<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  FORM 10-Q

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

                For the Quarterly Period Ended March 31, 1997

                        Commission File Number 0-25056

                  FINANCIAL SERVICES ACQUISITION CORPORATION
            (Exact name of registrant as specified in its charter)

        Delaware                                        59-3262958
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                    Identification Number)

                            Two World Trade Center
                           New York, New York 10048
                   (Address of principal executive office)

                                (212) 748-7000
                           (Registrant's telephone
                         number, including area code)

                  Indicate by check mark whether registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.

                  Yes      X             No
                                            ---

                  The number of shares of common stock, par value $.001 per
share, of registrant outstanding as of May 9, 1997 was 8,949,656.

                       The Exhibit Index is on Page 20

                              Page 1 of 22 Pages

<PAGE>

                  FINANCIAL SERVICES ACQUISITION CORPORATION

                                    INDEX

<TABLE>
<CAPTION>
                                                                                             Page
                                                                                       
                             PART I.  FINANCIAL INFORMATION           
<S>                                                                                         <C>
  Item 1.  Financial Statements (Unaudited):                                                    3
                                                                                       
                  Consolidated Statement of Financial Condition                                 4
                                                                                       
                  Consolidated Statement of Income                                              6
                                                                                       
                  Consolidated Statement of Changes in Stockholders' Equity                     7
                                                                                       
                  Consolidated Statement of Cash Flows                                          8
                                                                                       
                  Notes to the Consolidated Financial Statements                               10
                                                                                       
  Item 2.  Management's Discussion and Analysis of Financial                           
              Condition and Results of Operations                                              13
                                                                                       
                             PART II.  OTHER INFORMATION           
                                                                                       
  Item 5.  Other Information                                                                   18
                                                                                       
  Item 6.  Exhibits and Reports on Form 8-K                                                    18
                                                                                       
  Signatures                                                                                   19
                                                                                       
  Exhibit Index                                                                                20
</TABLE>

                              Page 2 of 22 Pages

<PAGE>

                        PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

                  FINANCIAL SERVICES ACQUISITION CORPORATION
                      CONSOLIDATED FINANCIAL STATEMENTS
                                MARCH 31, 1997
                                 (Unaudited)






                              Page 3 of 22 Pages

<PAGE>

                  FINANCIAL SERVICES ACQUISITION CORPORATION

                CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                                                   March 31, 1997            December 31, 1996
                                                                                   --------------            -----------------
                                                                                   (unaudited)
<S>                                                                               <C>                        <C>
      ASSETS

      Cash and cash equivalents                                                   $  14,134,542                $  18,231,926
      Restricted cash                                                                 1,889,121                    1,968,851
      Commissions receivable                                                         18,579,588                   18,558,643
      Equity in affiliated companies                                                  2,575,258                    2,756,741
      Receivable from clearing firm                                                   3,808,442                    2,200,062
      Deposits with clearing organizations
          (Includes cash of $561,326 and U.S. Treasury bills of
          $6,499,784 at March 31, 1997)                                               7,061,110                    7,181,992
      Securities owned                                                                1,024,389                    8,751,276
      Receivable from broker-dealers and customers                                    8,576,387                    9,042,613
      Prepaid expenses and other assets                                               5,628,575                    6,177,118
      Deferred tax asset                                                              5,785,229                    6,662,193
      Furniture, equipment and leasehold improvements                                12,748,580                   13,624,500
      Intangible assets                                                               1,914,293                    2,016,800
                                                                                  -------------                -------------

          Total assets                                                            $  83,725,514                $  97,172,715
                                                                                  =============                =============
</TABLE>

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

                              Page 4 of 22 Pages

<PAGE>
                  FINANCIAL SERVICES ACQUISITION CORPORATION
                CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
                                 (continued)
<TABLE>
<CAPTION>
                                                                                    March 31, 1997           December 31, 1996
                                                                                    --------------           -----------------
                                                                                      (unaudited)
<S>                                                                                 <C>                      <C>
      LIABILITIES AND STOCKHOLDERS' EQUITY:

      Liabilities:
          Short-term borrowings                                                     $   4,312,458              $    9,688,983
          Accounts payable and accrued liabilities                                     18,818,095                  17,336,032
          Accrued compensation payable                                                 15,857,603                  22,973,060
          Income taxes payable                                                          1,813,935                   1,804,543
          Obligations under capitalized leases                                          1,185,688                   1,428,764
          Securities sold, not yet purchased                                            1,658,718                   1,724,531
          Payable to broker dealers and customers                                                                   1,826,250
          Deferred taxes payable                                                          719,324                     719,324
          Notes payable                                                                 6,155,627                   7,379,762
                                                                                  ---------------              --------------

                                                                                       50,521,448                  64,881,249
                                                                                  ---------------              --------------

      Minority interest in consolidated subsidiaries                              (       256,049)             (      159,408)
                                                                                  ---------------              --------------

      Stockholders' equity:
          Preferred stock, $.001 par value; 1,000,000 shares authorized, none
             issued and outstanding at March 31, 1997 and December 31, 1996

          Common stock, $.001 par value; 30,000,000 shares authorized, 8,949,656
             shares issued and outstanding at March 31,
             1997 and December 31, 1996 (Notes 1 and 2)                                    8,950                        8,950
          Additional paid-in capital                                                  33,533,867                   33,533,867
          Accumulated deficit                                                     (    2,512,134)              (    3,546,081)
          Foreign translation adjustment                                               2,429,432                    2,454,138
                                                                                  --------------               --------------

             Total stockholders' equity                                               33,460,115                   32,450,874
                                                                                  --------------               --------------

             Total liabilities and stockholders' equity                           $   83,725,514               $   97,172,715
                                                                                  ==============               ==============
</TABLE>

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

                              Page 5 of 22 Pages

<PAGE>

                  FINANCIAL SERVICES ACQUISITION CORPORATION
                       CONSOLIDATED STATEMENT OF INCOME
                                 (unaudited)

<TABLE>
<CAPTION>

                                                                                           For the Three Months Ended
                                                                                  March 31, 1997              March 31, 1996
                                                                                  --------------              --------------
<S>                                                                               <C>                         <C>
      Revenue:

        Commission income                                                          $  43,412,352               $  48,339,964
        Interest income                                                                  428,671                     418,772
        Other income                                                                     176,581                      74,725
                                                                                  --------------              --------------

                                                                                      44,017,604                  48,833,461
                                                                                  --------------              --------------
      Costs and expenses:
        Payroll and related costs                                                     26,543,217                  28,353,853
        Communication costs                                                            4,352,234                   3,948,713
        Travel and entertainment                                                       2,714,381                   2,609,881
        Depreciation and amortization                                                  1,322,818                   1,171,970
        Occupancy costs                                                                1,550,870                   1,500,966
        Clearing fees                                                                  1,849,543                   1,191,695
        General, administrative and other  expenses                                    1,573,500                   2,004,770
        Interest expense                                                                 215,506                     148,058
                                                                                  --------------              --------------

                                                                                      40,122,069                  40,929,906
                                                                                  --------------              --------------

      Income before provision for income taxes and minority interest                   3,895,535                   7,903,555

      Provision for income taxes                                                       2,607,847                   4,099,528
                                                                                  --------------              --------------

      Income before minority interest                                                  1,287,688                   3,804,027

      Minority interest in consolidated subsidiaries                              (      253,741)             (     350,852)
                                                                                  --------------              --------------

      Net income                                                                  $    1,033,947              $    3,453,175
                                                                                  ===============             ==============

      Average  common shares outstanding (Note 1)                                      8,949,656                   8,949,656

      Earnings per share (Note 1)                                                  $         .12               $         .39
</TABLE>


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

                              Page 6 of 22 Pages

<PAGE>

                   FINANCIAL SERVICES ACQUISITION CORPORATION

            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
     FOR THE PERIODS ENDED DECEMBER 31, 1996 AND MARCH 31, 1997 (unaudited)

<TABLE>
<CAPTION>
                                    Additional                                           Notes          Foreign
                        Common       paid-in         Treasury        Accumulated    receivable from   translation
                        stock        capital          stock            deficit       stockholders     adjustments         Total
                        -----        -------          -----            -------       ------------     -----------         -----
<S>                   <C          <C>             <C>              <C>               <C>              <C>               <C>
Balance at                                      
 December 31, 1995    $   4,258   $ 48,193,040    ($ 10,177,107)   ($ 7,251,041)   ($   2,243,709)  $   2,865,823     $  31,391,264
                                                                      
Retirement                                                            
  of treasury stock   (   2,587)  ( 10,174,520)      10,177,107      
                                                                      
Net income for                                                        
  the year ended                                                      
  December 31, 1996                                                   3,704,960                                           3,704,960
                                                                      
Foreign translation                                                   
  adjustment                                                                                        (     411,685)    (     411,685)
                                                                      
Recapitalization                                                      
  in connection                                                       
  with the Merger:                                                    
                                                                      
  Retirement of                                                       
     EBIC stock       (   1,671)         1,671                       
                                                                      
  Issuance of                                                         
     shares to                                                        
     EBIC                                                             
     shareholders         8,950     18,234,300                                                                           18,243,250
                                                                      
  Cash consideration                                                  
     paid to EBIC                                                     
     shareholders                 ( 21,955,012)                                                                       (  21,955,012)
                                                                      
  Repayment of                                                        
     stockholder                                                      
     notes                                                                              2,243,709                         2,243,709
                                                                      
  Expenses                                                            
   incurred                                                           
   in connection                                                      
   with Merger                    (    765,612)                                                                       (     765,612)
                      ---------   ------------    -------------    ------------    --------------   -------------     -------------
                                                                      
Balance at                                                            

  December 31,                                                        
  1996                    8,950     33,533,867                     (  3,546,081)                        2,454,138        32,450,874
                                                                      
Net income for                                                        
  the three                                                           
  months ended                                                        
  March 31, 1997                                                      1,033,947                                           1,033,947 
                                                                      
Foreign                                                               
  translation                                                         
  adjustment                                                                                        (      24,706)    (      24,706)
                      ---------   ------------    -------------    ------------    --------------   -------------     -------------
                                                                      
Balance at                                                            
  March 31, 1997      $   8,950   $ 33,533,867    $                ($ 2,512,134)   $                $   2,429,432     $  33,460,115
                      =========   ============    =============    ============    ==============   =============     =============
</TABLE>

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

                              Page 7 of 22 Pages

<PAGE>
                  FINANCIAL SERVICES ACQUISITION CORPORATION
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (unaudited)
<TABLE>
<CAPTION>
                                                                              For the Three Months Ended
                                                                          March 31, 1997       March 31, 1996
                                                                          --------------       --------------
<S>                                                                       <C>                  <C>
       Cash flows from operating activities:                            
            Net income                                                      $ 1,033,947        $   3,453,175
            Adjustments to reconcile net income                         
              to net cash used in operating activities:                 
              Depreciation and amortization                                   1,322,818            1,171,970
              Provision for doubtful accounts                                    12,256               18,689
              Undistributed earnings of affiliates                          (   693,464)       (   1,064,957)
              Minority interest in consolidated subsidiary                  (   158,278)       (     106,275)
              Imputed interest expense                                           21,154               26,266
              Amortization of deferred expenses                                     364                  364
              Deferred income taxes                                             827,731              677,806
            Change in assets and liabilities:                           
              Decrease in deposits with clearing organizations                  113,939
              Increase in commissions receivable                            (   306,394)       (   3,328,499)
              Decrease in receivable from broker dealers and            
                  customers                                                     466,266
              Increase in receivable from clearing firm                     ( 1,608,380)       (     308,674)
              Decrease in securities owned                                    7,726,887
              Decrease in prepaid expenses and other assets                   1,127,832              551,217
              Increase (decrease) in accounts payable                   
                and accrued liabilities                                       1,540,364        (     901,356)
              Decrease in accrued compensation payable                      ( 6,765,051)       (   2,934,126)
              Decrease in payable to broker dealers and customers           ( 1,826,250)
              Decrease in short-term borrowings                             ( 5,376,525)
              Decrease in securities sold, not yet purchased                (    65,812)
              Increase (decrease) in income taxes payable                       128,595        (     559,366)
                                                                            -----------        --------------
                                                                        
                  Net cash used in operating activities                     ( 2,478,001)       (   3,303,766)
                                                                            -----------        --------------
       Cash flows from investing activities:                            
              Purchase of fixed assets                                      (   636,567)       (     758,850)
              Proceeds from the sale of subsidiary                              322,622
              Investment in equity affiliates                                    37,768               64,869
              Increase in minority interest in                          
                consolidated subsidiary                                     (     3,430)          
                                                                            -----------        --------------
                  Net cash used in investing activities                     (   279,607)       (      693,981)
                                                                            -----------        --------------
</TABLE>
             The accompanying notes are an integral part of these
                      consolidated financial statements.

                              Page 8 of 22 Pages

<PAGE>

                  FINANCIAL SERVICES ACQUISITION CORPORATION
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                           (unaudited) (continued)

<TABLE>
<CAPTION>
                                                                                             For the Three Months Ended
                                                                                       March 31, 1997             March 31, 1996
                                                                                       --------------             --------------
<S>                                                                                    <C>                        <C>
Cash flows from financing activities:
Repayment of notes receivable from stockholders                                                                           1,843
Decrease in notes payable                                                               (  1,099,325)
(Decrease) increase in obligations under capitalized leases                             (    183,334)                    51,666
                                                                                        ------------               ------------

Net cash (used in) provided by financing activities                                     (  1,282,659)                    53,509
                                                                                        ------------               ------------

Effect of exchange rate changes on cash                                                 (     57,117)              (    263,601)
                                                                                        ------------               ------------

Net decrease in cash and cash equivalents                                               (  4,097,384)              (  4,207,839)

Cash and cash equivalents at beginning of period                                          18,231,926                 27,013,350
                                                                                        ------------               ------------

Cash and cash equivalents at end of period                                              $ 14,134,542               $ 22,805,511
                                                                                        ============               ============

Supplemental disclosures of cash flow information

Interest paid                                                                           $     96,054
Income taxes paid                                                                          1,443,416              $   3,306,459
</TABLE>

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

                              Page 9 of 22 Pages

<PAGE>

                  FINANCIAL SERVICES ACQUISITION CORPORATION
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 (unaudited)


NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION:

Financial Services Acquisition Corporation (the "Company") was incorporated in
Delaware in August 1994 with the objective of acquiring or merging with an
operating business in the financial services industry. On August 16, 1996, the
Company acquired Euro Brokers Investment Corporation ("EBIC"), a privately-held
international and domestic inter-dealer broker, in a merger transaction (the
"Merger").

EBIC, incorporated in December 1986, through its subsidiaries and affiliates, is
primarily an inter-dealer broker of money market instruments, derivative
products and selected securities, with offices in major financial centers,
including New York, London, Tokyo, Toronto and Sydney, and correspondent
relationships with other brokers throughout the world. EBIC and its affiliates
currently comprise substantially all of the Company's business and assets.

The Merger has been accounted for as a recapitalization of EBIC, with the
issuance of shares by EBIC for the net assets of the Company. The historical
assets of the Company and EBIC have been reflected in the statement of financial
condition at their respective book values. The consolidated results of
operations and financial position of the Company for periods and dates prior to
the Merger are the consolidated historical results of operations and financial
position of EBIC for such periods and dates.

The number of shares of the common stock, par value $.001 per share ("Common
Stock") of the Company outstanding and related earnings per share information, 
as presented in the Company's audited consolidated financial statements 
as of and for the year ended December 31, 1996 included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 (the "1996 
Form 10-K"), were presented on a pro forma basis, as if all shares anticipated
to be issued in the Merger (9,011,295) had been issued and were outstanding for
the merged and recapitalized entity at December 31, 1996 and for the entire
period. This number of shares outstanding and related earnings per share
information  has now been restated to reflect actual shares issued and
outstanding at December 31, 1996 of 8,949,656, which is also the number of
actual shares issued and outstanding at March 31, 1997. Shares outstanding and
related earnings per share information for the three months ended March 31, 1996
have been presented as if all shares outstanding at March 31, 1997 had been
issued and were outstanding for the three months ended March 31, 1996.

The accompanying unaudited consolidated condensed financial statements of the
Company have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a

fair presentation have been included. Operating results for the three month
period ended March 31, 1997 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1997. All significant
intercompany balances and transactions have been eliminated in consolidation.
For further information, refer to the audited consolidated financial statements
of the Company as of December 31, 1996 and for each of the years in the three
year period then ended and the footnotes thereto included in the 1996 Form 10-K.

                              Page 10 of 22 Pages

<PAGE>

NOTE 2 - STOCKHOLDERS' EQUITY:

Common stock and warrants:

The Company is authorized to issue 30,000,000 shares of Common Stock. At March 
31, 1997, the Company had outstanding 8,949,656 shares of Common Stock,
7,566,666 redeemable common stock purchase warrants (issued in connection with
the Company's 1994 initial public offering) and 7,451,610 Series B redeemable
common stock purchase warrants (issued in connection with the Merger and
economically identical to the public offering warrants). Each of the Company's
outstanding warrants (both series) currently entitles the holder thereof to
purchase from the Company one share of Common Stock at an exercise price of
$5.00 per share. The warrants expire on November 30, 2001 and are redeemable, at
a price of $.01 per warrant, upon 30 days notice at any time, but only if the
last sale price of the Common Stock has been at least $8.50 per share for 20
consecutive trading days ending on the third day prior to the date on which
notice of redemption is given.

At March 31, 1997, the Company had 15,018,276 shares of Common Stock reserved
for issuance upon exercise of its warrants and an additional 1,800,000 shares
reserved for issuance upon exercise of options that may be granted pursuant to
the Company's 1996 Stock Option Plan.

Preferred stock:

The Company is authorized to issue 1,000,000 shares of preferred stock with such
designations,  voting and other rights and  preferences  as may be determined 
from time to time by its Board of Directors.  At March 31, 1997, no shares of
preferred stock were issued or outstanding.


                              Page 11 of 22 Pages


<PAGE>

Pursuant to the Company's adoption of a shareholder rights plan (the "Plan") in
December 1996, the Company authorized the creation of Series A junior
participating preferred stock and reserved 300,000 shares thereof for issuance
upon exercise of the rights that, pursuant to the Plan, were at the time
dividended to holders of Common Stock.


NOTE 3 -  SALE OF BUSINESS:

On February 5, 1997, the Company's 51% owned Hong Kong subsidiary, Yagi Euro
(Hong Kong) Limited, completed the sale of its 57.5% interest in Euro Yagi
Martin Limited, its joint venture in Hong Kong with Martin Brokers (Hong Kong)
Limited. The business was sold to the minority shareholder for $323,000 at a
loss of $277,000, which was fully reserved at December 31, 1996.

NOTE 4 - NET CAPITAL REQUIREMENTS:

The Company's U.S. broker-dealer subsidiary, Euro Brokers Maxcor Inc. ("EBMI"),
is subject to the Securities and Exchange Commission's Uniform Net Capital Rule
(rule 15c3-1), which requires the maintenance of minimum net capital. EBMI has
elected to use the alternative method, as permitted by the rule, which requires
that EBMI maintain minimum net capital, as defined, equal to the greater of
$250,000; 2% of aggregate debit items arising from customer transactions, as
defined; or 4% of the funds required to be segregated pursuant to the Commodity
Exchange Act and regulations thereunder. At March 31, 1997, EBMI's net capital
was $13,005,642 and exceeded the minimum requirement of $250,000 by $12,755,642.
In addition, a number of the Company's other subsidiaries operating in various
countries are subject to capital rules and regulations issued by the designated
regulatory authorities to which they are subject.

                              Page 12 of 22 Pages

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

                                   General

The Company was incorporated in Delaware in August 1994 with the objective of
acquiring or merging with an operating business in the financial services
industry. On August 16, 1996, the Company acquired EBIC, a privately-held
international and domestic inter-dealer broker for a broad range of financial
instruments, in the Merger. EBIC and its subsidiaries currently comprise
substantially all of the Company's business and assets.

The Merger has been accounted for as a recapitalization of EBIC, with the
issuance of shares by EBIC for the net assets of the Company. Results of
operations discussed below for periods prior to the Merger are the consolidated
historical results of operations of EBIC for such periods. Results of operations
discussed below for periods that include the Merger consist of the consolidated
historical results of operations for each of the Company and EBIC for the
portions of such periods following the Merger and the consolidated historical
results of operations for EBIC for the portions of such periods prior to the
Merger.

                      Three Months Ended March 31, 1997
              Compared to the Three Months ended March 31, 1996

         Commission income for the quarter ended March 31, 1997 decreased

$4,927,612 to $43,412,352, compared to $48,339,964 for the comparable period in
1996. The net decrease primarily resulted from the combination of reduced 
brokerage in London of approximately $5.4 million, reflecting reduced market
activity and several department closures that occurred in 1996, and a decrease 
of approximately $1.7 million as the result of the sale of the Company's Hong 
Kong subsidiary. These reductions were  partially offset by overall increased
brokerage in New York, inclusive of continued expansion of securities
businesses.

         Interest income for the first quarter of 1997 increased  slightly by
$9,899 to $428,671, compared to $418,772 for the comparable period in 1996.

         Other income for the quarter ended March 31, 1997 increased $101,856 to
$176,581, compared to $74,725 for the same period in 1996, primarily due to

                              Page 13 of 22 Pages

<PAGE>

increased foreign exchange gains of approximately $50,000 and trading gains on
municipal securities transactions of approximately $56,000, which business began
in June 1996.

         Payroll and related costs for the quarter ended March 31, 1997
decreased $1,810,636 to $26,543,217, compared to $28,353,853 for the quarter
ended March 31, 1996. The decrease was primarily the result of the sale of the
Company's Hong Kong subsidiary, which accounted for reduced payroll costs of
approximately $1.3 million. However, as a percentage of commission income, 
these costs increased from 58.7% in the first quarter 1996 to 61.1% in the first
quarter of 1997 and reflect the effect of certain fixed salary costs on reduced
revenues.

         Communication costs for the quarter ended March 31, 1997 increased
$403,521 to $4,352,234, compared to $3,948,713 for the quarter ended March 31,
1996, primarily as a result of continued expansion of the Company's proprietary
screen and communication systems to access additional emerging markets.

         Travel and entertainment costs for the quarter ended March 31, 1997
increased $104,500 to $2,714,381, compared to $2,609,881 for the quarter ended
March 31, 1996. As a percentage of commission income, travel and entertainment
expenses increased from 5.4% in the first quarter of 1996 to 6.2% in the first
quarter of 1997. The overall increase is reflective of efforts to maintain and
improve market share in existing businesses.

         Depreciation and amortization expense for the quarter ended March 31,
1997 increased $150,848 to $1,322,818, compared to $1,171,970 for the same
period in 1996. This increase was principally due to continued expansion of the
Company's proprietary screen system. The Company also continues to replace and
upgrade its communications and computer technology.

         Occupancy costs for the quarter ended March 31, 1997 increased by
$49,904 to $1,550,870, compared to $1,500,966 for the quarter ended March 31,
1996. The net increase primarily results from the offsetting effects of rent
escalations in New York and London of approximately $160,000 and a decrease of

approximately $150,000 relating to the Company's sale of its Hong Kong
subsidiary in February 1997.

                              Page 14 of 22 Pages


<PAGE>


         Clearing fees for the quarter ended March 31, 1997 increased $657,848
to $1,849,543, compared to $1,191,695 for the quarter ended March 31, 1996,
principally due to an increased number of cleared trades and an increase in the
clearing fee per transaction.

         General, administrative and other expenses for the quarter ended March
31, 1997 decreased by $431,270 to $ 1,573,500, compared to $2,004,770 for the
quarter ended March 31, 1996, principally due to the reversal of a contingency
provision of approximately $450,000.

         Interest expense for the quarter ended March 31, 1997 increased by
$67,448 to $215,506, compared to $148,058 for the quarter ended March 31, 1996.
The increase was the net result of interest expense of approximately $100,000
incurred in connection with the financing of securities positions taken from
time to time while conducting municipal securities business, offset by a
reduction in interest expense of approximately $33,000 associated with scheduled
repayments of the principal balance outstanding on the Company's indebtedness.

         Provision for income taxes for the quarter ended March 31, 1997
decreased by $1,491,681 to $2,607,847, compared to $4,099,528 for the quarter
ended March 31, 1996, principally due to reduced income before tax. The
Company's effective tax rate increased from 51.9% to 66.9% from the first
quarter of 1996 to the first quarter of 1997, primarily reflecting the impact of
non-deductible expenses and reduced pretax income which increases the effect of
such non-deductible expenses.

         Minority interest in consolidated subsidiary for the quarter ended
March 31, 1997 increased by $97,111 to $253,741, compared to $350,852 for the
quarter ended March 31, 1996, primarily due to lower net income allocated to the
Company's joint venture partner in Japan and the elimination of minority
interest in the Company's Hong Kong joint venture upon its disposition in the
first quarter of 1997.

Liquidity and Capital Resources

         A substantial portion of the Company's assets, similar to other
brokerage firms, is liquid, consisting of cash, cash equivalents and assets
readily convertible into cash, such as commissions receivable, receivables from
broker-dealers, customers and clearing firm and securities owned.

         Securities owned principally reflect municipal security positions taken
in connection with the Company's brokerage of municipal securities business,
which commenced in June 1996. Positions are generally held for short periods of
time and for the purpose of facilitating anticipated customer needs and are
generally financed by a combination of cash margin and short term borrowings

from the Company's clearing firm. At March 31, 1997, as reflected on the
Consolidated Statement of 

                              Page 15 of 22 Pages

<PAGE>

Financial Condition, the Company had net assets relating to securities
transactions of approximately $3.6 million, reflecting securities owned of
approximately $1.0 million, securities sold, not yet purchased of approximately
$1.7 million and a receivable from broker-dealers, customers of approximately
$8.6 million, financed by short-term borrowings of approximately $4.3 million.

         Notes payable at March 31, 1997 of approximately $6.2 million reflects
the remaining three equal installments of principal due on November 30 of each
1997, 1998 and 1999 on notes issued by the Company in connection with the
acquisition of EBIC's predecessor business in December 1986. These installments
and the interest thereon are expected to be met from operating activities.

         The Company reported cash used in operating activities of approximately
$2.5 million and $3.3 million for the quarters ending March 31, 1997 and March
31, 1996, respectively. Although net income for the quarter ended March 31,
1996, was greater than the corresponding quarter for 1997, the cash benefits of
such income are generally realized in the subsequent quarter upon collection of
commissions receivable.

         The Company and its subsidiaries, in the ordinary course of their
business, are subject to extensive regulation at international, federal and
state levels by various regulatory bodies which are charged with safeguarding
the integrity of the securities and other financial markets and protecting the
interest of customers. The compliance requirements of these different regulatory
bodies may include, but are not limited to, net capital or stockholders' equity
requirements. The Company has historically met regulatory net capital and
stockholders' equity requirements and believes it will be able to continue to do
so in the future.

         Cash flows from investing activities reflected cash used of
approximately $280,000 and $694,000 for the quarters ended March 31, 1997 and
March 31, 1996, respectively. Cash used in investing activities during the first
quarter of 1997 primarily reflects purchases of fixed assets associated with
expansion of the Company's proprietary screen system and other technology
aggregating approximately $637,000, partially offset by proceeds from the sale
of the Company's Hong Kong subsidiary aggregating $323,000. Cash used in
investing activities for the first quarter of 1996 is principally comprised of
purchases of fixed assets aggregating approximately $759,000.

         Cash used in financing activities was approximately $1.3 million for
the quarter ended March 31, 1997 and cash provided by financing activities was
approximately $54,000 for the quarter ended March 31, 1996. Cash used in the
first quarter of 1997 principally relates to the decrease in notes payable to
minority shareholders associated with the Company's sale of its investment in
Hong Kong.

                              Page 16 of 22 Pages


<PAGE>

Effects of Inflation

         Because the Company's assets are to a large extent liquid in nature,
they are not significantly affected by inflation. However, increases in certain
Company expenses due to inflation, such as employee compensation, travel and
entertainment and occupancy and communication costs, may not be readily
recoverable in the price of its services. In addition, to the extent inflation
increases or decreases volatility in the securities markets, the Company's
brokerage business is likely to be affected by corresponding increases or
decreases in brokerage transaction volumes.


                              Page 17 of 22 Pages

<PAGE>


                          PART II. OTHER INFORMATION


Item 5.        Other Information.

        In connection with the Company's August 1996 Merger acquisition of EBIC,
$2,000,000 of the aggregate cash consideration payable by the Company to former
stockholders of EBIC was placed in escrow, pending the making of certain
possible post-Merger balance sheet adjustments. In February 1997, the Company
and the designated representatives of such stockholders agreed that no such
adjustments were necessary. Accordingly, the entire $2,000,000 that was held in
escrow, plus interest earned thereon net of escrow agent fees, has been released
to the former EBIC stockholders in amounts proportionate to their former
holdings of EBIC common stock.

        In May 1997, EBIC consummated a securities repurchase transaction with a
former officer and director who had left EBIC and such positions in October
1994. In the transaction, the former officer and director sold all of his stock
certificates formerly representing EBIC shares (and currently representing
solely the right to receive the Merger consideration), repaid certain
indebtedness owed by him and executed a mutual release. As a result of such
transaction and the subsequent exchange by the Company of such stock 
certificates for the Merger consideration, the Company acquired 61,638 shares of
Common Stock and 115,015 Series B warrants, which are being held in the
Company's treasury.

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits

Exxhibit       Description

11             Statement re: Computation of Per Share Earnings

27             Financial Data Schedule (filed in electronic form only)

(b)  Reports on Form 8-K

               The Company did not file any Current Reports on Form 8-K during
the three months ended March 31, 1997.

                              Page 18 of 22 Pages


<PAGE>

                                  SIGNATURES


        Pursuant to the requirements 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.

Date:  May 15, 1997

                               FINANCIAL SERVICES ACQUISITION CORPORATION
                                              (Registrant)

                                       /s/ Gilbert D. Scharf
                               -----------------------------------------------
                               Gilbert D. Scharf, Chairman of the Board,
                               President and Chief Executive Officer

                                       /s/ Michael J. Scharf
                               -----------------------------------------------
                               Michael J. Scharf, Vice President, 
                               Secretary and Treasurer
                               (Chief Financial and Principal 
                               Accounting Officer)


                              Page 19 of 22 Pages


<PAGE>

                                EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit       Description                                                                           Page
-------       -----------                                                                           ----
<S>           <C>                                                                                   <C> 
11            Statement re:  Computation of Per Share Earnings                                       21

27            Financial Data Schedule  (filed in electronic form only)                               22
</TABLE>







                             Page 20 of 22 Pages