SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[x]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

[ ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________

                         Commission File Number 1-10751

                             OBJECTSOFT CORPORATION
-------------------------------------------------------------------------------
                  (Name of small business issue in its charter)

           Delaware                                          22-3091075
 -----------------------------                           -------------------
(State or other jurisdiction of                           (I.R.S. Employer
 incorporation or organization)                          Identification No.)

Continental Plaza III, 433 Hackensack Avenue,                       07601
---------------------------------------------                     ----------
          Hackensack, New Jersey                                  (Zip Code)
  (Address of principal executive offices)

Issuer's telephone number:   (201) 343-9100
                             ---------------

Securities  registered  under  Section  12(b) of the Exchange Act: None
     Title of each class: None
     Name of each exchange on which registered:

Securities registered under Section 12(g) of the Exchange Act:
     Title of Each Class:  Common Stock
                           Redeemable Class A Warrants
                           Units, each consisting of one share of
                             Common Stock and one
                             Redeemable Class A Warrant

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Securities  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. [ ]

The issuer's revenues for its most recent fiscal year were: $441,130.00.

The aggregate  market value of the Common Stock (the only class of voting stock)
held by non-affiliates (2,406,676 shares as of March 26, 1997 was $12,447,027.43
(based upon the average bid and asked prices of the Common Stock on such date on
the Nasdaq SmallCap Market System).

The  number  of  shares  of Common  Stock  (the  only  class of  common  equity)
outstanding on March 26, 1997 was 4,061,676.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the issuer's  Definitive Proxy Statement for the 1997 Annual Meeting
of  Stockholders  of the Company are  incorporated  by  reference  into Part III
hereof.

Transitional Small Business Disclosure Format (check one):   Yes ___   No X




<PAGE>



                                     PART I


Item 1. Description of Business
-------------------------------

General

     ObjectSoft  Corporation  (the  "Company") was  incorporated  in Delaware in
January 1996 and is the  surviving  corporation  of a merger on January 31, 1996
between it and its predecessor, ObjectSoft Corporation, a New Jersey corporation
incorporated in December 1990.

     The Company's  executive  offices are located at Continental Plaza III, 433
Hackensack Avenue,  Hackensack,  New Jersey 07601; its telephone number is (201)
343-9100; its facsimile number is (201) 343-0056; its Internet e-mail address is
Webmaster@Objectsoftcorp.com;  and  its  homepage  on the  World-Wide  Web is at
http://www.objectsoftcorp.com.

     The Company  currently  provides  information  and services  through public
access kiosks,  known as  SmartStreet(TM),  that combine the advantages of local
and wide area network technology.  Like an intranet,  the communication  between
the kiosk and its servers is accomplished  over private,  secure lines.  Like an
internet,  it enables an organization  to interact with the general public,  not
just its own employees and customers.  Generally, the kiosks have been installed
in high density pedestrian traffic areas. The Company  anticipates that revenues
from the kiosks will be provided by leasing fees paid by service  providers  and
by usage fees paid by consumers who obtain services through the kiosks.

     Prior to 1996, the Company's  activities consisted primarily of consulting,
writing,  training and custom  software  development  for various  corporate and
government clients,  including Microsoft Corporation  ("Microsoft") for which it
produced technical papers and provided  consulting  services.  In performance of
these activities,  the Company developed skills in rapid application development
and a base of  courseware  and  reusable  software  objects  to which it retains
title.  In 1995,  the Company  decided to direct these skills and its  expanding
body of reusable  software  objects toward the  development of services  through
which it can derive revenue on a "per transaction" basis. It initially developed
and operated OLEBroker(TM),  an Internet-based  subscription service that allows
customers to search its database of information about software objects, find the
information  needed  and at  the  customer's  option,  purchase  needed  objects
on-line.  The Company  discontinued active marketing of OLEBroker(TM) at the end
of 1996 in order to concentrate on its kiosk- and Internet- related  businesses.
However,  in  connection  with the  development  of  OLEBroker(TM),  the Company
developed  significant  additional  software objects,  which it then used in the
development of technology for the kiosk and Internet service delivery  programs.
The Company  anticipates that the kiosk and Internet  service delivery  programs
will constitute the most  significant  part of its business.  It may continue to
engage in consulting  activities as resources  permit.  In selecting  consulting
opportunities,  the Company will focus  primarily on  assignments  in connection
with the sale of kiosk

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services or that can otherwise enhance its skill base.

     In early 1996, as part of its Kiosk Demonstration  Project, the City of New
York  (the  "City")  entered  into an  agreement  with the  Company  (the  "City
Agreement")  to develop  public  kiosks to be located in City  offices and other
public locations in an effort to expedite  transactions with the City. Under the
City Agreement,  the City agreed to lease the first five kiosks, and the Company
may deploy  additional  kiosks throughout the New York City area at its own risk
and expense,  subject to City approval of kiosk locations. The first five kiosks
were deployed in New York City in July 1996. All kiosks  providing City services
or information,  whether operated by the Company or other  suppliers,  carry the
City's  "CityAccess(TM)"  logo. Pursuant to the City Agreement,  the Company has
developed  kiosks  through  which members of the public can obtain access to the
records of the Department of Buildings,  certain  Department of Health services,
including obtaining copies (for a fee) of birth certificates, death certificates
and dog licenses,  obtaining  public health  information,  and  registering  for
certain  courses  offered  by the  Department  of  Health.  Information  on City
government,  directional  information  and  information  about  New York  City's
events, museums,  tourist attractions,  shopping and similar matters is provided
without fee. The City has recently  requested pricing  information for extending
the City  Agreement to include an  additional  12 - 36 kiosks to be installed in
the third quarter of 1997.  However,  there can be no assurance  that a contract
for this extension will ultimately be entered into.

     The Company's goal in designing the SmartStreet(TM)  kiosks was to maximize
potential use by developing software that would be inviting and easy to use. The
kiosks  are  designed  so that a  potential  user is  attracted  to the kiosk by
digital  videos  played  from the upper  monitor.  Initially  these  videos will
include an "attract loop,"  narrated by the noted actor Tony Randall  (currently
Director of the National  Repertory Theater) and a message from Mayor Rudolph W.
Giuliani, as well as "spot"  advertisements.  The attract loop explains what can
be done with the kiosks and how to use them, and shows people from many walks of
life using them successfully.

     The  kiosks  are  configured  to permit  the  Company  to offer  additional
services provided either by the Company or third parties and to sell advertising
on such kiosks.  The City Agreement  requires the Company to pay to the City 50%
of advertising  and third party service  revenues from the first five kiosks and
15% of such revenues from such additional  kiosks as carry the CityAccess  logo.
The Company plans to exercise  these rights and to actively  solicit  additional
service   providers   and   advertisers.   The  Company  will  seek  to  provide
SmartStreet(TM) services to other municipalities, states and government agencies
and to  organizations  in the  private  sector  that  provide a large  volume of
information,  records and documents to the public.  The Company may also seek to
enter into agreements  with the City and other customers to provide  information
and  services  over  the  Internet,   in  order  to  significantly   expand  the
accessibility  of such  information  and services.  To date, the Company has not
entered into any agreements to offer any of the foregoing additional services or
products.

     In connection  with the  development  of the kiosks and the  deployment and
operation of the

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<PAGE>



first  five  kiosks,  the City  agreed to pay to the  Company  an  aggregate  of
$661,080,  of which  $361,080  is  payable in the form of  monthly  payments  of
$30,090  ($6,018 per kiosk),  which were commenced as of August 1, 1996, and the
balance of $300,000 is payable in partial  amounts as certain  milestones in the
development,  deployment  and  operation  of the kiosks are  achieved,  of which
$147,000 has been received prior to December 31, 1996.

     The Company may also receive transaction fees in connection with the use of
the kiosks by the public to obtain  documents or certain other  services.  As of
December 31,  1996,  the first five kiosks were  available  only to provide City
information  and  did  not  provide  transaction  services  or  carry  any  paid
advertising  or third  party  services.  Consequently,  no  revenues  have  been
generated  to date by user  transactions  or  advertising.  The amount of future
transaction and advertising revenues, if any, will depend on user and advertiser
acceptance of the kiosks.

     As  of  December  31,  1996,  no  revenues  have  been  generated  by  user
transactions or advertising.  The kiosks are expected to be available to support
on-line  inquiries  into City  databases  by April  1997,  and to  conduct  City
transactions on a fee basis by May  1997.

     Pursuant  to the City  Agreement,  the  Company  has the  right to  install
additional  kiosks in the City, at the Company's risk and expense and subject to
certain  conditions  including  site approval by the City.  The City will not be
required  to  pay  additional  monthly  payments  for  such  kiosks,  but  it is
anticipated,  although  there can be no  assurance,  that use by the public will
generate  transaction fees. The Company had commenced evaluating potential sites
and will seek to install up to 25 additional kiosks over the next year.

     At the time the City Agreement with the Company was executed, the City also
signed similar  agreements with two other companies for additional  kiosks.  The
City  expects to evaluate  its  success  with this  program  and, if it deems it
successful,  to issue a Request for Proposals for competitive  bidding to supply
additional kiosks throughout the City.

     The Company has established a strategic relationship with Microsoft that it
believes is important to its sales, marketing and support activities, as well as
to its product  development  efforts relating to its kiosks.  Microsoft supports
the  Company in  marketing  its kiosk  services,  and has  informally  agreed to
exhibit the Company's  kiosks in Microsoft  displays at various trade shows.  It
has also issued statements that included  favorable  references  relating to the
Company's  products.  Microsoft  has also entered  into  various  non-disclosure
agreements  with the Company with  respect to  unannounced  Microsoft  products,
under  which the  Company  has the  opportunity  to have  advance  knowledge  of
software  technology being developed by Microsoft.  Microsoft has also provided,
and continues to provide,  fee-based  consulting services to the Company through
Microsoft  Consulting.  Since  1994,  the  Company  has served as the  exclusive
regional  host and sponsor of Microsoft  Developer  Days,  an ongoing  series of
technical  conferences  organized  and  operated by  Microsoft.  The most recent
conference was held on March 19, 1997. The conference  attracted over 1,350 paid
registrants and was completely sold out. The Company has also produced technical
papers for, and

                                        4


<PAGE>



provided consulting services to, Microsoft.

     The Company  intends to market kiosks to other  municipalities,  government
agencies and organizations in the private sector. In the future, the Company may
seek to make its transactional  services available over the Internet and to make
the Internet available from the Company's public kiosks.

     Research and Development  expenditures  were $92,693 in 1996 and $62,863 in
1995.  In  addition,  during the years ended  December  31,1996 and December 31,
1995, the Company has capitalized  additional  software  development costs which
aggregated $137,904 and $118,478, respectively.

Competition

     The  Company is subject  to  competition  from  different  sources  for its
different services. The Company's intranet kiosk business competes with numerous
companies, including IBM, North Communications, Golden Screens and NCR (formerly
a division of AT&T).  The City has also  awarded  contracts,  comparable  to the
contract awarded to the Company, to North Communications and DSSI (which awarded
a  subcontract  to Golden  Screens),  both of which have sold similar  kiosks to
other municipalities.  Many kiosk vendors serve a small number of clients and/or
limited  geographic areas.  After fulfillment of the initial  contracts,  if the
City chooses to install  additional  kiosks  throughout the City of New York, it
may  award  to  others,  and not the  Company,  the  contract  to  install  such
additional kiosks.  Further, there can be no assurance that other municipalities
or other entities will seek to acquire kiosks from the Company. In addition,  if
the use of kiosks  provided by the Company and others proves to be successful in
New York City and other  municipalities and locations,  additional  companies in
the software, hardware and communications areas, among others, may seek to enter
the market. A total of 19 companies  competed for the contracts with the City of
New  York,  many of which  can be  expected  to  compete  aggressively  in other
competitive situations.

Marketing

     The objective of the Company's marketing efforts is to obtain the rights to
place its kiosks in compelling  high-density locations. In addition, the Company
seeks  to  attract   advertisers   based  on  the  number  and  demographics  of
"impressions"  that the  Company  can offer to  advertisers.  To this  end,  the
Company has commissioned  site surveys that count the actual  population at each
existing  location.  The Company has retained a consultant to assist the Company
in leasing space in favorable  locations and on satisfactory terms. In addition,
the Company has retained a media consultant to prepare a media kit and to target
it to  suitable  advertisers.  The  Company  has  retained  a  public  relations
consultant to  disseminate  news related to its kiosks and to stimulate  demand.
Additional  marketing  efforts  focus  on  identifying  content-providers  whose
offerings can create additional transaction revenue for the Company's kiosks. In
seeking  content-providers,  the Company will exhibit at major trade shows where
it will partner with several of its major vendors. For example, the

                                        5


<PAGE>



Company  partnered  with Dell and Microsoft at the Government  Technology  trade
show held in Albany,  New York in September  1996, and it expects to participate
in similar joint efforts on an ongoing basis. A  telemarketing  program has been
initiated to target tourist,  recreational and similar  facilities to list their
facilities  on the  Company's  kiosks.  This  effort  will  be  contracted  to a
telemarketing firm on a commission basis.

     The Company's marketing activities are currently performed by its executive
officers and consultants  under such officers'  supervision.  In March 1997, the
Company engaged June R. Petroff as Senior Vice President of Sales and Marketing.
Ms.  Petroff was formerly  employed as Vice  President-Corporate  Marketing  for
Gateway Outdoor Advertising,  and has significant  experience in non-traditional
media.

Proprietary Rights

     The Company's  success is highly  dependent on its proprietary  technology.
The Company views its software as  proprietary,  and relies on a combination  of
trade secret,  copyright  and  trademark  laws,  non-disclosure  agreements  and
contractual  provisions to establish  and protect its  proprietary  rights.  The
Company has no patents or patents  pending and has not to date registered any of
its trademarks or  copyrights.  The Company plans to seek  registrations  in the
United  States  for the  following  trademarks:  SmartStreet(TM),  SmartSign(TM)
ObjectSoft(TM).  In  addition,  the Company  plans to register  certain of these
trademarks in principal foreign jurisdiction.

     The source code for the  Company's  proprietary  software is protected as a
trade  secret.  In  addition,  because the Company  does not sell or license its
technology to third parties, but rather delivers services through its kiosks and
OLEBroker(TM),  its  proprietary  software is not  disclosed  to third  parties.
Furthermore, the Company enters into agreements, as appropriate, with employees,
consultants and subcontractors containing provisions relating to confidentiality
and the assignment of inventions and other  developments  to the Company.  There
can be no  assurance  that  the  steps  taken  by the  Company  to  protect  its
proprietary  rights will be adequate or that the Company's  competitors will not
independently develop technologies that are substantially equivalent or superior
to the Company's technologies or products.

Customers

     The customer base for the Company's kiosk business consists  principally of
municipalities  and other  public  sector or  commercial  entities  to which the
Company  would sell or lease  kiosks,  prospective  advertisers  and  ultimately
consumers  accessing kiosk services or products.  The Company expects that users
of its OLE Broker  service will consist of software  designers and  programmers.
The Company also intends to market its consulting services to mall operators.


                                        6


<PAGE>



     The Company  historically has derived a significant portion of its revenues
from a relatively  limited  number of customers.  During the twelve months ended
December 31, 1996, two customers,  the City of New York and Microsoft  accounted
for 71% of the Company's  revenues.  During 1995,  two  customers  accounted for
approximately 48% of the Company's revenues.

Government Regulations and Licensing

     The Company  believes  that it has all  licenses  necessary  to operate its
business as currently conducted in New Jersey and New York.

     The Company is not  currently  subject to direct  regulation by the Federal
Communications Commission or any other agency, other than regulations applicable
to  businesses   generally  and  businesses  doing  business  with  governmental
agencies. In connection with its contract with the City and future contracts, if
any, with the City and other municipalities or government entities,  the Company
will have to comply with such  regulations,  including  bidding  procedures  and
record-keeping,  audit, insurance,  bonding and anti-discrimination  provisions,
among others.

     Due to the increase in Internet use and publicity, it is possible that laws
and  regulations  may be adopted with respect to the  Internet,  including  with
respect to privacy,  pricing and  characteristics  of products or services.  The
Company cannot predict the impact,  if any, that future laws and  regulations or
legal or regulatory changes may have on its business.

Employees

     As of March 27, 1997, Company had 13 employees, 12 of which were full-time,
and all of whom are based in its  Hackensack,  NJ  offices.  These  include 6 in
product development, 3 in management and sales, 2 in operations and 2 in finance
and administration.

     Although the Company expects to increase its full-time staff to 17 or more,
on an  "as-needed"  basis,  the Company  intends to continue  with its policy to
outsource  non-strategic  functions  such  as  artwork  development,  repetitive
testing,  maintenance and bookkeeping  rather than using its own staff for these
functions.

Item 2. Description of Property
-------------------------------

     The Company  occupies  approximately  4,300  square feet of office space in
Hackensack, New Jersey, under a lease with an unaffiliated landlord that expires
on March 31,  2003 and  provides  for a base rent of $58,008  per annum in 1997,
subject to certain increases in subsequent periods.


Item 3. Legal Proceedings
-------------------------

     The  Company is not a party to, nor is its  property  the  subject  of, any
material pending legal proceeding.


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

     No  matter  was  submitted  to a vote of the  Company's  security  holders,
through the  solicitation of proxies or otherwise,  during the fourth quarter of
its fiscal year ended December 31, 1996.



                                     PART II


Item 5. Market For Common Equity and Related Stockholder Matters
----------------------------------------------------------------

     The  Company's  common  stock,  par value  $.0001  per share  (the  "Common
Stock"),  and  redeemable  Class A Warrants are  currently  quoted on the Nasdaq
SmallCap Market under the symbols "OSFT" and "OSFTW",  respectively,  and units,
each consisting of one share of Common Stock and one redeemable  Class A Warrant
(the  "Units"),  were  quoted on the  Nasdaq  SmallCap  Market  under the symbol
"OSFTU" until January 9, 1997. Prior to the Company's initial public offering in
November  1996,  there was no public  market for the Company's  securities.  The
following table sets forth the high and low sales price per share for the Common
Stock,  the Class A Warrants  and the Units as reported  on the Nasdaq  SmallCap
Market.

                      Common Stock       Class A Warrants            Units
                     --------------      ----------------            -----
                     High      Low       High        Low        High        Low
                     ----      ---       ----        ----       ----        ---
  Fiscal Year 1996
     Fourth Quarter   6       5 1/4        1        11/16      6 1/2       5 3/8


     As of March 26, 1997, there were  approximately 59 holders of record of the
Common Stock and 4 holders of record of Class A Warrants.

     The Company did not pay cash  dividends  on its Common Stock during the two
years ended  December 31, 1996 and the Company does not presently  intend to pay
any dividends on its Common Stock.


Item 6. Management's Discussion and Analysis of Operation
---------------------------------------------------------

     The  following  discussion  and  analysis  provides  information  which the
Company's  management believes is relevant to an assessment and understanding of
the Company's  results of operations and financial  condition.  This  discussion
should be read in conjunction  with the  consolidated  financial  statements and
notes thereto appearing elsewhere herein.

Special Note Regarding Forward-Looking Statements

     A  number  of  statements  contained  in this  Report  are  forward-looking
statements within the

                                       8


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meaning of the Private  Securities  Litigation  Reform Act of 1995 that  involve
risks and  uncertainties  that could cause actual  results to differ  materially
from those  expressed or implied in the applicable  statements.  These risks and
uncertainties  include  but are not limited to the recent  establishment  of new
business  divisions;  dependence on new untested product;  risks associated with
the   marketing  of  kiosks  and   expansion  of  services;   risks  related  to
technological  factors;  potential  manufacturing  difficulties;  dependence  on
certain third parties and on the Internet; limited customer base; risk of system
failure,  security risks and liability  risks;  and other risks described in the
Company's Prospectus dated November 12, 1996.


Overview

     The Company  provides  kiosk- and  Internet-based  services.  Beginning  in
mid-1994, the Company changed its focus from consulting and training services to
transactional,  fee-based and  advertising-supported  products and services. The
Company has sustained net losses in each of the last two fiscal years with a net
loss of  $122,400 in 1995 and a net loss of  $1,240,695  in 1996.  In  September
1995,  the  Company  introduced  OLEBroker(TM),  its  fee-based  website  on the
Internet. The Company's SmartStreet(TM) kiosks were introduced in July 1996. The
Company  has  not   recognized   any   significant   income  to  date  from  the
SmartStreet(TM) kiosk rentals or from OLEBroker(TM).  Consequently, any analysis
of the Company's prior operations has only minimal relevance to an evaluation of
the Company,  its current products and services and its prospects.  Although the
Company  anticipates  that it will begin to recognize  greater revenues from the
SmartStreet(TM) kiosks and from OLEBroker(TM) during 1997, it cannot predict the
actual timing or amount of such revenues.

Results of Operations

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

     Net  revenues  decreased  $125,464 or 22.1% to $441,130 for the fiscal year
ended  December 31, 1996 over net revenues of $566,594 for the fiscal year ended
December 31, 1995.  Consulting revenues decreased by $178,575 or 39.8%. Training
revenue  decreased from $118,618 to $21,279 or 82%. Rental income increased from
$0 to $150,450.  The Company's decreased revenues from consulting,  training and
custom  development  services resulted from redirection of the Company resources
to transactional fee-based products and services.

     The  Company  continues  to  devote  its  resources  toward  the  growth in
transactional  fee-based products and services utilizing intranet technology and
believes this trend will  continue in the future.  Kiosk-based  rental  revenues
represented   approximately   34.1%  of  1996  net  revenues  and  kiosk-related
consulting,  training and custom development represented  approximately $145,000
or 38.8% of 1996 net revenues.

     Costs and  expenses  for the year ended  December  31,  1996  increased  to
$1,681,825  from  $688,994 in 1995.  This increase is a result of an increase in
expensed  development  costs for the  SmartStreet(TM)  operations  and financing
expenses.


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     Costs of services for the year ended December 31, 1996 declined to $424,336
from $429,604 in 1995.  This decline is a result of expenses for costs  relating
to the  New  York  City  contract  which  management  expects  to  use in  other
Smartstreet(TM) applications.

     General and  Administrative  expenses as a percentage  of net revenues were
189.3% in 1996 as compared  with 34.1% in 1995.  Such  increase  is  principally
attributable to startup costs for the Company's SmartStreet(TM) program.

     Interest  expense  increased to $329,836 in fiscal year ended  December 31,
1996 from  $3,502  for the  fiscal  year  ended  December  31,  1995,  primarily
reflecting the amortization of discount and interest on the $1,250,000 loan. See
"Financial  Condition,  Liquidity and Capital  Resources" and Note D of Notes to
Financial Statements.

     Net loss  increased by $1,118,295 or 913.6% to a net loss of $1,240,695 for
the fiscal year ended December 31, 1996 over net loss of $122,400 for the fiscal
year ended December 31, 1995. The increase in losses occurred  primarily because
of financing costs and startup costs relating to the Company's SmartStreet kiosk
program.

     At  December  31,  1996,   the  Company  had  federal  net  operating  loss
carryforwards  of  approximately  $2,200,000.  A  valuation  allowance  has been
recorded  for the  entire  deferred  tax  asset  as a  result  of  uncertainties
regarding the  realization  of the asset due to the lack of earnings  history of
the Company. See Note H of Notes to Financial Statements.

Financial Condition, Liquidity and Capital Resources

     In November  1996, the Company  completed the sale in a public  offering of
1,366,050   Units,   from  which  it  received  net  proceeds  of  approximately
$5,465,000.  Of  such  amount,  approximately  $1,298,000  was  applied  to  the
repayment of certain  bridge loans and $285,000 was applied to the redemption of
the Company's Series A Preferred  Stock. Of the balance,  the Company expects to
apply approximately $3,500,000 to deploying up to additional kiosks in the City,
to  further  expand  SmartStreet(TM)  kiosk  operations  and for  kiosk  related
acquisitions over the next 24 months, and the remainder to working capital.  The
Company intends to lease equipment  whenever  possible on acceptable  terms. The
Company  believes  that an  additional  $800,000  will be  required  to fund the
SmartStreet(TM)  expansion,  and that such  funds will be  derived  from  future
operating revenues. However, there can be no assurance that future revenues will
be generated in sufficient amounts or that additional funds will not be required
for the expansion of operations.

     As of December 31,  1996,  cash and cash  equivalents  were  $4,039,000  as
compared with $64,000 at December 31, 1995.

     The  increase is a result of the receipt by the Company of the net proceeds
from an initial  public  offering and two private  financings of the  securities
completed  in 1996 less the  repayment  obligations  arising  as a result of the
Company's initial public offering.

     During  1996,  the Company  borrowed  $1,250,000  which was repaid prior to
December 31,

                                       10


<PAGE>



1996  from  the  proceeds  of the  initial  public  offering.  The  increase  in
borrowings  during 1996 were used to partially  fund the initial  acquisition of
the equipment  necessary for the  installation  of the kiosks required under the
City Agreement and operating expenses.

     The Company intends to meet its long-term liquidity needs through available
cash and cash flow. To the extent that such sources are inadequate,  the Company
will be required to seek  financing.  In such event,  there can be no  assurance
that financing will be available to the Company on satisfactory terms.

     The Company is continually  exploring  possible  acquisitions of compatible
companies in the software business. If any such acquisition were to be made with
available  cash,  the Company's  long-term  liquidity  would depend to a greater
extent on cash flow and financing.

Inflation and Seasonality

     The rate of inflation was insignificant  during the year ended December 31,
1996. In the past, the effects of inflation on personnel  costs have been offset
by the  Company's  ability to increase  its charges for services  rendered.  The
Company  anticipates  that it will be  able  to  continue  to do so in the  near
future. The Company  continually reviews its costs in relation to the pricing of
its products and services.

     The Company's business is not seasonal.


Item 7. Financial Statements
----------------------------

     The financial statements of the Company required by this item are set forth
at end of this Form 10-KSB at pages F-1 through F-16.


                                       11


<PAGE>




Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
--------------------------------------------------------------------------------
Financial Disclosure
--------------------

     None.



                                    PART III


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

     The information required by this item is incorporated by reference from the
Company's  Definitive Proxy Statement under the captions  "Management--Executive
Officers and Directors"  and "--Section  16(a)  Beneficial  Ownership  Reporting
Compliance."


Item 10. Executive Compensation
-------------------------------

     The information required by this item is incorporated by reference from the
Company's Definitive Proxy Statement under the captions  "Management--Directors'
Compensation" and "Executive Compensation."


Item 11. Security Ownership of Certain Beneficial Owners and Management
-----------------------------------------------------------------------

     The information required by this item is incorporated by reference from the
Company's Definitive Proxy Statement under the caption "Security Ownership."


Item 12. Certain Relationships and Related Transactions
-------------------------------------------------------

     The information required by this item is incorporated by reference from the
Company's  Definitive Proxy Statement under the caption  "Certain  Relationships
and Related Transactions."

                                       12


<PAGE>



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

a.   Exhibits

     2.1    *  Certificate of Ownership and Merger of ObjectSoft Corporation (a
               New Jersey corporation)into the Company.
     2.2    *  Plan of Merger of ObjectSoft Corporation (a New Jersey
               corporation) into the Company.
     3.1(a) *  Certificate of Incorporation of the Company.
     3.1(b)    Amendment to Certificate of Incorporation of the Company.
     3.2(a) *  By-laws of the Company.
     3.2(b)    Amended and Restated By-laws of the Company.
     4.1    *  Form of Representative's Unit Purchase Option Agreement.
     4.2    *  Specimen Certificate of the Company's Common Stock
     4.3    *  Form of Class A  Warrant Agreement, including form of Class A
               Warrant.
     10.1+  *  Employment Agreement dated as of July 1, 1996 between the Company
               and David E. Y. Sarna.
     10.2+  *  Employment Agreement dated as of July 1, 1996 between the Company
               and George J. Febish.
     10.3+  *  1996 Stock Option Plan.
     10.4   *  Form of Bridge Loan Promissory Note.
     10.5   *  Form of Bridge Loan Warrant.
     10.6   *  Form of Warrant Agreement with placement agent for Bridge Loan
               Offering.
     10.7   *  Form of Subscription Agreement and Investment Representation of
               Investor with each of the investors in the July 1996 Offering.
     10.8   *  Form of July 1996 Warrant Agreement.
     10.9   *  Form of Warrant Agreement with placement agent for July 1996
               Offering.
     10.10  *  Agreement, dated January 11, 1996, as amended, with the City of
               New York (Department of Information Technology and
               Telecommunications).
     10.11  *  Cooperation Agreement with Microsoft Corporation, dated November
               7, 1995.
     10.12  *  Agreement with ACORD Corporation dated July 5,1995.
     10.13  *  Form of Investor Warrant.
     10.14+ *  Form of Officer Warrant.
     10.16  *  Cyndel Warrant
     27.1      Financial Data Schedule

b.   The Company did not file any Report on Form 8-K during the last  quarter of
     its fiscal year ended December 31, 1996.

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

*    Denotes  Exhibits  incorporated by reference to the Company's  Registration
     Statement on Form SB-2 (Registration No. 333-10519).
+    Management contract or compensatory plan or arrangement.


                                       13


<PAGE>


                                   SIGNATURES

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


Dated:  March 31, 1997                       OBJECTSOFT CORPORATION


                                             By: /s/ David E. Y. Sarna
                                                -------------------------
                                                David E. Y. Sarna, Chairman

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


       Signature                      Title                       Date


/s/ David E. Y. Sarna   Chairman, Co-Chief Executive Officer,    March 31, 1997
----------------------  Secretary and Director (Principal
David E. Y. Sarna       Executive Officer, Principal Financial
                        Officer and Principal Accounting
                        Officer)


/s/  George J. Febish   President, Co-Chief Executive Officer,   March 28, 1997
---------------------   Treasurer and Director (Principal
George J. Febish        Executive Officer)


/s/  Daniel E. Ryan     Director                                 March 27, 1997
---------------------
Daniel E. Ryan

                        Director                                 March __, 1997
---------------------
Julius Goldfinger

/s/ Gunther L. Less     Director                                 March 27, 1997
---------------------
Gunther L. Less






<PAGE>


                             OBJECTSOFT CORPORATION


                                  - I N D E X -



                                                                           PAGE
                                                                          NUMBER


REPORT OF INDEPENDENT AUDITORS                                              F-2


BALANCE SHEET - AS AT DECEMBER 31, 1996                                     F-3


STATEMENTS OF OPERATIONS FOR THE YEARS ENDED
DECEMBER 31, 1996 AND DECEMBER 31, 1995                                     F-4


STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(CAPITAL DEFICIENCY) FOR THE YEARS ENDED
DECEMBER 31, 1996 AND DECEMBER 31, 1995                                     F-5

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31, 1996 AND DECEMBER 31, 1995                                     F-6

NOTES TO FINANCIAL STATEMENTS                                               F-7


                                       F-1

<PAGE>



                         REPORT OF INDEPENDENT AUDITORS



To the Board of Directors and Stockholders
ObjectSoft Corporation
Hackensack, New Jersey


      We have audited the accompanying  balance sheet of ObjectSoft  Corporation
as at December  31,  1996,  the related  statements  of  operations,  changes in
stockholders'  equity (capital  deficiency) and cash flows for each of the years
in the two-year period ended December 31, 1996.  These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

      We conducted our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the 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 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 report.

      In our opinion, the financial statements  enumerated above present fairly,
in all material respects, the financial position of ObjectSoft Corporation as at
December 31, 1996 and the results of its  operations  and cash flows for each of
the years in the two-year  period ended  December 31, 1996, in  conformity  with
generally accepted accounting principles.



/s/ Richard A. Eisner & Company, LLP

Florham Park, New Jersey
March 7, 1997


                                       F-2

<PAGE>



                             OBJECTSOFT CORPORATION

                                  BALANCE SHEET

                             AS AT DECEMBER 31, 1996



                                   A S S E T S

Current assets:
   Cash and cash equivalents (Notes A[9] and J[1]) ..............   $ 4,039,358
   Accounts receivable ..........................................         5,900
   Prepaid expenses and other current assets ....................       180,463
                                                                    -----------
          Total current assets ..................................     4,225,721

Equipment, at cost, net of accumulated depreciation
  (Notes A[2], B and E) .........................................       457,848
Capitalized software (Notes A[5] and C)..........................       168,118
Other assets ....................................................       130,474
                                                                    -----------


          T O T A L .............................................   $ 4,982,161
                                                                    ===========


                              L I A B I L I T I E S

Current liabilities:
   Current portion of obligations under capital lease
     (Note E) ...................................................   $    45,740
   Accounts payable .............................................        57,309
   Accrued expenses .............................................       101,872
   Other liabilities ............................................         9,785
                                                                    -----------
          Total current liabilities .............................       214,706
                                                                    -----------

Obligations under capital lease (Note E) ........................        38,335
                                                                    -----------

Commitments (Note K)


                                         STOCKHOLDERS' EQUITY
                                            (Notes G and L)

Common stock, $.0001 par, authorized 20,000,000
   shares, issued and outstanding 4,022,676 shares ..............           402
Additional paid-in capital ......................................     6,878,868
Accumulated deficit .............................................    (2,150,150)
                                                                    -----------
          Total stockholders' equity ............................     4,729,120
                                                                    -----------


          T O T A L .............................................   $ 4,982,161
                                                                    ===========






                       The accompanying notes to financial
                     statements are an integral part hereof.


                                       F-3

<PAGE>



                             OBJECTSOFT CORPORATION

                            STATEMENTS OF OPERATIONS


                                                           Year Ended
                                                          December 31,
                                                 ------------------------------
                                                     1996               1995
                                                 -----------        -----------

Revenues (Note J[2]):
   Consulting ............................       $   269,401        $   447,976

   Training ..............................            21,279            118,618

   Rental income (Note K[1]) .............           150,450
                                                 -----------        -----------

         Total revenues ..................           441,130            566,594
                                                 -----------        -----------


Expenses:
   Cost of services ......................           424,336            429,604

   Research and development ..............            92,693             62,863

   General and administrative ............           834,960            193,025

   Interest ..............................           329,836              3,502
                                                 -----------        -----------

          Total expenses .................         1,681,825            688,994
                                                 -----------        -----------


NET (LOSS) ...............................       $(1,240,695)       $  (122,400)
                                                 ===========        ===========


Net loss per share .......................       $     (0.45)       $     (0.05)
                                                 ===========        ===========

Weighted average number
   of shares outstanding .................         2,848,943          2,797,134
                                                 ===========        ===========








                       The accompanying notes to financial
                     statements are an integral part hereof.


                                       F-4

<PAGE>

                             OBJECTSOFT CORPORATION

       STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)

                     YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
                                                         Common Stock          Additional
                                                   -------------------------     Paid-in
                                                     Shares         Amount       Capital       (Deficit)        Total
                                                   -----------   -----------   -----------    -----------    -----------
<S>                                                  <C>         <C>           <C>            <C>            <C>
Balance, January 1, 1995 .......................     2,275,000   $       228   $   255,332    $  (735,879)   $  (480,319)

Accretion of dividends on the Series A
   Preferred stock .............................          --            --            --          (19,125)       (19,125)

Series B preferred stock issuance costs (Note F)          --            --          (2,500)          --           (2,500)

Common stock issued, net of costs ..............        18,000             1        15,499           --           15,500

Compensatory option granted (Note G[3]) ........          --            --          10,000           --           10,000

Net loss .......................................          --            --            --         (122,400)      (122,400)
                                                   -----------   -----------   -----------    -----------    -----------

Balance, December 31, 1995 .....................     2,293,000           229       278,331       (877,404)      (598,844)

Warrants issued in connection with bridge
   loan, net of costs (Note D) .................          --            --         123,525           --          123,525

Compensatory warrants granted (Note G[3]) ......          --            --          16,000           --           16,000

Dividends declared .............................          --            --            --          (32,051)       (32,051)

Units issued, net of costs (Note G[2]) .........     1,639,051           164     6,279,771           --        6,279,935

Exercise of warrants (Note G[3]) ...............        90,625             9       181,241           --          181,250

Net loss .......................................          --            --            --       (1,240,695)    (1,240,695)
                                                   -----------   -----------   -----------    -----------    -----------

BALANCE, DECEMBER 31, 1996 .....................     4,022,676   $       402   $ 6,878,868    $(2,150,150)   $ 4,729,120
                                                   ===========   ===========   ===========    ===========    ===========
</TABLE>


                       The accompanying notes to financial
                     statements are an integral part hereof.


                                       F-5

<PAGE>

                             OBJECTSOFT CORPORATION

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                            Year Ended
                                                                           December 31,
                                                                   --------------------------
                                                                       1996           1995
                                                                   -----------    -----------
<S>                                                                <C>            <C>
Cash flows from operating activities:
   Net (loss) ..................................................   $(1,240,695)   $  (122,400)
   Adjustments to reconcile net loss to net cash provided by
     (used in) operating activities:
       Depreciation and amortization ...........................       174,699         58,056
       Amortization of discount on note payable ................       268,525            --
       Provision (recovery) for doubtful accounts ..............       (16,200)        16,200
       Stock options issued for services rendered ..............        16,000         10,000
       Changes in operating assets and liabilities:
         (Increase) decrease in:
           Accounts receivable .................................        82,902         67,091
           Prepaid expenses and other current assets ...........      (153,884)         6,311
           Other assets ........................................       (94,875)        34,587
         Increase (decrease) in:
           Accounts payable ....................................        (1,005)       (48,332)
           Accrued expenses ....................................         7,617        (28,574)
           Accrued officer compensation ........................      (391,687)       107,220
           Other liabilities ...................................         8,169            --
                                                                   -----------    -----------
             Net cash provided by (used in) operating activities    (1,340,434)       100,159
                                                                   -----------    -----------
Cash flow from investing activities:
   Capital expenditures ........................................      (419,096)
   Capitalized software and courseware .........................      (137,904)      (118,478)
                                                                   -----------    -----------
             Net cash (used in) investing activities ...........      (557,000)      (118,478)
                                                                   -----------    -----------
Cash flow from financing activities:
   Proceeds from issuance of preferred and common stock ........           --         113,000
   Proceeds from issuance of warrants - bridge units ...........       123,525            --
   Proceeds from note payable ..................................       981,475            --
   Repayment of note payable ...................................    (1,250,000)           --
   Deferred offering costs .....................................           --        (30,250)
   Proceeds from issuance of common stock and warrants .........     6,279,935            --
   Dividends ...................................................       (32,051)           --
   Proceeds from exercise of warrants ..........................       181,250            --
   Principal payments on obligations under capital leases ......       (27,431)        (7,928)
   Redemption of preferred stock ...............................      (383,906)           --
                                                                   -----------    -----------
             Net cash provided by financing activities .........     5,872,797         74,822
                                                                   -----------    -----------

NET INCREASE IN CASH ...........................................     3,975,363         56,503

Cash, beginning of period ......................................        63,995          7,492
                                                                   -----------    -----------

CASH, END OF PERIOD ............................................   $ 4,039,358    $    63,995
                                                                   ===========    ===========
Supplemental disclosures of cash flow
   Cash paid during the period:
     Interest expense ..........................................   $    61,311    $     3,502
</TABLE>

         The accompanying notes to financial statements are an integral
                                  part hereof.


                                       F-6
<PAGE>


                             OBJECTSOFT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


(NOTE A) - Summary of Significant Accounting Policies:
-----------------------------------------------------

        [1]     The Company:
                -----------

                ObjectSoft  Corporation (the "Company") is currently  engaged in
the  business of  providing  transaction  based  services  over the Internet and
through kiosks, computer software training and consulting.

        [2]     Equipment:
                ---------

                Equipment  is carried at cost,  less  accumulated  depreciation.
Depreciation is provided using the  straight-line  method over estimated  useful
lives of the assets (three to seven years).

        [3]     Provision for income taxes:
                --------------------------

                Deferred income taxes arise from temporary differences resulting
primarily  from income and expense items being  reported on an accrual basis for
financial  reporting purposes and on a cash basis for tax purposes,  capitalized
software and net  operating  loss  carryforwards.  The Company has  available at
December 31, 1996,  Federal net operating loss  carryforwards  of  approximately
$2,200,000 which may be applied against future taxable income through 2011.

        [4]     Software revenue recognition policies:
                -------------------------------------

                The  Company is engaged as a  developer  in a number of software
transactions.  Generally,  revenue  from  generic  software is  recognized  upon
delivery of the software.  After the sale, if significant  obligations remain or
significant  uncertainties  exist about  customer  acceptance  of the  software,
revenue is deferred until the obligations are satisfied or the uncertainties are
resolved.  Revenue  from  software  services is  recognized  as the services are
performed.  Revenue from software  leased  through the Internet  (generally  one
year) is  deferred  and  amortized  over the lease  term.  Revenue  from  custom
software  development  (included in consulting revenue) is recognized based upon
its percentage completion.

        [5]     Software development costs:
                --------------------------

                The Company capitalizes  software development costs when project
technological  feasibility  is established  and  concluding  when the project is
ready  for  release.   Research  and  development   costs  related  to  software
development are expensed as incurred.



(continued)


                                       F-7

<PAGE>


                             OBJECTSOFT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


(NOTE A) - Summary of Significant Accounting Policies: (continued)
-----------------------------------------------------

        [5]     Software development costs: (continued)
                --------------------------

                The Company's policy is to amortize  capitalized  software costs
by the greater of (a) the ratio that current gross  revenues for a product bears
to the total of current and  anticipated  future gross revenues for that product
or (b) the straight-line  method over the remaining  estimated  economic life of
the product  including the period being  reported on. It is reasonably  possible
that those  estimates  of  anticipated  future  gross  revenues,  the  remaining
economic useful life of the product or both will be reduced in the near term.

        [6]     Use of estimates:
                ----------------

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

        [7]     Stock-based compensation:
                ------------------------

                Statement of Financial Accounting Standards No. 123, "Accounting
for  Stock-Based  Compensation"  ("SFAS No.  123")  allows  companies  to either
expense the  estimated  fair value of stock options or to continue to follow the
intrinsic value method set forth in APB Opinion 25, "Accounting for Stock Issued
to  Employees"  ("APB 25") but disclose the pro forma  effects on net (loss) had
the fair value of the options been expensed. The Company has elected to continue
to apply APB 25 in accounting  for its stock option  incentive  plans.  See Note
G[3] to the financial statements for further information.

        [8]     Net loss per share:
                ------------------

                Net loss per share was computed  based on the  weighted  average
number of shares of common stock outstanding  during the period and the net loss
increased by the dividends accruing on the cumulative preferred stock. Since, in
1995 and prior to November 13, 1996,  certain  shares of common stock and common
stock  equivalents  were issued and, in  accordance  with  certain  rules of the
Securities  and Exchange  Commission  all such shares of common stock and common
stock  equivalents  were  considered  outstanding  for 1995 and through June 30,
1996.  Fully  diluted  net  loss  per  share  is not  shown  since  it  would be
anti-dilutive.


(continued)


                                       F-8

<PAGE>


                             OBJECTSOFT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


(NOTE A) - Summary of Significant Accounting Policies: (continued)
-----------------------------------------------------

        [8]    Net loss per share: (continued)
               ------------------

               During 1996, the Company issued units  consisting of common stock
and warrants  (see Note D) and  utilized  $125,000 of the proceeds to redeem the
Series B  preferred  stock.  Additionally,  the  Company  redeemed  the Series A
preferred  stock and  repaid  the short  term  debt with the  proceeds  from the
initial public  offering.  Had the Series A preferred been retired on January 1,
1995, the Series B preferred  stock not been issued on December 31, 1995 nor the
short  term debt  initiated  in 1996 and had the  Company  issued  common  stock
instead,  the net loss per share  for the  years  ended  December  31,  1996 and
December 31, 1995 would have been $(0.31) and ($0.04), respectively.  These loss
per share  computations  assume an additional  weighted average number of shares
outstanding  for the years  ended  December  31, 1996 and  December  31, 1995 of
173,834 and 43,367, respectively.

        [9]    Cash and cash equivalents:
               -------------------------

               Cash and cash equivalents  include cash on hand,  demand deposits
and all highly-liquid investments with a maturity of three months or less at the
time of purchase.


(NOTE B) - Equipment:
--------------------

        At December 31, 1996, equipment consists of:

              Kiosks ..................................$407,131
              Equipment ............................... 179,323
                                                       --------
                                                        586,454
              Accumulated depreciation ................ 128,606
                                                       --------

                        T o t a l .....................$457,848
                                                       ========

        Depreciation  expense aggregated $83,587 and $19,573 for the years ended
December 31, 1996 and 1995,  respectively.  Included in depreciation  expense is
depreciation  expense on equipment under capital lease which aggregated  $14,920
and $8,396, for the years ended December 31, 1996 and 1995, respectively.

        During  1996,  the  Company  acquired   equipment  under  capital  lease
aggregating $98,906.



(continued)


                                       F-9

<PAGE>


                             OBJECTSOFT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


(NOTE C) - Capitalized Software:
-------------------------------

        During the years ended  December 31, 1996 and  December  31,  1995,  the
Company has capitalized software development costs which aggregated $137,904 and
$118,478,  respectively.  Amortization of capitalized  software costs aggregated
$78,392 and $9,873 for the years ended  December 31, 1996 and December 31, 1995,
respectively.   Additionally   amortization  of  capitalized   courseware  costs
aggregated  $12,720  and  $28,610  for the years  ended  December  31,  1996 and
December 31, 1995, respectively.


(NOTE D) - Financing:
--------------------

        In 1996,  prior to the IPO,  the Company  sold 12.5 bridge  units,  each
consisting  of a $100,000,  7% note and  warrants to purchase  30,000  shares of
common stock or other  securities as might be offered in the Company's IPO ("IPO
Securities").  Additionally,  the placement agent received a warrant to purchase
37,500  shares of common  stock or other  securities  as might be offered in the
Company's IPO. The notes were paid in full on November 22, 1996.

        The Company  valued the  warrants at $138,750.  Accordingly,  additional
paid-in  capital has been credited  $123,525  which  represents the value of the
warrants less the allocable  portion of the offering costs.  The short-term note
was discounted by the value of the warrants and the offering costs. The discount
was  amortized  as  additional  interest  expense  from the date of  issuance to
November 22, 1996,  the date the note was paid in full. The IPO was completed in
November 1996; the bridge unit warrants are exercisable  into the IPO Securities
at $3.50 per unit.  These warrants  expire in November 1999. The placement agent
warrants are exercisable at $4.55 and expire in November 2001.

        During  the  year  ended  December  31,  1996,  amortization  aggregated
$268,525.



(continued)


                                      F-10

<PAGE>


                             OBJECTSOFT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


(NOTE E) - Obligations Under Capital Lease:
------------------------------------------

        Minimum  future lease payments  under capital  leases  expiring  through
2001, as of December 31, 1996 are as follows:


     Year Ending
     December 31,                                               Amount
     ------------                                               ------

        1997..............................................    $ 57,676
        1998..............................................      30,933
        1999..............................................       6,723
        2000..............................................       5,080
        2001..............................................       2,193
                                                              --------
                                                               102,605
        Less amount representing interest.................      18,530
                                                              --------
        Present value of net minimum
          lease payments..................................      84,075

        Less present value of net minimum lease payments
          due within one year.............................      45,740
                                                              --------

               Total......................................    $ 38,335
                                                              ========


(NOTE F) - Preferred Stock:
--------------------------

        The Series A 9% cumulative  voting  preferred  stock was redeemed at the
time of the initial  public  offering  for a total of $212,500  plus  cumulative
dividends of $71,214.

        The Series B 10% cumulative  preferred stock was redeemed at the time of
the private placement for a total of $125,000 and warrants expiring November 13,
1999 to purchase 20,000 shares of common stock at an exercise price of $7.00 per
share. Dividends paid in 1996 aggregated $7,243.


(NOTE G) - Stockholders' Equity:
-------------------------------

        [1]     Recapitalization:

                In  January   1996,   ObjectSoft   Corporation,   a  New  Jersey
corporation merged into a newly formed corporation,  ObjectSoft  Corporation,  a
Delaware  corporation.  In conjunction with the merger,  shares of the preferred
and common stock  outstanding  were  exchanged  for the same number of shares of
stock,  the shares  authorized  increased to 5,000,000  preferred and 20,000,000
common  and the par value was  reduced  to  $.0001.  This  transaction  is given
retroactive effect in the accompanying financial statements.


(continued)


                                      F-11

<PAGE>


                             OBJECTSOFT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS



(NOTE G) - Stockholders' Equity: (continued)

        [2]     Private placement and initial public offerings:

                In August 1996, the Company  issued 273,001 units  consisting of
one share of common  stock and a warrant to  purchase  two-thirds  of a share of
common stock at an exercise  price of $3.00 per  two-thirds  share.  The Company
received proceeds of $816,285, net of offering costs of $139,215.  Additionally,
the placement agent was granted warrants to purchase 27,300 of these units at an
exercise price of $4.50 per unit. The warrants expire November 13, 1999.

                In November 1996, the Company issued 1,366,050 units, consisting
of one share of common stock and a warrant to purchase one share of common stock
at an exercise  price of $6.50 per share  expiring  November  2001.  The Company
received  proceeds  of  $5,463,650  net of  offering  costs  of  $1,366,600.  In
connection  with the IPO,  the  underwriter  was  granted an option to  purchase
87,500 units at $8.00 per unit.

        [3]     Stock options and warrants:

                As of January 1, 1995, the Company had issued warrants, expiring
in April 1998, to purchase  143,333  shares of common stock at an exercise price
of $0.50 and warrants,  expiring in November 1996, to purchase 106,250 shares of
common stock at an exercise price of $2.00. In 1996, warrants to purchase 90,625
shares of common stock were  exercised.  Warrants to purchase  15,625  shares of
common stock expired.

                In 1995,  the  Company  granted  an option to  purchase  100,000
shares of common stock at $1.00 per share in exchange for  consulting  services.
The options are exercisable  through September 2000. In 1996, in exchange for an
additional $5,000 payment to the option holder, the Company cancelled the option
on 50,000 shares.

                In 1996, the Company granted a warrant to purchase 10,000 shares
of common  stock at $1.00 per share in  exchange  for  $20,000  of  professional
services to be rendered  during the vesting  period.  This warrant vests ratably
over a ten month period ending March 1997 and is  exercisable  through May 2001.
During 1996, the Company  recognized expense of $16,000 and warrants to purchase
8,000 shares of common stock were vested as of December 31, 1996.

                In addition, the Company adopted a stock option plan under which
250,000 shares of common stock are reserved for issuance upon exercise of either
incentive or  nonincentive  stock options which may be granted from time to time
by the Board of Directors to employees and others.

(continued)


                                      F-12

<PAGE>


                             OBJECTSOFT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


(NOTE G) - Stockholders' Equity: (continued)
-------------------------------

        [3]     Stock options and warrants: (continued)
                --------------------------------------

                Other than the  warrants  to  purchase  90,625  shares of common
stock, no other options or warrants were exercised in 1995 or 1996.

                The Company  applies APB 25 in  accounting  for its stock option
incentive  plan  and,  accordingly,  recognizes  compensation  expense  for  the
difference  between the fair value of the underlying  common stock and the grant
price of the option at the date of grant. The effect of applying SFAS No. 123 on
1996 pro forma net loss as stated above is not necessarily representative of the
effects on reported net loss for future years due to, among other things (1) the
vesting  period of the stock options and the (2) fair value of additional  stock
options in future years.  Had  compensation  cost for the Company's stock option
plans  been  determined  based  upon the fair value at the grant date for awards
under the plans  consistent with the methodology  prescribed under SFAS No. 123,
the  Company's  net loss in 1996 would have been  approximately  $1.4 million or
$(0.50) per share. The weighted average fair value of the options granted during
1996  are  estimated  as  $1.20  per  share  on the  date  of  grant  using  the
Black-Scholes  option-pricing  model with the  following  assumptions:  dividend
yield 0%, volatility of 40%,  risk-free interest rate of 6.37% and expected life
of 5 years.

                During 1996,  the Company  granted  options on 145,000 shares of
its common stock at an average  exercise price of $3.43.  No options were either
exercised or forfeited during the year.

                The  following  table  summarizes  information  about the plan's
options outstanding at December 31, 1996:

<TABLE>
<CAPTION>
                             Options Outstanding                Options Exercisable
                  --------------------------------------      ----------------------
                                  Weighted
                                   Average
                                  Remaining     Weighted                     Weighted
   Range of                      Contractual     Average                      Average
   Exercise         Number          Life        Exercise        Number       Exercise
    Prices        Outstanding    (In Years)       Price       Exercisable      Price
    ------        -----------    ----------     --------      -----------      -----
<C>                 <C>              <C>          <C>           <C>            <C>
$2.50 to $3.50      145,000          5.0          $3.43         129,999        $3.42
</TABLE>

                The Company has  reserved  2,961,887  shares of its common stock
for issuance upon exercise of the outstanding warrants and options.

(continued)


                                      F-13

<PAGE>


                             OBJECTSOFT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


(NOTE H) - Income Taxes:
-----------------------

        The  significant  components  of the  Company's  deferred tax assets and
liabilities at December 31, 1996 as follows:


                Accrual to cash adjustment................$  (52,000)
                Capitalized software......................   (65,000)
                Net operating losses carryforward.........   909,000
                Valuation allowance.......................  (792,000)
                                                          ----------

                Net deferred tax asset....................$     -0-
                                                          ==========


        The significant components of the provision for income taxes consists of
the following:


                                                    December 31,
                                                 -------------------
                                                 1996           1995
                                                 ----           ----

       Accrual to cash adjustment........... $ (255,000)    $   62,000
       Net Operating loss carryforward......    764,000         37,000
       Capitalized software.................    (28,000)       (35,000)
       Increase in valuation allowance......   (481,000)       (64,000)
                                             -----------    ----------
       Provision for income taxes........... $     -0-      $     -0-
                                             ===========    ==========

        The  difference  between the  statutory  federal  income tax rate on the
Company's net loss and the Company's  effective  income tax rate for each of the
year ended December 31, 1996 and 1995, respectively, is summarized as follows:

                                                               December 31,
                                                             ---------------
                                                             1996       1995
                                                             ----       ----

                Statutory federal income tax rate .......    34.0%      34.0%
                Increase in valuation allowance .........   (38.8)     (39.2)
                Research and development credit .........     0.9        7.3
                Miscellaneous ...........................     3.9       (2.1)
                                                           ------     ------
                Effective income tax rate ...............     0.0%       0.0%
                                                           ======     ======


(NOTE I) - Employee Benefit Plan:
--------------------------------

        The Company  maintains  a  noncontributory  Employee  Savings  Plan,  in
accordance  with the  provisions  of Section 401 of the Internal  Revenue  Code.
Pursuant  to the terms of the plan,  participants  can defer a portion  of their
income through contributions to the Plan.

(continued)


                                      F-14

<PAGE>


                             OBJECTSOFT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


(NOTE J) - Financial Instruments, Revenues and Other Matters:
------------------------------------------------------------

        [1]     Cash:

                Financial  instruments which potentially  subject the Company to
concentrations of credit risk are primarily cash. The Company maintains its cash
in a highly rated financial  institution.  At December 31, 1996, the Company had
bank deposits exceeding Federally insured limits by approximately $4,000,000.

        [2]     Revenues:

                For the years ended  December 31, 1996 and December 31, 1995, 71
percent  and 48  percent,  respectively,  of  revenues  were  derived  from  two
customers.

        [3]     Microsoft Corporation:

                The Company's software is generally based upon Microsoft Windows
technology.  Additionally,  it has  established  a strategic  relationship  with
Microsoft  that  management  believes is important to its sales,  marketing  and
support  and product  development  activities.  Accordingly,  any change in this
relationship  or any factor  adversely  affecting the demand for, or the use of,
Microsoft's  Windows operating system could have a negative impact on demand for
the Company's  products and services.  Additionally,  changes to the  underlying
components  of  the  Windows  operating  system  would  require  changes  to the
Company's  products and could result in the loss of sales if the Company did not
implement changes in a timely manner.


(NOTE K) - Commitments:
----------------------

        [1]     Lease income:

                In 1995, the Company  entered into an agreement with the City of
New York ("New York") whereby the Company would develop custom software and upon
final  acceptance of the software by New York, the Company will initially  lease
five kiosks,  hardware  and software to New York for one year,  renewable by New
York for two successive one year terms. The annual rental  aggregates  $361,080.
Additionally,  the Company  can earn fees based upon the number of  transactions
effectuated in the kiosks.  The remaining  rent  receivable at December 31, 1996
under this agreement is $210,630.


(continued)


                                      F-15

<PAGE>


                                       OBJECTSOFT CORPORATION

                                    NOTES TO FINANCIAL STATEMENTS


(NOTE K) - Commitments: (continued)
----------------------

        [2]     Lease:

                The Company  leases office space and equipment  under  operating
leases with an initial or remaining term of more than one year expiring  through
2003.

                    Year Ending
                    December 31,                        Amount
                    ------------                        ------

                        1997.....................    $   58,008
                        1998.....................        77,822
                        1999.....................        80,494
                        2000.....................        84,787
                        2001.....................        89,080
                        Thereafter                      116,984
                                                     ----------

                               Total.............    $  507,175
                                                     ==========


                Rent expense  approximated  $62,500 and  $18,300,  for the years
ended December 31, 1996 and December 31, 1995, respectively.

        [3]     Employment agreements:
                ---------------------

                The Company  entered  into  employment  agreements  with two key
executives  expiring in December 2001.  Under the terms of the  agreements,  the
aggregate initial annual  compensation is $208,000 per executive.  Additionally,
the agreements include provisions for bonuses  (aggregating the sum of 5 percent
of earnings before  depreciation,  interest,  taxes and  amortization  and other
amounts,  if any, to be  determined  by the board of  directors),  increases  in
compensation and severance payment based upon certain events.


(NOTE L) - Subsequent Event:
---------------------------

        In  January  1997,  with the  approval  of the board of  directors,  the
Company loaned $440,000 to the Company's  chairman of the board.  The loan which
is unsecured,  bears  interest at 8% per annum and is due in November  1997. The
chairman of the board used the proceeds for a block purchase of 80,000 shares of
the Company's  common stock from the market maker,  who was also the underwriter
of the Company's IPO, in an open market transaction.



                                      F-16