  aggregate  of  144,000  shares  owned by  adult,
         independent  children of Mr. Cascio.  Mr. Cascio  disclaims  beneficial
         interest in such shares.

(5)      Represents 20,000 currently exerciseable warrants.

ITEM 12.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The  Company  has  entered  into  written  employment  agreements  with
Theodora Landgren and Charles D. Cascio, and an oral agreement with Richard J.L.
Herson,  all of whom are  executive  officers  and  directors.  The  Company has
recently  concluded an exclusive  license  agreement with Dr. Julius  Cherny,  a
director,  for the worldwide rights to an automated machine  translation  system
for which Dr. Cherny has filed a patent application.  See "Business-Research and
Development."

         As part of the  Company's  January  1996  transaction  with  BTS,  as a
shareholder  of BTS,  Ms.  Landgren  received a pro rata  amount of stock in the
Company,  amounting  to  677,500  shares of Common  Stock,  which has since been
reduced to 385,000  shares by  accounting  for her  give-back  to the Company of
292,500  shares and which was further  reduced to 285,000  shares by the sale by
the  Underwriters  of  100,000  shares on her  behalf  as part of the IPO.  As a
prerequisite  for the  Underwriter  entering  into  this  transaction  with  the
Company, it required that not more than 1,226,000 (post-Reverse Split) shares of
Common Stock be outstanding. In order to meet this limit an aggregate of 665,000
shares of Common  Stock were  returned  to the  Company by various  stockholders
including Ms.  Landgren  (292,500  shares),  Mr.  Cascio and his family  members
(300,000 shares) and Mr. Herson (7,500 shares). In an attempt to compensate such
people for their loss, on May 24, 1996, the Company granted 100,000 warrants, to
each of Ms.  Theodora  Landgren  and Mr.  Charles  Cascio.  These  warrants  are
identical  in all  respects  to the  1,840,000  Warrants  that  were sold by the
Company.


                                       17




         Other assets include  approximately $52,000 due from Theodora Landgren,
the Company's  chairman and chief operating  officer;  interest  charged for the
year on such advances is at the rate of 8% per annum.



                                       18




         In February 1997, the Company entered into a Consulting  Agreement with
Mr. Grau for which he received 20,000 warrants.  The Company also entered into a
Consulting Agreement with Charisma Communications Ltd., a corporation controlled
by Mr. Grau, for which it receives a fee of $60,000.


                                    PART IV


Item 13. Exhibits and Reports on Form 8-K
         --------------------------------

         (a)  Exhibits

The following exhibits were filed as part of SB-2 Registration Statement dated
July 25, 1996 (Registration No. 333-8857):

     3.1       Restated Certificate of Incorporation
     3.2       By-Laws
     4.6       Form of Subscription  Agreement between the Company and investors
               pursuant to December 7, 1995 Private Placement Memorandum.
    10.1       Lease Agreement between BTS and J.C.G.  Partnership dated January
               18, 1995.
    10.5       The Translation Group, Ltd. 1995 Stock Option Plan.

The  following  exhibits  were  filed  as part of  Amendment  No.  1 to the SB-2
Registration Statement dated September 19, 1996:

    10.2       Employment  Agreement  between the Company and Theodora  Landgren
               dated as of December 7, 1995, as amended.

--------------------

    (1)   Includes  $7,000  as a  car  allowance  and  the  balance  as  an  IRA
contributions and insurance premiums.

    10.3       Employment Agreement between the Company and Charles Cascio dated
               as of December 7, 1995, as amended.

    10.4       Agreement  between the Bureau of Translation  Services,  Inc. and
               debis Systemhaus KSP-Kommerzielle Systeme und Projekte GmbH dated
               May 24, 1995

    10.5       Voting Trust Agreement  between Ms. Theodora Landgren and various
               stockholders dated as of September 11, 1995.

The  following  exhibits  were  filed  as part of  Amendment  No,  2 to the SB-2
Registration Statement dated October 17, 1996:

     4.1       Specimen Common Stock Certificate
     4.2       Specimen Warrant Certificate

The  following  exhibits  were  filed  as part of  Amendment  No.  3 to the SB-2
Registration Statement dated November 14, 1996

   1.1.2       Revised Underwriting Agreement
   4.3.1       Revised Form of Warrant Agreement
   4.4.1       Form of Revised Repressentative's Warrant Agreement
   4.5.1       Form of Revised Repressentative's Warrant
    10.6       Consulting Agreement between the Repressentative and the Company

The following exhibit is filed herewith:

    10.7       License  Agreement  Between the Company and Gedanken  Corporation
               dated as of November 1, 1997.

         (b)   Reports on Form 8-K:

During the last quarter of its fiscal year ending  March 31,  1997,  the Company
filed one  Current  Report on Form 8-K  dated as of March  31,  1997,  to report
entering into a letter of intent to acquire the Word House companies.


                                   SIGNATURES

         In accordance  with 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 TRANSLATION GROUP, LTD.



                         By: /s/CHARLES D. CASCIO
                            ------------------------
                                Charles D. Cascio
                                President


                         Dated: June 26, 1997



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


Signiture                   Title                              Date
---------                   -----                              ----

/s/ THEODORA LANDGREN       Chairman and Chief Operating       
---------------------       Officer                            -----------------
THEODORA LANDGREN

/s/ CHARLES D. CASCIO       President, Chief Executive
---------------------       Officer and Director               -----------------
CHARLES D. CASCIO

/s/ RICHARD J.L. HERSON     Chief Accounting Officer and
-----------------------     Director(Principal Financial Officer)---------------
RICHARD J.L. HERSON

/s/ JULIUS CHERNY           Director                              
-----------------------                                        -----------------
JULIUS CHERNY

/s/ GARY M. SCHLOSSER       Director                     
-----------------------                                        -----------------
GARY M. SCHLOSSER

/s/ JAMES W. GRAU           Director                           
-----------------------                                        -----------------
JAMES W. GRAU




                                       19








<PAGE>

                           THE TRANSLATION GROUP, LTD.
                                 AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                        MARCH 31, 1997 AND MARCH 31, 1996

<TABLE>
<CAPTION>

                                                                          MARCH 31,       MARCH 31, 
                                                                            1997            1996
                                                                            ----            ----
 ASSETS:
<S>                                                                 <C>              <C>
 Current assets:
   Cash and cash equivalents                                            $  3,659,307    $    530,340
   Accounts receivable, net of allowance for doubtful
   accounts of $25,000 and $20,000 respectively                              946,107         642,481
   Prepaid expenses and other current assets                                 175,627
   Deferred offering costs                                                                    34,540
                                                                     ---------------  --------------

 Total current assets                                                      4,781,041       1,207,361

 Property and equipment                                                      529,785         362,178
   Less:  accumulated depreciation and amortization                        (171,235)       (189,466)
                                                                     ---------------  --------------
 Net property and equipment                                                  358,550         172,712

 Other assets                                                                126,204          58,759
                                                                     ---------------  --------------

 TOTAL ASSETS                                                          $   5,265,795     $ 1,438,832
                                                                     ===============  ==============

 LIABILITIES AND STOCKHOLDERS' EQUITY:
 Current liabilities:
   Accounts payable                                                    $     111,799    $     55,834
   Accrued liabilities                                                       130,514          26,000
   Accrued income taxes                                                                      115,000
   Deferred income taxes                                                     278,792         233,394
                                                                     ---------------  --------------

 Total current liabilities                                                   521,105         430,228

 Stockholders' equity:
   Common  stock,  $.001 par  value,  15,000,000 
    shares  authorized,  1,943,000 outstanding
    and 1,891,000 outstanding, respectively                                    1,943           1,891
   Preferred stock, $.001 par value, 1,000,000
     authorized, none outstanding
   Additional paid-in capital                                              4,046,772         464,759
   Retained earnings                                                         695,975         541,954
                                                                     ---------------  --------------

 Total stockholders' equity                                                4,744,690       1,008,604
                                                                     ---------------  --------------

 TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY                                                  $   5,265,795    $  1,438,832
                                                                     ===============  ==============
</TABLE>

 See accompanying notes to consolidated financial statements.


<PAGE>


                           THE TRANSLATION GROUP, LTD.
                                 AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                   FOR THE YEARS ENDED MARCH 31, 1997 AND 1996

<TABLE>
<CAPTION>
                                                             MARCH 31,        MARCH 31,
                                                               1997             1996
                                                               ----             ----

<S>                                                     <C>               <C>          
 Revenue                                                $    3,193,068    $   2,586,306
 Cost of services provided                                   2,126,262        1,442,940
 Depreciation and amortization
                                                                75,202           74,751
                                                        --------------    --------------

 Gross profit                                                  991,604        1,068,615
                                                               


 Selling, general and
 administration expense                                        811,626          485,137
                                                        --------------    --------------
                                                                        
                                                                        
 Operating income                                              179,978          583,478
                                                                        
                                                                        
 Non-operating income (expense)                                          
 Interest income (expense)                                      76,343           (3,007)
                                                        --------------    --------------
                                                                        
 Income before income taxes                                    256,321          580,471
                                                                        
                                                                        
 Provision for income taxes                                    102,300          232,600
                                                        --------------    --------------
                                                                        
                                                            
 Net income                                           $        154,021    $     347,871
                                                     =================  ================



 Net income per common share
 outstanding                                          $           0.11    $        0.34
                                                     =================  ================

 Weighted average shares
 outstanding                                                 1,465,000        1,033,200
                                                     =================  ================
</TABLE>

 See accompanying notes to consolidated financial statements.



<PAGE>


                           THE TRANSLATION GROUP, LTD.
                                 AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   FOR THE YEARS ENDED MARCH 31, 1997 AND 1996

<TABLE>
<CAPTION>


                                                                               MARCH 31,         MARCH 31, 
                                                                                 1997              1996
                                                                                 ----              ----
<S>                                                                         <C>             <C>
 CASH  FLOWS PROVIDED BY OPERATING ACTIVITIES:
   Net income                                                                $    154,021    $     347,871
   Depreciation and amortization                                                   75,202           74,751
                                                                                

 CHANGE IN OPERATING ASSETS AND LIABILITIES:
   Accounts receivable                                                           (303,626)        (316,816)
   Prepaid expenses and other current assets                                     (175,627)          31,625
   Other assets                                                                   (67,445)         (42,258)
   Accounts payable                                                                55,965           33,826
   Accrued liabilities                                                            104,514            2,130
   Accrued income taxes                                                          (115,000)         107,118
   Deferred income taxes                                                           45,398          117,600
                                                                          ---------------  ---------------

 Net cash flows provided by operating activities                                 (226,598)         355,847

 CASH FLOWS (USED FOR) INVESTING ACTIVITIIES:
   Purchase of property and equipment                                            (261,040)        (196,749)

 CASH FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
   Issuance of common stock                                                     3,582,065          446,600
   Deferred offering costs                                                         34,540          (34,540)
   Net payments under line of credit                                                               (40,000)
   Payments on long-term debt                                                                       (3,056)
                                                                          ---------------  ---------------

 Net cash flows provided by (used in) financing activities                      3,616,605          369,004
                                                                          ---------------  ---------------

 Net increase in cash and cash equivalents                                      3,128,967          528,102

 Cash and cash equivalents, beginning of year                                     530,340            2,238
                                                                          ---------------  ---------------

 Cash and cash equivalents, end of year                                     $   3,659,307    $     530,340
                                                                          =============== ================


 SUPPLEMENTAL INFORMATION:
   Cash paid during the year for:

      Interest                                                              $         258    $       3,227
                                                                          =============== ================
      Income Taxes                                                          $     233,100    $       8,933
                                                                          =============== ================
</TABLE>

 See accompanying notes to consolidated financial statements.


<PAGE>


                          THE TRANSLATION GROUP, LTD.
                                 AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                   FOR THE YEARS ENDED MARCH 31, 1997 AND 1996

<TABLE>
<CAPTION>


                                                                                                                    Total
                                                       Common        Common         Paid-in        Retained     Stockholders'
                                                       Shares         Stock         Capital        Earnings         Equity
                                                       ------         -----         -------        --------         ------

<S>                                                   <C>            <C>            <C>           <C>           <C>               
 BALANCE AT MARCH 31, 1995                                    50      $     50       $        -    $  194,083    $     194,133
                                                                                              

 YEAR ENDED MARCH 31, 1996:

   Formation of TTGL                                     885,000
                                                                            885             885            -             1,770

   Conversion of note                                     10,000                         19,990
                                                                             10                            -            20,000

   Recapitalization                                      755,000
                                                                            755           (705)            -                50

   BTS shares acquired                                       (50)           (50)              -            -               (50)

   Private Placement                                     241,000            241         444,589            -           444,830

   Net income - March 31, 1996                                                                        
                                                              -              -               -         347,871         347,871
                                                       ---------         ------         -------        -------      ----------
 BALANCE AT MARCH 31, 1996                             1,891,000          1,891         464,759        541,954       1,008,604


 YEAR ENDED MARCH 31, 1997:

   Give back of shares in connection with the IPO       (665,000)          (665)                                          (665)

   Shares issued in connection with IPO                  705,000            705       3,534,025                      3,534,730
                                                                            

   Shares issued in satisfaction of debt                  12,000             12          47,988                         48,000

   Net income - March 31, 1997                                 -              -               -       154,021          154,021
                                                       ---------         ------         -------       -------       ----------

 BALANCE AT MARCH 31, 1997                             1,943,000     $    1,943     $ 4,046,772     $ 695,975    $   4,744,690
                                                       =========     ==========     ===========     =========    =============
</TABLE>

 See accompanying notes to consolidated financial statements.



<PAGE>


                           The Translation Group, LTD.
                   Notes to Consolidated Financial Statements


NOTE 1-THE COMPANY

The Translation  Group, LTD. (TTGL or the Company) was incorporated in the State
of Delaware on July 7, 1995,  and  acquired  100% of the issued and  outstanding
shares of the Bureau of Translations  Services,  Inc. (BTS) on January 17, 1996;
BTS  was  incorporated  in  1984  in the  State  of  Pennsylvania.  The  Company
translates  and  localizes  documents and software  into various  languages.  It
provides  services to a range of industries with a concentration  on information
technology companies.

On  January  17,  1996,  pursuant  to the  terms  of an  Agreement  and  Plan of
Reorganization,  TTGL  completed a business  combination  merger  with BTS.  The
transaction  was effected by the  exchange of 755,000 of TTGL common  shares for
all the issued and outstanding common shares of BTS. Concurrent with the merger,
TTGL issued 241,000 shares  pursuant to a private  placement offer at a price of
$2.50 a share and costs of issuance of $157,670.  Subsequently,  of the original
shares  issued,  292,500  shares were returned by BTS  shareholders  and 362,500
shares by TTGL  shareholders  in  connection  with the initial  public  offering
(IPO).

In November 1996, the Company underwent a two-for-one  reverse stock split. This
was  recorded  retroactively  in  the  Company's  March  31,  1996  Consolidated
Financial  Statements.  The statements  presented for the comparative period are
reclassified to agree with the classifications of the current statements.

As of December 2, 1996, the Company  completed its IPO. The Company sold for its
own account  705,000 shares of its Common Stock at $6.00 per share and 1,840,000
warrants at a price of $.20 per share. The net proceeds after expenses  amounted
to  approximately  $3,535,000.  The Company also issued  12,000 common shares in
payment of indebtedness of $48,000.

On March 31, 1997, TTGL agreed to acquire all the capital stock of the companies
that  comprise the Word House  Group(Word  House) in exchange for 375,000 of its
common shares;  the closing is scheduled for June 30,1997.  The acquisition will
be  accounted  for on a pooling of  interests  basis.  See Note 11 below and Pro
Forma (Unaudited) Consolidated Financial Information.

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements for the year ended March 31,1997,  include
the accounts of TTGL and BTS. The  acquisition  of BTS by TTGL was accounted for
as  a  recapitalization  of  BTS  as  of  January  17,  1996.  Accordingly,  the
consolidated  financial statements for the year ended March 31, 1996 reflect the
results of activities of both  companies.  Operations have been conducted by the
Subsidiary,  BTS.  The  Parent's  activities  have been  related to the  private
placement  financing and to the IPO, potential and actual acquisitions and joint
ventures, and overall coordination and direction of research and development and
market strategies with operations.


                                       1



Preparation  of  the  consolidated   financial  statements  in  conformity  with
generally accepted  accounting  principles requires management to make estimates
and judgments  that affect the reported  amounts of assets and  liabilities  and
disclosure of contingent  assets and  liabilities  at the dates of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting periods. Actual results could differ from these estimates.

REVENUE RECOGNITION

Revenues are  recognized  on the accrual  method of  accounting  upon billing to
customers.  Customers are billed upon completion of project milestones which are
defined at the beginning of the projects.

MARKETING AND ADVERTISING

The Company  adopted the  American  Institute of  Certified  Public  Accountants
Statement of Position (SOP) 93-7,  Reporting on Advertising  Cost. In accordance
with SOP 93-7,  marketing and advertising  costs are expensed as incurred.  Such
expenses approximated $61,000 and $53,000 for the years ended March 31, 1997 and
1996, respectively.

FOREIGN CURRENCY TRANSACTIONS

Gains and losses from exchange rate fluctuations are not material.

CASH AND CASH EQUIVALENTS

Cash includes  demand  deposits,  certificates  of deposit,  and  investments in
United  States  government  securities  with a due date of less than two  years,
carried at cost, net of amortization of premium.  Market and credit risk are not
significant because of the nature of these securities.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost net of depreciation and  amortization.
Depreciation and amortization are computed using  accelerated and  straight-line
methods over the  estimated  useful lives of the assets.  See also Notes 4 and 5
below relative to licensing agreements and their accounting.

INCOME TAXES

Deferred  income tax assets and  liabilities  are determined in accordance  with
Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes
(SFAS No.  109),  and result from  revenues and expenses  being  recognized  for
financial reporting purposes in time periods different from those for income tax
purposes.  Under SFAS No. 109, deferred income tax liabilities are classified as
current or  noncurrent,  based upon the financial  reporting  classification  of
assets and liabilities to which they relate.


RESEARCH AND DEVELOPMENT

See  Notes 4 and 5 below  relative  to  certain  license  agreements  and  their
accounting.  Other research and  development  costs are charged to operations as
incurred.


                                       2



EARNINGS PER COMMON SHARE

In calculating  average  earnings per common share,  the weighted average shares
outstanding  reflect the reverse split and modifications (in connection with the
IPO) to shares originally issued:

<TABLE>
<CAPTION>


                                                   Year Ended                       Year Ended
                                                 March 31, 1997                   March 31, 1996
                                             Shares         Weighted          Shares          Weighted
                                             ------         --------          ------          --------

<S>                                         <C>              <C>             <C>              <C>     
TTGL shares original issue and note         522,500          522,500         522,500          522,500*
conversion (t)
TTGL shares issued to BTS shareholders      462,500          462,500         462,500          462,500**
(t)
TTGL shares issued in connection with       241,000          241,000         241,000           48,200**
private placement
TTGL shares issued in connection with       717,000          239,000           -0-              -0-
IPO and debt settlement                   ---------        ---------       ---------        ---------
Total:                                    1,943,000        1,465,000       1,226,000        1,033,200
                                          =========        =========       =========        =========
</TABLE>


t    Net of give-back of 372,500 and 292,500 shares by TTGL and BTS
     shareholders.
*    The original  shares issued by TTGL are assumed to be  outstanding  for the
     entire year.
**   From January 17, 1996, the date of merger and private placement.

For the computation of earnings per share for the year ended March 31, 1997, the
inclusion of Common Stock  equivalents  of  outstanding  warrants and options is
antidilutive.

NOTE 3-SIGNIFICANT CUSTOMERS

For the year ended March 31, 1997,  two  customers  represent 31% of revenues in
comparison  to 37% for the prior year.  For each of the years  ended,  March 31,
1997 and 1996,  approximately  29% of the  Company's  revenues  were to  foreign
markets.

The Company has some  concentration  of credit risk with regard to its  accounts
receivable.  Three clients  represented  approximately 40% of the total accounts
receivable as of March 31, 1997 and two clients represented  approximately 41.5%
as of March 31, 1996.

NOTE 4-LICENSING AGREEMENTS

In  mid  1995,  the  Company  entered  into a  five-year  agreement  with  debis
Systemhaus KSP- Kommerzielle Systeme und Projekte GmbH ("debis"), a wholly owned
subsidiary of Daimler Benz.  The Company  acquired  license rights to a software
product  known as KEYTERM,  a  concept-oriented,  fully  relational  proprietary
database   running  under  UNIX  and  Windows  for  developing  and  maintaining
glossaries.  The Company has the  exclusive  right to use and to market  KEYTERM
throughout North America, and elsewhere nonexclusively. The Company is obligated
to pay  royalties  on all  revenues  generated  that use in whole or in part the
patent rights and know-how.


                                       3



In February 1997, the Company obtained an exclusive worldwide license and rights
for the life of the  patent to use and sell  know-how,  apparatus,  and  methods
pertaining  to a  patent  owned  by  the  Gedanken  Corporation  (Gedanken).  By
assignment  from Dr.  Julius  Cherny,  Gedanken is the owner of a United  States
Patent  Application that describes  apparatus and methods for translating words,
phrases,  and sentences from a source  language to other target  languages using
advanced   telecommunications  and  computer   technologies.   The  Company  has
contracted to pay Gedanken for the development of a machine  translation system:
(1) $250,000 over a  twelve-month  period,  beginning  February 15, 1997,  for a
Specific Topic Builder; and (2) $500,000,  beginning September 15, 1997, over an
eighteen-month  period,  for the development of a General Topic Dictionary.  The
Company  also  acquired  the  rights to the  development  of a Real  Time  Voice
Translation  System  based on  providing  the  necessary  funding  estimated  at
$4,000,000.  The Company is obligated to pay royalties on all revenues generated
that use in whole or in part the patent rights and know-how. The Company has the
right to stop funding at specified times or accomplishment  periods. As of March
31, 1997, the Company has paid $43,191.

See Note 5 below for the accounting of such payments.

NOTE 5-PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

                                           March 31, 1997       March 31, 1996
                                           --------------       --------------

Equipment                                    $245,020              $221,212

Software                                      117,723                40,090

Equipment & Software                          143,128                74,702
(under Licenses)

Furniture & Fixtures                           16,459                24,133

Leasehold Improvements                          7,455                 2,041
                                             --------              --------

Total                                         529,785               362,178

Less: accumulated depreciation &
amortization                                  171,235               189,466
                                              -------               -------

Net property & equipment                     $358,550              $172,712
                                             ========              ========


For the years  ended  March 31,  1997 and 1996,  depreciation  and  amortization
expense was $75,201 and $74,751  respectively.  Original  KEYTERM software costs
approximated  $75,000.  Additional  KEYTERM  software costs for the current year
approximate $26,000.  Amortization included in depreciation expense approximates
$21,700 and  $12,000 for the years ended March 31, 1997 and 1996,  respectively.
The $43,191 costs of Gedanken's  development of the machines for translations as
described  in Note 4 above is also  included in Equipment  and  Software  (under
Licenses); there is no amortization.


                                       4



NOTE 6 -RELATED PARTY TRANSACTIONS

Other assets  include  approximately  $52,000 due from  Theodora  Landgren,  the
Company's chairman and chief operating officer; interest charged for the year on
such advances is at the rate of 8% per annum.

The Company has retained  Michael  Cascio,  Esq.,  former officer and son of the
Company's  president as outside legal  counsel.  All  transactions  with Michael
Cascio, Esq., are at arms length.

NOTE 7-INCOME TAXES

The provisions for current and deferred  income tax expense for the years ending
March 31, 1997 and 1996 consist of the following:


                                           March 31, 1997     March 31, 1996
                                           --------------     --------------

Provision for Taxes
Current:
         Federal                              23,715             $88,000
         State                                10,390              26,556
                                              ------              ------
                                              34,105             114,556
                                                               
Deferred:                                                      
         Federal                              54,685              92,217
         State                                13,510              25,827
                                              ------              ------
                                              68,195             118,944
                                                               
         Total                               102,300             232,600
                                             =======             =======
                                                            
Components of Deferred
Tax Assets and Liabilities:

Accounts Receivable                          394,293            $257,136
Accounts Payable and
Accrued Liabilities                         (115,501)            (23,742)
                                            --------             -------
                                            $278,792            $233,394
                                            ========            ========

Reconciliation of Effective
Income Tax Rate:

Federal Income Tax Rate                     34.0%               34.0%
State Taxes, Net of Federal
Income Tax Benefit                           6.0%                6.0%
                                            -----               -----
         Total                              40.0%               40.0%
                                            =====               =====


Included  in prepaid  expenses is  approximately  $88,800 of  refundable  income
taxes.



                                       5



NOTE 8-WARRANTS AND STOCK OPTIONS

Pursuant  to the IPO,  the  Company  sold  1,840,000  warrants.  There were also
300,000  warrants  outstanding to shareholders  given in  consideration of their
give-back  of shares to the Company in  connection  with the IPO . Each  warrant
entitles  the  registered  shareholder  to purchase one share of Common Stock at
$6.00 per  share for a period of three  years  beginning  December  1996.  For a
holder to exercise such warrants, there must be a current registration statement
on file; the current  registration  statement becomes outdated on July 31, 1997.
Under certain terms and conditions,  all warrants may be redeemed by the Company
at a price of $.25 per warrant.  There are also outstanding  warrants granted to
underwriters  for a period of three  years to purchase  60,000  shares of Common
Stock at an exercise price of $7.80 per share and to purchase  160,000  warrants
at an exercise  price of $.26 per warrant to acquire a similar  number of shares
of Common Stock at $7.80 per share.  In connection  with the  Company's  private
placement,  additional  stock warrants were issued to purchase  40,000 shares of
the  Company's  Common  Stock at a price of $1.50 per share for a period of five
years.

The Company has adopted a Stock Option Plan (the "Plan") that provides a maximum
of  2,500,000  shares of Common  Stock to be issued  under such plan.  The price
payable for the shares of Common Stock under incentive stock options must be not
less than 100% of the fair market  value at the time the option is granted  (and
110% if the person  granted  such option  owns more than 10% of the  outstanding
shares of the Common Stock).  Additionally,  under the Plan, participants may be
granted stock appreciation rights (SAR). SAR consist of rights to receive either
cash or shares of Common  Stock  equal to the  amount by which the value of such
shares of Common  Stock on the date the SAR is  exercised  exceeds the per share
option  price.  Options  granted  under the plan  expire  ten years from date of
grant.

During the year the Company  granted  total stock  options of 660,000  shares at
$6.00 per share of which  300,000  shares are  exercisable  during the  eighteen
months  ended  June 30,  1998,  (no options  were  exercised  during the current
year):

<TABLE>
<CAPTION>

                                 NUMBER OF     % OF         EXERCISABLE     % OF MARKET   ESTIMATED VALUE OF SALE OF
                                SECURITIES      GRANTS     WITHIN 18 MOS.    ON DATE OF        SUCH OPTIONS ***
                                UNDERLYING                (APRIL 30, 1998)     GRANT         5 YEARS    10 YEARS
                                  OPTIONS
<S>                              <C>              <C>        <C>               <C>           <C>       <C>      
Theodora Landgren                100,000          15.1       100,000           110           $166,800  $ 381,600

Charles D.Cascio                 100,000          15.1       100,000           110            166,800    381,600

Richard J.L.Herson                65,000           9.9        13,000 *         100            108,400    248,000

Luis Garcia-Barrio                25,000           3.8         5,000 *         100             41,700     95,400

John J. Wetter                    25,000           3.8         5,000 *         100             41,700     95,400

Gary M. Schlosser                 10,000           1.5        10,000           100             16,700     38,200

Other Employees                  335,000          50.8        67,000 *         100            558,800  1,278,400

TOTAL                            660,000          100.0      300,000 **

</TABLE>
*   Exercisable 20% per year.
**  Per Agreement with Underwriter.
*** Based on assumed increase in value of 5% per annum of the underlying  Common
    Stock  securities.

                                       6



Subsequent  to March 31, 1997 all of the options which were  exercisable  within
the 18 month period were registered on Form S-8.

NOTE 9-COMMITMENTS AND CONTINGENGIES

The  Company  has five year  employment  agreements  with  three  officers  that
aggregate  $233,000 per year. The Company has outstanding  lease  agreements for
premises   that   approximate   $60,000   per  year  (plus   certain   operating
expenses)until  June 1998.  Rent expenses under such leases for the years ending
March 31, 1997 and 1996 were $77,000 and $68,000,  respectively.  In April 1997,
the Company  closed its  German office and in June 1997,  opened a London office
at a rental of $9,000 per year.

The Company has been given notice that it will be sued by a  stockholder  who is
seeking monetary damages, specific performance, equitable relief and cost in the
amount of  $3,000,000.  The Company and its  counsel  believe  that this suit is
completely without merit and will vigorously defend it. At this time a complaint
has not been  served.  The Company is not a party to, or involved  in, any other
legal proceedings.

NOTE-10-SUBSEQUENT EVENTS

Between  April  1,  1997  and June 25,  1997 a total  of  13,340  warrants  were
exercised at $6.00 a share,  10,000  shares were issued in  connection  with the
original  public  offering,  and 25,000  were issued  pursuant  to a  consulting
agreement.

NOTE 11-RECENT AGREEMENT AND ACQUISITION

In February 1997, the Company entered into a  marketing/production  venture with
World  Tech.  Corp (WTC),  a Korean  corporation.  Subject to Korean  government
approval,  BTS will  initially  operate  as a branch  in  Seoul to  exploit  the
translation markets from English to Korean and other Asian languages.  TTGL will
also have an option to acquire  WTC,  for shares of its  Common  Stock  based on
performance  criteria of WTC. To date, this venture has had negligible impact on
the financial statements.

On March 31, 1997, the Company  entered into an agreement to acquire the various
corporations that comprise The Word House Group (Word House), for 375,000 shares
of its Common Stock.  Word House has been in business since 1984 and has offices
in The Netherlands,  France,  Great Britain and China. Word House translates and
localizes  documents and software,  concentrating on European  languages.  Three
principal customer accounted for approximately 77% of sales in calendar 1996. In
May 1997,  Word House moved its principal  location to  Amsterdam.  Its lease of
approximately  5,500 square feet is for a period of five years at  approximately
$95,000 per year.


                                       7


Word House's net income  (unaudited)  for the calendar  years 1996 and 1995 were
$297,000  and  a  loss  of  $117,000  on  sales  of  $3,240,000  and  $1,720,000
respectively.  For the year 1996, net income reflects the recovery of income tax
carry forward in the amount of $120,000.  The acquisition  will be accounted for
on  a  pooling-of-interests  basis;  accordingly,   the  consolidated  financial
statements  will  retroactively  include the  operations of Word House for their
fiscal  years  based  on the  historical  costs of the  carrying  value of their
assets,  together with the consolidated  financial statements of the Company for
their fiscal years ended March 31. Costs in connection with this transaction are
estimated  at $55,000  and will be  expensed in the  consolidated  statement  of
income for the year ended March 31, 1998.  The  (unaudited)  pro forma effect of
such acquisition on sales and net income is as follows:


SALES                            YEAR ENDED 3/31/97         YEAR ENDED 3/31/96
Company                            $3,200,000                    $2,586,300
Word House                          3,240,000                     1,720,000
                                   ----------                    ----------

TOTAL                              $6,440,000                    $4,306,300
                                   ==========                    ==========

Net Income
Company                               154,000                       348,000
Word House                            297,000                      (117,000)
                                   ----------                    -----------

TOTAL                              $  451,000                    $  231,000
                                   ==========                    ==========

NET INCOME PER SHARE

Company                                $ .08                         $ .17
                                         ---                           ---
Word House                               .75                          (.30)
                                         ---                           ---

WEIGHTED AVERAGE                       $ .19                         $ .12
                                       =====                         =====



The  Company's  pro forma net income per share  (above) for each of the years is
based upon 1,943,000  shares currently issued and outstanding and 375,000 shares
to be issued for Word House. Net income of Word House for the year 1996 includes
the  recovery  of  income  taxes  from the  carry  forward  of prior  losses  of
approximately $120,000, or $.05 per share.


                                       8


The following is a pro forma (unaudited) consolidated condensed balance sheet of
the Company giving effect to the acquisition of Word House at March 31, 1997:


                                                                 Consolidated
                                                                        (000)
Assets
  Current assets
    Cash & equivalents                                                 $3,892
    Accounts receivable, net                                            1,306
    Prepaid exp & other current                                           280
                                                                       ------
     Total current                                                      5,478

  Property & equipment, net of                                            796
     depreciation
  Other assets                                                            129
                                                                       ------
     Total Assets                                                      $6,403
                                                                       ------

Liabilities & Stockholders' Equity
  Current liabilities
    Accounts payable                                                   $  359
    Accrued expenses                                                      231
    Deferred income tax                                                   279
    Bank overdraft (secured)*                                             529
                                                                       ------
     Total current                                                      1,398
                                                                       ------

  Mortgage payable                                                         92
                                                                       ------
     Total liabilities                                                  1,490

  Stockholders' equity                                                  4,913
                                                                        -----
     Total Liabilities &                                               $6,403
                                                                       ======
     Stockholders' Equity

*Secured  by cash  and  accounts  receivable  of Word  House  in the  amount  of
 $493,000.



                                       9



                          INDEPENDENT AUDITORS' REPORT



To the Stockholders of
The Translation Group, LTD

We have audited the accompanying  balance sheets of The Translation  Group, LTD.
and its  consolidated  subsidiary  at March 31,  1997 and 1996,  and the related
statements of  operations,  stockholders'  equity and cash flows for both of the
years in the two year period ended March 31, 1997. These consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

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

In our opinion,  the aforementioned  consolidated  financial  statements present
fairly,  in all material  respects,  the financial  position of The  Translation
Group,  LTD. And its  subsidiary at March 31, 1997 and 1996,  and the results of
their  operations,  stockholders'  equity  and their  cash flows for each of the
years in the two year period ended March 31, 1997, in conformity  with generally
accepted accounting principles.

As  discussed  in  Note  1  to  the  consolidated   financial  statements,   the
consolidated financial data reflect the result of a business combination merger,
accounted  for  as a  recapitalization  and a 1  for  2  reverse  split  of  the
outstanding common shares.



/s/VOTTA & COMPANY
Votta & Company
(A Professional Corporation)

Haddonfield, New Jersey
June 26, 1997


                                       10