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

                                   FORM 10-KSB

(Mark One)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended DECEMBER 31, 1996
                                                               or
[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from _____________________ to _______________________
                                                 Commission file number: 1-11782

                           ESQUIRE COMMUNICATIONS LTD.
        (Exact name of Small Business Issuer as specified in its charter)

          DELAWARE                                      13-3703760
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                          Identification No.)

216 EAST 45TH STREET, NEW YORK, NEW YORK                10017
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code:     (212) 687-8010
                                                        --------------

Securities registered pursuant to Section 12(b) of
   the Act:
                                                         Name of each exchange
TITLE OF EACH CLASS                                      ON WHICH REGISTERED
Common Stock, $.01 par value                             Boston Stock Exchange
Redeemable Common Stock Purchase Warrants                Boston Stock Exchange

Securities registered pursuant to
  Section 12(g) of the Act:                              Common Stock, par value
                                                             $.01
                                                         Redeemable Common Stock
                                                             Purchase Warrants

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

As of January 31, 1997, the aggregate market value of the voting stock held by
non-affiliates of the registrant, based on the closing price, was approximately
$5,758,580.

As of January 31, 1997, the registrant had 3,997,329 shares of Common Stock
outstanding.

Registrant's revenues for the fiscal year ended December 31, 1996 were
$24,583,000.

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

Transitional Small Business Disclosure Format   Yes ___    No X
<PAGE>



Item 1.         BUSINESS

General

     Esquire Communications Ltd. (the "Company" or "Esquire Communications") is
a court reporting firm using state-of-the-art technology to provide printed and
computerized transcripts and video recordings of testimony from depositions to
the legal profession primarily in the New York City metropolitan, Southern
California and Washington, D.C. areas. The Company's strategy is to become a
national court reporting firm by acquiring court reporting companies in major
business communities around the country. The Company believes that by expanding
through the acquisition of established court reporting companies in major
cities, the Company will achieve a significant national presence in the court
reporting industry. In evaluating a prospective acquisition candidate,
management of the Company considers the following material factors: (i)
financial condition and results of operations; (ii) experience and skill of
management and management's availability after the acquisition; (iii) growth
potential; (iv) costs associated with the consummation of the acquisition; and
(v) customer base and reputation. The size, nature and geography of the early
acquisitions will determine the pace of the Company's achievement of national
coverage. The Company believes that there are a number of suitable acquisition
candidates in the size range contemplated, and that national status could be
achieved by acquiring 10 to 12 firms in major metropolitan areas.

     Esquire Communications was incorporated in 1993 under the laws of the State
of Delaware, as a holding company to own all the outstanding capital stock of
Pepper Services, Ltd. ("Pepper") and Esquire Reporting Company, Inc. ("ERC"),
which the Company acquired in 1988 and 1989, respectively. The Company's
principal executive offices are located at 216 East 45th Street, New York, New
York 10017, and its telephone number is (212) 687-8010. Unless the context
indicates otherwise, all references to the Company include its subsidiaries.

The Court Reporting Industry

     Court reporting is the verbatim transcription of the spoken word into the
written word, generally from sworn legal testimony. The industry is divided into
two distinct sectors-- the recording of proceedings in court, or "official"
court reporting, and all other court reporting. Official court reporting is
performed by civil servant court reporters employed by municipal, state, or
federal courts. All other court reporting is performed outside the courtroom by
free-lance court reporters, who may be either self-employed, or employees or
independent contractors affiliated with a court reporting agency. The Company is
a court reporting agency which primarily uses the services of independent
contractors to handle the recording of legal proceedings (typically civil ones)
outside the courtroom and, to a lesser extent, the recording of other events
such as hearings, arbitrations, board meetings, stockholders' meetings,
conferences, conventions and media events.

     Court reporting firms range in size from sole practitioners to firms with
more than 100 free-lance court reporters. Although there are no independently
verified statistics with respect to the number of court reporters or the total
revenues of the court reporting industry, there are approximately 22,000 members
of the National Court Reporting Association ("NCRA"), the only national
professional association in the industry, and an additional 12,000 student
members. The Company estimates that there are approximately 50,000 court
reporters in the United States. The Company believes that, based on its size and
reputation, it is one of the leading court reporting companies in the United
States.

     The industry's long-time local focus is shifting toward a more national
approach to accommodate law firms and corporations whose cases, in many
instances, extend beyond a single city. Attorneys commonly request such
out-of-town referrals from their local court reporting firm. Professional
associations such as the NCRA and various national networks facilitate both the
development of personal relationships between agency owners and the referral of
business between agencies. Through such networks, a member court reporting firm
is able to schedule depositions in other cities for clients so requesting. One
drawback of the networks to date has been the inability of the referring court
reporting firm to guarantee the quality of service that the client ultimately
receives. The Company believes that by expanding nationally, it will be able to
more effectively serve clients across the country, rather than depending on the
loosely-aligned networks or other strategic relationships.

Services and Technology

     The Company's basic business is the verbatim transcription of EBTs
(examinations before trial) or depositions. Court reporting requires a trained
professional capable of transcribing speech, which generally approximates 200
words per minute, using shorthand symbols. Most of the Company's court reporters
use a computer-aided transcription, or CAT, system for transcribing depositions.
Much like traditional stenotype machines, CAT systems enable a court reporter to
represent what is spoken as phonetic symbols. CAT systems, however, have an
added feature; the phonetic symbols are simultaneously recorded on the
traditional paper tape and disk. Whether taken on a CAT system or a traditional
stenotype machine, the shorthand notes are translated from the paper or magnetic
medium, then edited to produce a final transcript. CAT systems enable the
computer to interpret the shorthand symbols and translate them into English, a
process that otherwise must be done manually. CAT systems have speeded the
production of the final transcript; in fact, a court reporter can connect a
computer to his stenotype machine, which can perform the translation during the
proceedings and allow him to provide a transcript directly following the
proceeding. As a by-product of CAT technology, specialized software has been
developed enabling court reporters to provide clients with a floppy disk
containing the translation of the shorthand symbols in a computer-readable
format. This software allows the client to search, store, index, annotate, and
manage transcripts. Documents can be searched easily for relevant portions of
testimony, and can be integrated into larger databases containing all of the
other information pertaining to a particular proceeding.

     The Company's state-of-the art technologies include:

     o    Realtime Transcription. The reporter writes on the stenotype machine
          and the written translation of what is said instantaneously appears on
          monitors located in the conference rooms where the deposition is
          taking place and/or at a remote location.

     o    Interactive Realtime Transcription. Specialized software enables the
          user to mark, annotate, search, cut and paste the text instantly on a
          computer linked to that of the court reporter.

     o    Full-Text Search and Retrieval Programs. These programs allow the
          computer to be used to search, store, index and manage transcripts and
          other documents. This enables the user to locate a particular word or
          portion of text quickly and easily.

     o    Compressed Transcripts. This format eliminates excess white space on
          the page and organizes the text in columns, substantially reducing
          transcript bulk. The compressed transcripts contain an index listing
          all of the words in the transcript, as well as where and how often the
          words appear, simplifying the summarizing of transcripts.

     o    Multimedia Technology Systems. This format allows text and video
          images to be shown concurrently on a single screen. The proceedings
          are taped on video while the court reporter records the proceedings on
          a stenotype machine connected to a computer equipped with the
          appropriate software. The videotape or CD ROM can later be accessed
          via video cassette recorder or computer, as appropriate.

     While the Company believes that the services it provides through these
technologies are high quality, none of these services are unique in the industry
or represent any significant investments that would act as a barrier to entry by
competitors. Rather, the Company believes that its experience and expertise in
the use of such technologies give it a competitive advantage over those court
reporting firms that have not successfully integrated these technologies into
the services they provide on a regular basis.

Acquisition Strategy

     The Company intends to continue expanding geographically by making initial
acquisitions in new geographic markets of one or more court reporting companies
that can operate effectively on a decentralized basis resulting in the creation
of a new "hub". Subsequent to the establishment of a hub, the Company intends to
acquire additional court reporting agencies in that market. The Company believes
that these "tuck-in" acquisitions can be absorbed without significant increase
in administrative costs.

     The Company's strategy is to become a national court reporting company by
acquiring court reporting companies in both its present geographic markets and
in other major metropolitan areas in the United States. The Company believes a
national court reporting firm will be able to more effectively serve its
clients. The highly fragmented nature of the court reporting industry provides
substantial acquisition opportunities for the Company. With the advent of
sophisticated and rapidly changing technologies, aggressive marketing and
professional management, the Company believes that some small firms are unlikely
to be able to make the necessary capital investments required to compete
effectively against better-capitalized competitors. Through its utilization of
the newest technologies and its ability to provide professional management, the
Company will benefit from certain economies of scale in its operations and
marketing by expanding in its present market places. Additionally, the Company
believes that the efficiencies it has achieved in its present locations can be
duplicated in other locations which may be acquired in the future. For example,
the Company has developed a customized computer system to handle the scheduling
of depositions and billing and accounting matters. This software will be used in
managing the firms acquired by the Company without any corresponding material
increases in operating costs. Additionally, the Company's training program for
managers will enable the Company to efficiently streamline the operations of
acquired businesses by reducing or eliminating administrative offices and
certain staff positions of such acquired businesses.

     Pursuant to an Agreement of Merger dated as of September 30, 1993 (the
"Merger Agreement"), by and among the Company, Esquire Communications
Acquisition Corp., a wholly-owned subsidiary of the Company ("Acquisition Sub"),
and David Feldman & Associates (U.S.A.), Ltd. ("DFA"), on September 30, 1993 DFA
was merged into Acquisition Sub. As a result of the merger, DFA became a
wholly-owned subsidiary of the Company. DFA serves the metropolitan New York
City area. The purchase price paid by the Company pursuant to the Merger
Agreement consisted of 549,900 unregistered shares of Common Stock of the
Company, $1,500,000 in cash and a promissory note in the principal amount of
$600,000. The promissory note is payable in 16 equal quarterly installments,
commencing December 30, 1993, together with interest at the rate of 10% per
annum.

     On June 22, 1994, the Company acquired all the outstanding stock of Sarnoff
Deposition Service, Inc. ("SDS"), a Southern California based court reporting
company. The purchase price paid by the Company for SDS consisted of
approximately $4,331,000 in cash, a promissory note in the principal amount of
$1,500,000 and 750,000 unregistered shares of Common Stock of the Company. The
promissory note is payable in 28 equal quarterly installments commencing
September 1994, together with interest at the rate of 10% per annum.

     On January 27, 1995, the Company acquired substantially all the assets of
Coleman, Haas, Martin & Schwab, Inc. ("CHMS"), a California based court
reporting company. The purchase price paid by the Company for CHMS consisted of
$400,000 in cash, promissory notes in the aggregate principal amount of $800,000
and 76,923 unregistered shares of Common Stock of the Company. Upon CHMS
attaining specified revenues in 1995, the Company paid an additional $150,000 in
cash. The principal amount of one of the promissory notes is subject to
adjustment based on revenue levels attained by CHMS in 1995 and 1996. As the
result, the principal balance increased by approximately $35,000 for the 1995
fiscal year and $143,000 for the 1996 fiscal year. The promissory notes are
payable in equal monthly installments over a period of seven years, together
with interest at the rate of 9% per annum.

     On July 26, 1996, the Company acquired the assets and liabilities of
Kitlas, Dickman & Associates, a court reporting agency based in San Diego,
California, which has an immaterial effect on the operating results of the
Company.

     On October 28, 1996, the Company acquired the assets and liabilities of M&M
Reporting Referral Service, Inc., a Southern California-based court reporting
company. The purchase price consisted of $2,600,000 in cash, subordinated
promissory notes in the aggregate principal amount of $2,712,700 and 132,258
unregistered shares of Common Stock. The principal amount of one of the notes
and the cash portion of the purchase price are subject to revision based on the
revenue derived from M&M's business for the twelve month period commencing
November 1, 1996. The promissory notes are payable in equal quarterly
installments over a period of five years, together with interest at the rate of
9% per annum

     On November 15, 1996, the Company acquired the assets of Sherry Roe &
Associates, Inc., a Washington, D.C. based court reporting company. On January
3, 1997, the Company acquired the assets of Nevill & Swinehart and Pelletier &
Jones, both Southern-California based court reporting companies. The purchase
price in such acquisitions consisted of $2,160,000 in cash, subordinated
promissory notes in the aggregate principal amount of $1,265,000 and 171,748
unregistered shares of Common Stock. The principal amount of some of the notes
and the cash portion of the purchase price are subject to revision based on the
revenue derived from the acquired businesses subsequent to the closing. The
promissory notes are payable over a period of six years, together with interest
at the rate of 8% or 9% per annum.

Competitive Factors

     Court reporting is an increasingly competitive industry, where firms must
adapt to changing technology. The industry is characterized by low barriers to
entry, resulting in a large number of small firms competing for available
business. Most court reporting firms offer substantially the same type of
services which the Company offers. However, larger firms can compete more
effectively due to the economies of scale which can be achieved as a result of
spreading the high cost of computer and video equipment and marketing efforts
over a larger base. Additionally, large court reporting firms can use their
sophisticated facilities and equipment for ancillary services requested by their
clients. Although no statistics are available, the Company believes that there
are only one or two court reporting firms that are truly national in scope;
perhaps a dozen other firms are regional in scope. These firms may represent
more competition for the Company than smaller, presumably less comprehensive
firms. Competition in the court reporting industry is based on factors such as
the existence of personal relationships with clients and other reporting
agencies, price, service and reputation.

     Various proposals are under consideration by the Federal Advisory Committee
on Civil Rules, the Judicial Conference of the U.S. and the U.S. Supreme Court,
among others, which may reduce or eliminate the use of court reporters. Such
proposals include limitations on the number and length of pretrial depositions,
requirements to use alternative dispute resolution methods and the substitution
of audio- and/or video-tape recordings for stenographic transcription of
proceedings. In addition, on an unofficial basis, certain industries have
adopted alternative dispute resolution methods as standard industry practices.
These or other trends could have a material adverse impact on the court
reporting industry.

     Future technological innovations in the court reporting industry may create
new services or products that are competitive with, superior to or render
obsolete the services currently provided by the Company and other court
reporting companies. There can be no assurance that the Company would not be
adversely affected in the event of such technological innovation. In an attempt
to keep abreast of the changing technology, the Company has aggressively sought
to become a "beta" site for the manufacturers of all types of industry hardware
and software; the Company uses and evaluates new products for the manufacturers
before the products are available to the general public. This policy has proven
to be effective to date and will be aggressively continued. In addition,
representatives of the Company attend trade shows and serve on various industry
group committees.

Clients and Marketing

     The Company's professional sales team helps create and implement its
marketing efforts. Representatives of the Company attend and perform
demonstrations at industry trade shows. The Company highlights its technological
resources through advertisements in trade magazines and legal periodicals, and
engages in direct mail advertising to lawyers. The Company attracts business
through telemarketing, cold calling, recommendations and referrals, and
participates in competitive bidding.

     The Company also attracts new business through contacts made as a result of
its membership in the National Network Reporting Company ("NNRC"), a national
network of approximately 53 large, reputable court reporting agencies set up to
facilitate the exchange of ideas among agency owners. Membership in NNRC is
limited to one court reporting firm in each major metropolitan area in the
United States, Canada and the United Kingdom. The Company is the NNRC
representative for each of New York City, Long Island, New York, Los Angeles,
California and San Diego, California. The Company also has contractual
relationships with deposition-setting services that refer work to the Company.

     The Company recently formed Esq.Com CSD, Inc., as a wholly owned
subsidiary, to market on a national basis court reporting services to large
insurance companies and corporations. Revenues generated from these operations
have not been significant.

     The Company's client base is comprised primarily of law firms. Since the
Company provides verbatim transcriptions of sworn legal testimony, it is
unlikely that customers which are not law firms or others involved in legal
proceedings would be interested in the Company's services. Thus, the Company is
dependent upon the continued use of legal proceedings and the need for
transcription thereof by interested parties.

Human Resources

     The Company currently has 142 full-time employees and approximately 387
free-lance court reporters. The Company's court reporters are primarily
independent contractors, each of whom owns his own stenotype machine and many of
whom also own personal computers. The Company's ability to utilize the services
of independent contractors has significant favorable consequences to the
Company. As a result, the Company is able to minimize its fixed operating costs,
while avoiding certain capital expenditures. Although the Company does not have
the same amount of control over an independent contractor as it does over an
employee of the Company, the Company does not believe that this has had a
negative impact on its business since the Company has been able to attract
highly qualified professionals. The Company provides comprehensive training to
its managers and has an internship program for its court reporters.

     The Company's employees and independent contractors are not represented by
any union. The Company considers its relations with its employees and free-lance
court reporters to be excellent.

Item 2.  Properties

     The Company has leased offices in New York, New York, Santa Ana,
California, Los Angeles, California, San Diego, California and Washington, D.C.
The aggregate area under the leases approximates 50,000 square feet. The leases
generally run for a term of five years and expire at various dates from time to
time. In addition, the Company owns an office condominium of approximately 1,100
square feet of office space at 230 Hilton Avenue, Hempsted, New York.

Item 3.  Legal Proceedings

     The Company is not a party to any material pending legal proceedings.

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

     None.


                                     PART II

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

Price Range of Common Stock

     Effective May 18, 1993, the Common Stock and Warrants of the Company were
listed on the Boston Stock Exchange and Nasdaq Stock Market under the symbols
"ESQS" and "ESQSW", respectively. The following table sets forth for the
calendar periods indicated the high and low bid prices on the Nasdaq Stock
Market for the Common Stock for the period commencing January 1, 1995. The
prices set forth below do not include retail mark-ups, mark-downs or commissions
and represent prices between dealers and are not necessarily actual
transactions.

                                 HIGH                  LOW
           1996
     First Quarter               $3.50                $2.75
     Second Quarter               3.50                 2.75
     Third Quarter                3.25                 2.00
     Fourth Quarter               3.375                2.125

           1995
     First Quarter               $3.50                $2.875
     Second Quarter               3.50                 2.625
     Third Quarter                3.375                2.375
     Fourth Quarter               3.063                2.625


     There were approximately 66 shareholders of record of Common Stock as of
March 17, 1997. This number does not include beneficial owners holding shares
through nominee or "street" names. The Company believes that it has more than
2,000 beneficial holders of Common Stock.

Dividend Policy

     The Company has never declared or paid cash or other dividends on its
Common Stock. The payment of dividends, if any, in the future is within the
discretion of the Board of Directors and will depend upon the Company's
earnings, its capital requirements and financial condition, and other relevant
factors. Pursuant to the Series A Preferred Stock and the Credit Agreement, the
Company is prohibited from paying cash dividends. The Company presently intends
to retain all earnings for use in its business and does not anticipate paying
dividends in the foreseeable future.

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

Introduction

     The revenues of the Company are primarily derived from services for
recording sworn testimony at depositions. The Company's revenues can fluctuate
widely from period to period as a result of the absence or presence of
significant non-recurring litigation matters. Large complex litigation can
result in large amounts of revenues being recognized over a relatively short
period. The key variable in the Company's operating expenses are the fees paid
to reporters and transcribers engaged by the Company. The different types of
services provided by the Company represent varying profit margins, with
accelerated delivery transcripts, transcript copies and compressed transcripts
yielding the highest margins. In addition, profit margins vary in the different
geographic markets in which the Company operates.

     The Company acquired the assets of Kitlas, Dickman & Associates ("KDA") in
July 1996, M&M Reporting Referral Services, Inc. ("M&M") in October 1996 and
Sherry Roe & Associates, Inc. ("SRA") in November 1996 (collectively referred as
"1996 Acquisitions"). In January of 1995 the Company acquired the assets of
Coleman Haas Martin & Schwab ("CHMS") and in June of 1994 the Company acquired
Sarnoff Deposition Service, Inc. ("SDS") (see Note 2 to Consolidated Financial
Statements).

Results of Operations

Comparison of Years ended December 31, 1996 and 1995

     Revenues increased by $3.9 million or 18.8%. Excluding revenues from 1996
Acquisitions, the revenues increased by approximately 11.8% or $2.4 million. The
Company believes that the increase in revenues was due to its marketing efforts
and partly due to several large multi-party projects undertaken in 1996.

     Operating expenses increased by $2.3 million, from $11.6 million in 1995 to
$13.9 million in 1996 in line with the revenue increase. As a percentage of
revenues, operating expenses were 56.6% in 1996 and 56.4% in 1995.

     General and administrative expenses increased by $2.3 million to $8.4
million. The increase was in part due to expenses related to 1996 Acquisitions
consisting of payroll and occupancy expenses and increased sales compensation,
marketing and promotional expenses and administrative support expenses due to
increased revenue levels. Expenses incurred by the Company's Corporate Services
Division and additional expenses incurred for planned growth also contributed to
the increase. Corporate Services Division markets court reporting services on a
national basis to large insurance companies and corporations, and the revenues
from such efforts were not significant in 1996. The expenses incurred by
Corporate Services Division consisted of payroll, advertising and promotional
expenses. In addition, general and administrative expenses include approximately
$262,000 relating to the sublease loss (see Note 9 to Consolidated Financial
Statements). As a percentage of revenue, general and administrative expenses
increased from 29.6% to 34.3%. As the increase in general and administrative
expenses was greater than the contribution from increased revenues, overall
operating income declined.

     Depreciation and amortization increased by $133,000 due to additional
amortization charges arising from the 1996 Acquisitions and due to additional
depreciation arising from the capital expenditures for the Company's new office
space for its New York operations. A significant component of the amortization
expense relates to the cost in excess of the net tangible assets of acquired
businesses (goodwill) which is being amortized using the straight-line method
over 25 years. The Company continually reviews the recoverability of the
carrying value of goodwill. In determining whether there is an impairment of
goodwill, the Company compares the sum of the expected future cash flows
(undiscounted and without interest charges) to the carrying amount of the asset
(see Note 1 to Consolidated Financial Statements). Management believes that at
December 31, 1996, there has been no impairment in the carrying amount of the
assets.

     Interest expense increased by $94,000 due to incurrence of additional debt
to finance acquisitions and fund working capital.

     The Company's operations resulted in a net loss of $309,000 before
extraordinary item compared to income of $279,000 in 1995. As the increases of
above-mentioned expenses negated the additional contribution from increased
revenues, operations for the year resulted in a loss compared to a profit in
1995.

Comparison of the Years ended December 31, 1995 and 1994

     Revenues increased by $7.9 million or 61.4% to $20.7 million for the year
ended December 31, 1995 primarily as a result of the SDS and CHMS acquisitions.
On a proforma basis, as though the acquisitions were made at January 1, 1994,
the revenues increased by approximately 6.0% for the year ended December 31,
1995 due to several large multiparty projects undertaken in 1995.

     Operating expenses increased by $4.4 million, from $7.3 million in 1994 to
$11.7 million in 1995. As a percentage of revenue, operating expenses declined
from 56.8% to 56.4%.

     General and administrative expenses increased by $1.6 million to $6.1
million. The increase was due to SDS's and CHMS's general and administrative
expenses consisting of payroll, occupancy, marketing and promotional expenses.
As a percentage of revenue general and administrative expenses decreased from
35.1% to 29.6%. The decrease in general and administrative expenses as a
percentage of revenues was in part due to the integration of CHMS's operations
with SDS's and the integration of DFA's operations during the latter part of
1994.

     Depreciation and amortization increased by $371,000, due to additional
depreciation and amortization charges arising from the SDS and CHMS
acquisitions. A significant component of the amortization expense relates to the
cost in excess of the net tangible assets of the acquired businesses (goodwill)
which is being amortized using the straight-line method over 25 years. The
Company continually reviews the recoverability of the carrying value of
goodwill. In determining whether there is an impairment of goodwill, the Company
compares the sum of the expected future cash flows (undiscounted and without
interest charges) to the carrying amount of the asset (see Note 1 to
Consolidated Financial Statements). Management believes that at December 31,
1995, there has been no impairment in the carrying amount of the asset.

     Interest expense increased by $535,000 due to the incurrence of additional
debt to finance acquisitions and fund working capital.

     The Company generated a net income of $279,000 compared to a net loss of
$183,000 in 1994 as the additional contributions from increased revenues was
greater than the increases of the above mentioned expenses.

Liquidity and Capital Resources

     At December 31, 1996, the Company's working capital was approximately $3.4
million, which was approximately $1.8 million more than at December 31, 1995.
The increase was mainly due to the increase in the Company's accounts
receivable, net of accounts payable and accruals, and reduction in the current
maturities of long-term debt due to refinancing. The increase in the Company's
accounts receivable net of accruals was in part due to the 1996 Acquisitions and
increased revenue levels.

     In October 1996, the Company raised approximately $6.7 million through a
private sale of Convertible Preferred Stock (See Note 5 to Consolidated
Financial Statements). The funds were used to finance the 1996 Acquisitions and
repay approximately $500,000 of the Company's debt. In addition approximately
$1.3 million of the proceeds were used to repurchase 433,500 shares of the
Company's common stock at $3.00 per share. The purchase of the shares of Common
Stock was from an original investor in the predecessor of the Company and was
designed to permit such investor to liquidate its holdings without affecting the
trading in the Company's Common Stock. The repurchase caused a decrease of $1.3
million of cash and stockholders' equity.

     In December 1996, the Company entered into a three-year revolving loan
agreement ("Loan Agreement") with a financial institution which provides for
borrowing up to $20.0 million based on operating cash flows as defined therein.
Borrowings under the Loan Agreement bear interest at either prime rate or London
Interbank Offered Rate (LIBOR), at the Company's election, plus the applicable
margin rate. The applicable margin varies on the basis of operating cash flows
and the overall leverage ratio as defined in the Loan Agreement. The effective
rate at December 31, 1996 was 9%. The Loan Agreement, which is secured by
substantially all the assets of the Company, restricts future indebtedness,
investments, distributions, acquisitions or sale of assets and capital
expenditures and also requires maintenance of certain financial ratios and
covenants. The initial borrowings of $8.2 million under the Loan Agreement were
used to repay all amounts outstanding under the Company's credit agreement with
a bank and approximately $4.5 million of its subordinated debentures. The
aggregate borrowings at December 31, 1996 was $8.2 million with additional
availability of approximately $6.4 million.

     The Company's strategy is to continue to finance future acquisitions
principally and/or with the issuance of the Company's securities and borrowings.
The availability of these capital resources is dependent upon prevailing market
conditions, interest rates and the financial condition of the Company.

     The capital expenditures for 1997 are expected to range between $575,000
and $625,000. The Company believes that the cash flows from its operations
supplemented, if needed, by additional borrowing capacity from the Loan
Agreement will be sufficient to support the working capital and capital
expenditure requirements through at least the end of 1997.

Item 7.   Financial Statements

     Reference is made to the Financial Statements, the reports thereon and
notes thereto, commencing on page F-1 to this report.

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

     None.


                                    PART III


Item 9.  Directors and Executive Officers of the Registrant

     The executive officers and directors of the Company are as follows:

                                                                   Director or
Name                       Age     Position with Company          Officer Since

Malcolm L. Elvey            55     Chairman of the Board,              1993
                                     Chief Executive Officer,
                                     and Director
Cary A. Sarnoff             49     Vice Chairman and Director          1994
David J. Feldman            57     President,                          1993
                                     Chief Operating Officer,
                                     and Director
Debra Neiderfer             39     Vice President                      1993
Paul Strohfus               44     Vice President                      1995
Vasan Thatham               38     Chief Financial Officer
                                      and Secretary                    1994
Sandra Waite                37     Vice President                      1994
Mortimer R. Feinberg(2)     73     Director                            1993
Andrew P. Garvin(1)(2)      50     Director                            1993
Joseph P. Nolan(1)(2)       32     Director                            1996
Bruce V. Rauner             40     Director                            1996

(1)  Member of the Audit Committee
(2)  Member of the Compensation Committee

     Malcolm L. Elvey has served as Chairman of the Board of Directors and Chief
Executive Officer of the Company, Pepper and ERC since their respective
incorporations. Mr. Elvey is a Chartered Accountant and has a Master of Business
Administration from the University of Cape Town. From 1985 through 1987, Mr.
Elvey served as President and Chief Executive Officer of Pritchard Services,
Ltd. where he was responsible for the home health care, hospital and building
maintenance, security and food services subsidiaries, and served as a director
of A.D.T. Ltd. (formerly, the Hawley Group Ltd.), an international service
company.

     Cary A. Sarnoff has served as Vice Chairman of the Company since November
1994. Mr. Sarnoff was President of Sarnoff Deposition Service, Inc. for more
than five years prior thereto. Mr. Sarnoff formed in 1982 and owns CAT- Links, a
litigation support software development company. Mr. Sarnoff has more than 25
years experience in the court reporting industry. He was a founding member of
the NNRC and served as a member of the Board of Directors of the California
Court Reporters Association.

     David J. Feldman has served as President, Chief Operating Officer and a
director of the Company since September 1993. Mr. Feldman was President of David
Feldman & Associates (U.S.A.) Ltd. for more than five years prior thereto. Mr.
Feldman has more than thirty years experience in the court reporting industry,
including serving as a court reporter for the Knapp Commission Hearings and the
Nelson Rockefeller Commission on Critical Choices for Americas.

     Debra Neiderfer has served as Vice President of the Company since September
1993. From 1989 to September 1993, Ms. Neiderfer was employed as account
executive and then vice president at David Feldman & Associates (U.S.A.) Ltd.
From 1980 through 1987, Ms. Neiderfer served as marketing manager for Prentice
Hall Law & Business.

     Paul Strohfus has served as Vice President of the Company since November
1995. From 1987 to 1995, Mr. Strohfus was employed by Firemans Fund Insurance
Company in various capacities, with his last position having been Assistant
Vice-President of Claims.

     Vasan Thatham has served as Chief Financial Officer and Secretary of the
Company since 1994. In 1993, Mr. Thatham was controller of the IPC Franchising
Corp. and from 1987 through 1992 was controller (and ultimately Chief Financial
Officer) of Strings, Ltd., a specialty retail chain. From 1978 to 1987, Mr.
Thatham held various positions with Ernst & Whinney in Kuwait and KPMG Peat
Marwick in India. Mr. Thatham is a chartered accountant.

     Sandra Waite has served as Vice President of the Company since June 1994.
She served as office manager of Sarnoff Deposition Service, Inc. from 1980
through 1989, as general manager from 1990 to 1994 and as vice president since
June 1994.

     Mortimer R. Feinberg, Ph.D., has served as a director of the Company since
its incorporation. He is the co-founder of BFS Psychological Associates, Inc., a
human resources consulting firm, and has served as Chairman of the Board since
1960. Dr. Feinberg is Professor Emeritus, Baruch College, City University of New
York and is a frequent contributor to the Wall Street Journal on human resources
and other business topics.

     Andrew P. Garvin has served as a director of the Company since its
incorporation. Mr. Garvin is the co-founder of FIND/SVP, a consulting, research
and information gathering company, and has served as its Chief Executive Officer
since 1969.

     Joseph P. Nolan has served as a director of the Company since October 1996.
Mr. Nolan is a principal and has been with Golder, Thoma, Cressey, Rauner, Inc.,
an affiliate of GTCR, since February 1994. From May 1990 to January 1994, Mr.
Nolan was Vice President Corporate Finance at Dean Witter Reynolds Inc. Mr.
Nolan is also a director of Lason Inc., Principal Hospital, Inc., Ullo
International and Excaliber Tubular Corporation.

     Bruce V. Rauner has served as a director of the Company since October 1996.
Mr. Rauner is a principal and has been with Golder, Thoma, Cressey, Rauner,
Inc., since 1981. Mr. Rauner is also a director of ERO, Inc., COREStaff, Inc.,
Coinmach Laundry Corporation, Lason Inc., Polymer Group, Inc., Cherrydale Farms,
Inc., International Computer Graphics, Principal Hospital, Inc. and U.S.
Aggregates.

     On October 23, 1996, Messrs. Andrew Garvin and Mortimer Feinberg agreed to
resign as directors at any time upon the request of GTCR. All other directors
will hold office until the next annual meeting of stockholders and until the
election and qualification of their successors, or until death, resignation or
removal. Compensation for directors who are not officers or the Company is
$1,250 per meeting. Officers serve at the discretion of the Board of Directors
and under the terms of any employment agreement which may exist. See also Item
12.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

     Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's executive officers and directors, and persons who own
more than ten percent of the Company's common stock to file reports of ownership
and changes in ownership with the Securities and Exchange Commission (the
"SEC"). Executive officers, directors and holders of more than ten percent are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file. Based solely on a review of the copies of such forms
furnished to the Company and written representations from the Company's
executive officers and directors, the Company believes that during the year
ended December 31, 1996, its executive officers, directors and holders of more
than ten percent complied with all applicable Section 16(a) filing requirements.

Item 10.  Executive Compensation

     The following table sets forth certain information regarding compensation
paid by the Company or accrued for services rendered in all capacities during
the fiscal year ended December 31, 1996, to the Company's Chief Executive
Officer and to each of the other most highly compensated executive officers of
the Company whose aggregate cash compensation exceeded $100,000:

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                   Long-Term
                                                                                  Compensation
                                               Annual                       Awards            Payouts
                                           Compensation
Name and Principal Position         Salary     Bonus   Other Annual   Restricted  Options/LTIP  Payouts   All Other
                                       $         $     Compensation  Stock Awards   SARs        ($)      Compensation
                          Year                             ($)          ($)         (#)                     ($)
                          ----                            -----        -----       -----                   ----
<S>                       <C>    <C>         <C>         <C>           <C>         <C>          <C>       <C>
Malcolm L. Elvey
  Chairman &
Chief Executive           1996   $194,595    $115,000                              50,000
  Officer                 1995    166,431
                          1994    185,175
David J. Feldman          1996    188,927     358,665                              50,000
  President               1995    161,335     238,543
                          1994    180,000     188,575                              75,000
Cary A. Sarnoff,          1996    190,436                                          50,000
  Vice Chairman           1995    160,629
                          1994(1) 90,000
Debra Neiderfer           1996    115,967      48,666                               5,000
 Vice President           1995    82,660       18,650
                          1994    80,000        7,448                              25,000
Paul Strohfus             1996    155,764
Vice President            1995(2) 42,577                                           50,000



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

(1)      Represents compensation for the partial year from June 22, 1994.

(2)      Represents compensation for the partial year.

Employment and Related Agreements

     Malcolm L. Elvey is employed under an employment agreement which expires
May 1998 and is automatically renewed on a year-by-year basis unless terminated
by either party upon at least 60 days notice prior to the renewal date. Mr.
Elvey receives an annual salary of $194,595, which is subject to cost of living
increases. Mr. Elvey is also entitled to an annual bonus ranging from 3% based
on pre-tax earnings of the Company in excess of $750,000 to 15% based on pre-tax
earnings of the Company in excess of $2,500,000; provided, however, that the
bonus will not exceed 100% of Mr. Elvey's annual salary. In the event the
Company consummates any acquisitions, these pre-tax earnings levels are
increased by 70% of the net income before taxes of the acquired business,
excluding any extraordinary items of gain or loss (which amount is prorated for
the portion of any year in which the acquired business operations are
consolidated with the Company's). The employment agreement terminates upon the
death or permanent disability of Mr. Elvey or for cause. Cause is defined as a
material breach of the employment agreement by Mr. Elvey, his gross negligence
or willful misconduct in the performance of his duties, dishonesty to the
Company, conviction of a felony or excessive absenteeism unrelated to a
disability. In addition, Mr. Elvey has agreed not to compete with the Company
for a period of two years following the termination of his employment with the
Company. The Company maintains and is the beneficiary of key-man life insurance
in the amount of $1,000,000 on the life of Mr. Elvey.

     In connection with the acquisition of SDS, on June 22, 1994, the Company
entered into an employment agreement with Cary A. Sarnoff pursuant to which Mr.
Sarnoff is employed as Vice Chairman of the Company. The agreement expires four
years from the date thereof and is automatically renewed on a year-by-year basis
unless terminated by either party upon at least 60 days prior notice. Mr.
Sarnoff receives an annual salary at the rate of $186,455, which is subject to
cost of living increases. Mr. Sarnoff's employment agreement contains
termination provisions which are substantially the same as those of Mr. Elvey's
employment agreement. Mr. Sarnoff has agreed not to compete with the Company for
a period of two years following the termination of his employment with the
Company.

     In connection with the acquisition of DFA, on September 30, 1993 the
Company entered into an employment agreement with David Feldman pursuant to
which Mr. Feldman is employed as President and Chief Operating Officer of the
Company. The agreement expires four years from the date thereof and is
automatically renewed on a year-by-year basis unless terminated by either party
upon at least 60 days notice prior to the renewal date. Mr. Feldman receives an
annual salary at the rate of $188,927, which is subject to cost of living
increases. Mr. Feldman is also entitled to an annual bonus of 4.25% of total
annual revenues of the Company in excess of $4,200,000 and 5% of total annual
revenues of the Company in excess of $9,000,000. During the first two years, Mr.
Feldman is entitled to a minimum bonus of $175,000 per year and during the third
and fourth years is entitled to a minimum bonus of $225,000 per year. The
revenue hurdle levels will be increased in the event the Company consummates any
acquisitions. Mr. Feldman's employment agreement contains termination provisions
which are substantially the same as those of Messrs. Elvey's and Sarnoff's
employment agreements and, in addition, Mr. Feldman may terminate the employment
agreement for a material reduction in his responsibilities or authority, failure
of the Company to pay Mr. Feldman compensation or amounts due him under a
certain promissory note, relocation of his office or a termination not permitted
under the employment agreement. Upon the termination of Mr. Feldman's employment
(except if such termination results from his death, disability or for cause),
the Company will continue to pay Mr. Feldman his annual salary for the balance
of the term of the agreement and for a period of six months thereafter. Mr.
Feldman has agreed not to compete with the Company for a period of one year
following the termination of his employment with the Company.

Stock Option Plan

     In February, 1993, the Board of Directors of the Company adopted the 1993
Stock Option Plan (the "Plan"), which was approved by all stockholders of the
Company. The Plan was amended to increase the number of options which may be
granted thereunder to 1,400,000 shares of Common Stock, subject to stockholder
approval. Incentive stock options, intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended, and nonqualified stock options may be
granted under the Plan.

     The Plan is administered by the compensation committee of the Board of
Directors, which may grant options to key employees, directors, consultants and
independent contractors to the Company. The term of each option may not exceed
ten years from the date of grant. The exercise price of an option may not be
less than 100% of the fair market value of a share of Common Stock. The options
vest over a three-year period, commencing one year following their issuance.

     The table below sets forth information regarding the grant of stock options
made to the executive officers named in the Summary Compensation Table during
the fiscal year ended December 31, 1996.

<TABLE>
<CAPTION>
                                          OPTION/SAR GRANTS IN LAST FISCAL YEAR
                                                   (Individual Grants)

==================================================================================================================================
                                   Percent of
                                                     Number of               Total
                                                    Securities            Options/SARs
                                                    Underlying             Granted to          Exercise or
                    Name                           Options/SARs           Employees in         Base Price         Expiration
                                                    Granted (#)           Fiscal Year            ($/Sh)              Date
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                    <C>                  <C>               <C>
Malcom L. Elvey                                       50,000                 29.41%               $3.00             12/2006
----------------------------------------------------------------------------------------------------------------------------------
David Feldman                                         50,000                 29.41%                3.00             12/2006
----------------------------------------------------------------------------------------------------------------------------------
Cary Sarnoff                                          50,000                 29.41%                3.00             12/2006
----------------------------------------------------------------------------------------------------------------------------------
Debra Neiderfer                                        5,000                  2.94%               2.875             2/2006
----------------------------------------------------------------------------------------------------------------------------------
Paul Strohfus                                            0                     -                    -                  -
==================================================================================================================================
</TABLE>

     The table below sets forth information for the executive officers named in
the Summary Compensation Table concerning option exercises during 1996 and
outstanding options at December 31, 1996.
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
                           AGGREGATED OPTION/SAR EXERCISES IN 1996 AND DECEMBER 31, 1996 OPTION/SAR VALUES


------------------------------------------------------------------------------------------------------------------------------------
                                                                        Number of Securities               Value of Unexercised
                                                                       Underlying Unexercised                  in-the-Money
                      Shares                                               Options/SARs at                     Options/SARs
                     Acquired                                             December 31, 1996                         at
Name                On Exercise(a)       Value Realized(a)        Exercisable      Unexercisable             December 31, 1996
                                                                                                       Exercisable  Unexercisable
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>                   <C>                <C>                <C>                 <C>             <C>
Malcolm L.                  0                      -                 125,000            50,000              0               0
Elvey
------------------------------------------------------------------------------------------------------------------------------------
David Feldman               0                      -                  37,500            87,500              0               0
------------------------------------------------------------------------------------------------------------------------------------
Cary Sarnoff                0                      -                    0               50,000              0               0
------------------------------------------------------------------------------------------------------------------------------------
Debra Neiderfer             0                      -                  41,667            13,333              0               0
------------------------------------------------------------------------------------------------------------------------------------
Paul Strohfus               0                      -                  16,667            33,333              0               0
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

(a) There were no exercises of options by the Company's executives during 1996.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth certain information with respect to
beneficial ownership of Common Stock at February 1, 1997 by (i) each person
known by the Company to beneficially own more than five percent of outstanding
Common Stock, (ii) each Director of the Company, (iii) each of the most highly
compensated executive officers of the Company, and (iv) all Directors and
executive officers of the Company as a group. Except as noted below, each person
or entity has sole voting and investment power with respect to all shares listed
as owned by such person or entity.

Name and Address                             Number        Percent of Class

Malcolm L. Elvey(1)
216 East 45th Street
New York, NY 10017                            691,000            16.80%

The Sarnoff Trust(2)
2100 Broadway
Santa Ana, CA 92706                           750,000            18.80%

David J. Feldman(3)
216 East 45th Street
New York, NY 10017                            553,400            13.70%

Allied Investment Corporation(4)
Allied Investment Corporation II
Allied Capital Corporation II
1666 K Street
Washington, DC 20006                          625,000            13.50%

CMNY Capital, L.P.(5)
135 E. 57th Street
New York, NY 10022                            472,500            11.80%

Mortimer R. Feinberg                           ---                 ---

Andrew P. Garvin                                  400(7)              *

Golder, Thoma, Cressey, Rauner
  Fund IV, L.P.(6)                          2,437,475            37.90%

Debra Neiderfer(8)                             63,667                 *

Joseph P. Nolan(6)                                                 ---

Bruce V. Rauner(6)                                                 ---

Cary A. Sarnoff(9)                            758,500            18.90%

Paul M. Strohfus(10)                           19,167                 *

All directors and executive officers
  as a group (12 persons)(11)               2,161,967            50.20%

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

*        Less than 1%.

(1)  Includes options to purchase 125,000 shares of the Company's Common Stock
     granted to Mr. Elvey under the Plan.

(2)  The Sarnoff Trust is a revocable trust of which Cary A. Sarnoff and his
     wife, Michelle A. Sarnoff, are settlors, trustees and beneficiaries. These
     shares are pledged to secure indemnification obligations contained in the
     agreement by which the Company acquired all the stock of SDS.

(3)  Includes options to purchase 37,500 shares of the Company's Common Stock
     granted to Mr. Feldman under the Plan.

(4)  These entities in the aggregate own warrants to purchase an aggregate of
     625,000 shares of Common Stock at an exercise price of $2.90 per share,
     subject to adjustment.

(5)  Robert Davidoff and Edwin Marks are the general partners of CMNY Capital,
     L.P. and may be deemed to control it.

(6)  Golder, Thoma, Cressey, Rauner Fund IV, L.P. ("GTCR") is the direct owner
     of 7,313 shares of Series A Convertible Preferred Stock which is
     convertible into 2,437,475 shares of Common Stock. GTCR IV, L.P., a limited
     partnership, is the general partner of GTCR and Golder, Thoma, Cressey,
     Rauner, Inc. ("GTCR Inc.") is the general partner of GTCR IV, L.P. As such
     they may be deemed to be the indirect beneficial owners of such securities.
     Messrs. Nolan and Rauner are principals of GTCR Inc.

(7)  Includes warrants to purchase 200 shares of Common Stock.

(8)  Includes options to purchase 41,667 shares of the Company's Common Stock
     granted to Ms. Neiderfer under the Plan.

(9)  Includes shares owned by The Sarnoff Trust and warrants to purchase 7,600
     shares of Common Stock owned by Mr. Sarnoff. See Note (2).

(10) Includes options to purchase 16,667 shares of the Company's Common Stock
     granted to Mr. Strohfus under the Plan.

(11) Includes warrants to purchase 7,800 shares of Common Stock and options to
     purchase 299,167 shares of Common Stock granted under the Plan.

Item 12.   Certain Relationships and Related Transactions

     The Company leases its Santa Ana, California office from an affiliate of
Cary A. Sarnoff. The lease expires in June 1999 and grants to the Company an
option to renew for five years. The Company believes the terms of the lease are
comparable to market terms.

     For as long as The Sarnoff Trust owns 20% or more of the Common Stock
issued in connection with the acquisition of SDS, the Company has agreed to
nominate, recommend and use its best efforts to have Mr. Sarnoff elected as a
director of the Company. As long as Messrs. Elvey, Feldman and Sarnoff continue
as directors of the Company, the Company has agreed that they shall be the sole
members of the Executive Committee and that all decisions to be made by the
Executive Committee shall require unanimous approval.

     On October 23, 1996, the Company entered into a Purchase Agreement (the
"Purchase Agreement") pursuant to which the Company sold to Golder, Thoma,
Cressey, Rauner Fund IV, L.P. ("GTCR") and Antares Leveraged Capital Corp.
(collectively with GTCR, the "Investors") 7,312.50 and 187.50 shares of Series A
Preferred Stock, respectively, for an aggregate purchase price of $7,500,000. In
addition, the Investors have the right from time to time within 21 months to
acquire up to an additional 7,500 shares of Series A Preferred Stock at a price
of $1,000 per share.

     The Series A Preferred Stock is convertible into Common Stock of the
Company at a conversion price of $3.00 per share (subject to anti-dilution
adjustments) and bears cumulative annual dividends at the rate of 6% ($60.00)
per annum. The holders of Series A Preferred Stock have a liquidation preference
of $1,000 per share, plus accrued dividends. Holders of Series A Preferred Stock
have the right to vote together with the holders of Common Stock and are
entitled to one vote for each whole share of Common Stock into which the Series
A Preferred Stock is convertible (presently 333 1/3 votes per share). GTCR was
granted various rights to ask for registration under the Securities Act of 1933
of any shares of Common Stock acquired by it upon conversion of the Series A
Preferred Stock. Without the consent of the holders of a majority of the Series
A Preferred Stock, the Company may not take various actions, including paying
dividends on capital stock if there are any accrued but unpaid dividends on the
Series A Preferred Stock, issuing any equity securities which are senior to or
on a parity with the Series A Preferred Stock, merging with another entity,
selling or otherwise disposing of all or substantially all its assets, or
acquiring other entities. In addition, the Company may not issue in a private
offering any equity securities without first offering the holders of Series A
Preferred Stock the right to acquire their pro rata share. In connection with
the Purchase Agreement, the Investors and Malcolm L. Elvey, Chairman of the
Board and Chief Executive Officer of the Company, Cary A. Sarnoff, Vice Chairman
of the Company, David J. Feldman, President of the Company, CMNY Capital L.P.
and Allied Investment Corporation, Allied Investment Corporation II and Allied
Capital Corporation II (collectively, "Allied") entered into a Stockholder's
Agreement dated October 23, 1996 (the "Stockholder's Agreement") pursuant to
which (a) the parties agreed to vote their shares to elect as directors three
representatives designated by Messrs. Elvey, Sarnoff and Feldman (the
"Management Stockholders"), two representatives designated by GTCR and two
representatives jointly designated by GTCR and the Management Stockholders;
provided, however, that is they are unable to agree on such joint designees
within 90 days, then GTCR may elect the joint designees; (b) the Management
Stockholders granted to the other stockholders rights of first refusal to
acquire their shares if they desire to sell the same, subject to exceptions for
public sales and for transfers to family members; and (c) if the Company's Board
of Directors approves a sale of the Company's assets or capital stock (whether
by merger or otherwise), each stockholder other than Allied and CMNY Capital
L.P. agreed to consent to such transaction. The Stockholder's Agreement dated
June 22, 1994 among the Company and the Management Stockholders was terminated.
In addition, GKN Securities Corp. and Allied terminated their rights to
designate directors of the Company.

     Messrs. Andrew Garvin and Mortimer Feinberg, directors of the Company,
agreed to resign as directors at any time upon the request of GTCR.

     SDS was a party to an agreement with Edward Sarnoff, the father of Cary
Sarnoff, pursuant to which SDS agreed to pay to Edward Sarnoff, in the event of
the sale of SDS, the amount of $1,000,000 payable in equal monthly installments
over a period of five years. In connection with the Company's acquisition of
SDS, the Company assumed the obligations of SDS under this agreement. The
agreement, as amended, requires payment by the Company of $9,000 per month
through June 2002.

                                     PART IV

Item 13. Exhibits and Financial Statement Schedules and Reports on Form 8-K


     (a)(1). Financial Statements. The following consolidated financial
          statements of Esquire Communications Ltd. and Subsidiaries, required
          by Part II, Item 7, are included in Part IV of this report:

          Independent Auditors' Reports

          Consolidated Balance Sheets at December 31, 1996 and December 31,
          1995.

          Consolidated Statements of Operations for the years ended December 31,
          1996, 1995 and 1994.

          Consolidated Statement of Stockholders' Equity for the years ended
          December 31, 1996, 1995 and 1994.

          Consolidated Statements of Cash Flows for the years ended December 31,
          1996, 1995 and 1994.

          Notes to the Consolidated Financial Statements


Exhibits

          (a)(3). Exhibits:

Exhibit No.

     3.1  Certificate of Incorporation of the Company. Incorporated by reference
          to Exhibit 3.1 to the Current Report on Form 8-K reporting on an event
          which occurred October 28, 1996 ("October 1996 8-K").

     3.2  By-Laws of the Company. Incorporated by reference to Exhibit 3.2 to
          October 1996 8-K.

     10.1 Employment Agreement dated as of March 1, 1993, between the Company
          and Malcolm L. Elvey. Incorporated by reference to Exhibit 10.1 to
          Registration Statement on Form SB-2 (File No. 33-58814 ("SB")).

     10.2 Agreement of Merger dated as of September 30, 1993 by and among the
          Company, Esquire Communications Acquisition Corp. and David Feldman &
          Associates (U.S.A.), Ltd. Incorporated by reference to Exhibit 1 to
          Current Report on Form 8-K reporting on an event which occurred on
          September 10, 1993 ("1993 8-K").

     10.3 Employment Agreement dated as of September 30, 1993 by and between the
          Company and David Feldman. Incorporated by reference to Exhibit 10.8
          to the Company's Annual Report on Form 10-K for the year ended
          December 31, 1993.

     10.4 Registration Rights Agreement dated as of September 30, 1993 by and
          between the Company and David Feldman. Incorporated by reference to
          Exhibit 3 to 1993 8-K.

     10.5 Stock Purchase Agreement dated June 22, 1994 by and between the
          Company and Sarnoff Deposition Service, Inc. Incorporated by reference
          to Exhibit 1 to Current Report on Form 8-K reporting on an event which
          occurred on June 22, 1994 ("1994 8-K").

     10.6 Employment Agreement dated June 22, 1994 by and between the Company
          and Cary A. Sarnoff. Incorporated by reference to Exhibit 4 to 1994
          8-K.

     10.7 Registration Rights Agreement dated June 22, 1994 by and between the
          Company and The Sarnoff Trust. Incorporated by reference to Exhibit 2
          to 1994 8-K.

     10.8 Investment Agreement dated June 22, 1994 by and among the Company,
          Allied Investment Corporation, Allied Investment Corporation II and
          Allied Capital Corporation II. Incorporated by reference to Exhibit 12
          to 1994 8-K.

     10.9 Confidentiality and Non-Competition Agreement dated as of June 22,
          1994 by and between Edward L. Sarnoff and Sarnoff Deposition Service,
          Inc. Incorporated by reference to Exhibit 6 to 1994 8-K.

     10.10 Asset Purchase Agreement dated January 27, 1995 by and between the
          Company and Coleman, Haas, Martin & Schwab, Inc. Incorporated by
          reference to Exhibit 10.15 to Annual Report on Form 10-KSB for the
          fiscal year ended December 31, 1995.

     10.11 Registration Rights Agreement dated January 27, 1995 by and between
          the Company and Coleman, Haas, Martin & Schwab, Inc. Incorporated by
          reference to Exhibit 10.16 to Annual Report on Form 10-KSB for the
          fiscal year ended December 31, 1995.

     10.12 Asset Purchase Agreement dated May 22, 1996, as amended, among the
          Company, M&M Reporting Referral Service, Inc. and the stockholders of
          M&M Reporting Referral Service, Inc. Incorporated by reference to
          Exhibit 10.1 to October 1996 8-K.

     10.13 Registration Rights Agreement dated as of October 28, 1996 between
          the Company and M&M Reporting Referral Service, Inc. Incorporated by
          reference to Exhibit 10.3 to October 1996 8-K.

     10.14 Purchase Agreement dated October 23, 1996 by and between the Company,
          Golder, Thoma, Cressey, Rauner Fund IV, L.P. ("GTCR") and Antares
          Leveraged Capital Corp. (collectively with GTCR, the "Investors").
          Incorporated by reference to Exhibit 10.4 to October 1996 8-K.

     10.15 Stockholders Agreement dated October 23, 1996 by and between the
          Investors, Malcolm L. Elvey, Cary A. Sarnoff, David J. Feldman, CMNY
          Capital L.P. and Allied Investment Corporation, Allied Investment
          Corporation II and Allied Capital Corporation II. Incorporated by
          reference to Exhibit 10.5 to October 1996 8- K.

     10.16 Registration Agreement dated October 23, 1996 among the Company and
          the Investors. Incorporated by reference to Exhibit 10.6 to October
          1996 8-K.

     10.17 Agreement dated October 23, 1996 among the Company, GTCR, David J.
          Feldman, The Sarnoff Trust, Allied Investment Corporation I, Allied
          Investment Corporation II and Allied Capital Corporation II relating
          to registration rights. Incorporated by reference to Exhibit 10.7 to
          October 1996 8-K.

     10.18 Credit Agreement dated as of December 24, 1996 by and among Esquire
          Communications Ltd., as Borrower, Antares Leveraged Capital Corp., as
          Agent and the Other Financial Institutions Party Hereto, as Lenders.

     21   Subsidiaries of the Registrant.

     (b)  Reports on Form 8-K.

          Current report on Form 8-K filed reporting under items 6 and 7 on an
          event which occurred October 28, 1996.
<PAGE>
                           ESQUIRE COMMUNICATIONS LTD.
                                AND SUBSIDIARIES

                        Consolidated Financial Statements

                           December 31, 1996 and 1995


                  (With Independent Auditors' Reports Thereon)
<PAGE>
                           ESQUIRE COMMUNICATIONS LTD.
                                AND SUBSIDIARIES

                        Consolidated Financial Statements



                                Table of Contents



                                                                     Page

Independent Auditors' Reports                                        F-1

Consolidated Financial Statements:

    Balance Sheets - December 31, 1996 and 1995                       F-3

    Statements of Operations - Years ended
       December 31, 1996, 1995 and 1994                               F-4

    Statements of Stockholders' Equity - Years
       ended December 31, 1996, 1995 and 1994                         F-5

    Statements of Cash Flows - Years ended
       December 31, 1996, 1995 and 1994                               F-6

Notes to Consolidated Financial Statements                            F-7

                          INDEPENDENT AUDITORS' REPORT


The Board of Directors
Esquire Communications Ltd.:


We have audited the accompanying consolidated balance sheet of Esquire
Communications Ltd. and subsidiaries as of December 31, 1996, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the year then ended. 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 audit. The accompanying consolidated financial
statements of Esquire Communications Ltd. and subsidiaries as of December 31,
1995 and for the years ended December 31, 1995 and 1994 were audited by other
auditors whose report, dated January 27, 1996, on those statements expressed an
unqualified opinion.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the 1996 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Esquire Communications Ltd. and subsidiaries as of December 31, 1996, and the
results of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.




KPMG Peat Marwick LLP

February 12, 1997
Short Hills, New Jersey
<PAGE>
                          INDEPENDENT AUDITOR'S REPORT

To the Board of Directors of
Esquire Communications Ltd.

     We have audited the accompanying consolidated balance sheets of Esquire
Communications Ltd. as of December 31, 1995, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
two years in the period ended December 31, 1995. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the 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 opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Esquire
Communications Ltd. as of December 31, 1995, and the results of their operations
and their cash flows for each of the two years in the period ended December 31,
1995, in conformity with generally accepted accounting principles.

                                             Freed Maxi Sachs & Murphy P.C.

Buffalo, New York
January 27, 1996

<PAGE>
                           ESQUIRE COMMUNICATIONS LTD.
                                AND SUBSIDIARIES

                           Consolidated Balance Sheets

                           December 31, 1996 and 1995

                        (In Thousands, Except Share Data)


                ASSETS                                1996         1995
                                                      ----         ----

Current assets:
    Cash                                            $   165           95
    Accounts receivable, less allowance for
       doubtful accounts of
       $380 in 1996 and $245 in 1995                  6,764        4,263
    Prepaid expenses                                    792          247
    Deferred tax asset                                  102           -
                                                  ---------     --------
                  Total current assets                7,823        4,605

Property and equipment, net                           1,946        1,026
Cost in excess of fair value of net
    identifiable assets of acquired
    businesses, less accumulated
    amortization of $1,516 in 1996
    and $962 in 1995                                 19,681       12,752
Deferred tax asset                                       38           21
Other assets, net                                       847          670
                                                  ---------    ---------

                                               $     30,335       19,074
                                                  =========       ======

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                    1,708          577
    Accrued expenses                                    1,306          413
    Income taxes payable                                   -           361
    Deferred tax liability                                 -            49
    Current portion of long-term debt,
       including related parties                        1,394        1,605
                                                    ---------     ---------

                  Total current liabilities             4,408        3,005

Long-term debt, including related parties              12,891        8,634
Other liabilities                                         267           35
Stockholders' equity:
    Preferred stock, $.01 par value,
       1,000,000 shares authorized in series:
       Series A convertible preferred stock,
       authorized 15,000 shares, 7,500
       shares issued and outstanding in 1996
       (none in 1995)
       aggregate liquidation preference
       $7,500,000                                         -            -
    Common stock, $.01 par value, 10,000,000
       shares authorized,
       4,330,829 and 4,126,823 shares issued
       in 1996 and 1995,
       respectively, 3,897,329 and 4,126,823
       shares outstanding
       in 1996 and 1995, respectively                      43           41
    Additional paid-in capital                         14,911        7,703
    Treasury stock, at cost - 433,500
     shares in 1996 (none in 1995)                     (1,300)         -
    Accumulated deficit                                  (885)        (344)
                                                     ----------   ---------


<PAGE>
                  Total stockholders' equity           12,769        7,400

Commitments and contingencies
                                                    ---------       ------

                                                 $     30,335       19,074
                                                    =========       ======

See accompanying notes to consolidated financial statements.
<PAGE>
                           ESQUIRE COMMUNICATIONS LTD.
                                AND SUBSIDIARIES

                      Consolidated Statements of Operations

                  Years ended December 31, 1996, 1995 and 1994

                  (Dollars in Thousands, Except Per Share Data)




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

Revenues                                $     24,583       20,692     12,818
                                            ---------      ------    ---------

Costs and expenses:
    Operating expenses                        13,925       11,660      7,277
    General and administrative expenses        8,443        6,120      4,496
    Depreciation and amortization              1,158        1,025        654
                                            ---------     ---------   ---------

                                              23,526       18,805     12,427
                                            ---------     ---------   ---------

        Income from operations                 1,057        1,887        391
                                            ---------     ---------   ---------

Other income (expense):
    Interest expense                          (1,163)      (1,069)      (534)
    Interest income                                6            9          9
    Other                                          3            1         10
                                            ---------     ---------   ---------

                                              (1,154)      (1,059)      (515)
                                            ---------     ---------   ---------

   (Loss) income before provision for
      income taxes and extraordinary
      item                                       (97)         828       (124)

Provision for income taxes                       212          549         59
                                            ---------     ---------   ---------
   (Loss) income before extraordinary
      item                                      (309)         279       (183)

Extraordinary item - loss on early
    extinguishment of
    debt, net of tax benefit of $104            (157)          -           -
                                            ---------     ---------   --------
        Net (loss) income                       (466)         279       (183)

Dividends on preferred stock                     (75)          -           -
                                            ---------     ---------   --------

   Net (loss) income applicable to
      common stockholders                  $    (541)         279       (183)
                                            =========     =========   =========

(Loss) earnings per common share:
    (Loss) income before extraordinary
           item                              $  (.09)         .07       (.05)
    Extraordinary item                          (.04)          -           -
                                                ----          ---        ----

        Net (loss) income                    $  (.13)         .07       (.05)
                                                ====          ====       ====

Weighted average common shares
   outstanding                             4,104,680    4,125,348  3,694,420
                                           =========    =========  ==========


See accompanying notes to consolidated financial statements.
<PAGE>
                           ESQUIRE COMMUNICATIONS LTD.
                                AND SUBSIDIARIES

                 Consolidated Statements of Stockholders' Equity

                  Years ended December 31, 1996, 1995 and 1994

                             (Dollars in Thousands)




<TABLE>
<CAPTION>
                                            Series                                Addi-
                                               A                                 tional                                  Total
                                             pre-                                 paid-         Accu-                    stock-
                                            ferred             Common stock        in          mulated      Treasury    holders'
                                             stock         Shares      Amount    capital       deficit        stock     equity
                                             -----         ------      ------    -------       -------        -----     ------


<S>                                      <C>             <C>           <C>         <C>           <C>          <C>        <C>
Balance, December 31, 1993               $    -          3,299,900     $   33      5,242         (440)         -         4,835

Issuance of common stock and
    stock purchase warrants in
    connection with financing and
    acquisition of subsidiary                 -            750,000          7      2,249           -            -        2,256
Net loss                                      -               -             -          -         (183)          -         (183)
                                          -----------    ------------      ---   --------       -------       ----      -------
Balance, December 31, 1994                    -          4,049,900          40     7,491         (623)          -        6,908

Issuance of common stock in
    connection with acquisition of
    business                                  -             76,923           1       212           -            -          213
Net income                                    -               -              -         -          279           -          279
                                          -----------    ------------      ----    -----        -----          ----     ------
Balance, December 31, 1995                    -          4,126,823          41     7,703         (344)          -        7,400

Issuance of common stock in
    connection with acquisition
    of businesses                             -            204,006           2       508           -            -          510
Purchase of treasury stock                    -           (433,500)          -        -            -        (1,300)     (1,300)
Dividends on preferred stock                  -               -              -        -           (75)          -          (75)
Issuance of 7,500 shares of Series
    A convertible preferred stock,
    net of issuance costs of $800             -               -              -     6,700           -            -        6,700
Net loss                                      -               -              -        -          (466)          -         (466)
                                          -----------    ------------      ----    -----       -------      ------       ------

Balance, December 31, 1996               $    -            3,897,329      $ 43    14,911         (885)      (1,300)     12,769
                                          ===========    ============      ====   ======     ==========    =========  =========



See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                           ESQUIRE COMMUNICATIONS LTD.
                                AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                  Years ended December 31, 1996, 1995 and 1994

                             (Dollars in Thousands)



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

<S>                                                                                      <C>              <C>         <C>
Cash flows from operating activities:
    Net (loss) income                                                                   $      (466)       279        (183)
    Adjustments to reconcile net (loss) income to net cash
       provided by (used in) operating activities:
          Depreciation and amortization                                                       1,158      1,025         655
          Deferred income taxes                                                                (168)        23        (141)
          Extraordinary item                                                                    157         -           -
          (Increase) decrease in assets:
              Accounts receivable                                                            (1,284)      (501)       (178)
              Prepaid expenses                                                                 (427)         7         (13)
          Increase (decrease) in liabilities:
              Accounts payable and accrued expenses                                             873       (156)       (145)
              Deferred rent obligation and other long-term
                 liabilities                                                                     37         (6)         (2)
                                                                                           --------    -------    --------

                    Net cash (used in) provided by
                        operating activities                                                   (120)       671    (7)
                                                                                           --------    -------    --

Cash flows from investing activities:
    Acquisitions of businesses                                                               (3,958)      (642)     (4,331)
    Certificate of deposit redemption                                                            -          -          110
    Increase in other assets                                                                   (314)      (104)        (50)
    Purchases of property and equipment                                                        (952)      (161)       (159)
                                                                                           --------    -------    --------

                    Net cash used in investing activities                                    (5,224)      (907)     (4,430)
                                                                                           --------    -------    --------

Cash flows from financing activities:
    Proceeds from long-term debt                                                              8,218         -        4,994
    Principal payments on long-term debt                                                     (6,317)      (783)       (633)
    Repayment under bank line of credit, net                                                 (1,600)     1,100         160
    Deferred financing costs                                                                   (287)        -         (365)
    Proceeds from issuance of common stock warrants                                              -          -            6
    Purchase of treasury stock                                                               (1,300)        -           -
    Proceeds from issuance of Series A preferred stock,
       net                                                                                    6,700         -           -
                                                                                           --------    -------    -------

                    Net cash provided by financing
                        activities                                                            5,414        317    4,162
                                                                                           --------    -------    -----

                    Net increase (decrease) in cash                                              70         81        (275)

Cash - beginning of year                                                                         95         14         289
                                                                                           --------    -------    --------

Cash - end of year                                                                         $    165         95          14
                                                                                             =======    ======      ======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>

                           ESQUIRE COMMUNICATIONS LTD.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                        December 31, 1996, 1995 and 1994

                    (Dollars in Thousands, Except Share Data)



(1)       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          PRINCIPLES OF CONSOLIDATION AND DESCRIPTION OF BUSINESS

          The accompanying consolidated financial statements include the
          financial statements of Esquire Communications Ltd. and its
          subsidiaries, all of which are wholly owned (collectively, the
          Company). All significant intercompany accounts and transactions have
          been eliminated.

          The Company is a court reporting firm providing printed and
          computerized transcripts, and video recordings of testimony from
          depositions to the legal profession, primarily in the New York City
          Metropolitan, Washington, D.C. and Southern California areas.

          ESTIMATES

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

          REVENUE RECOGNITION

          Revenues and the related direct costs of court reporters and
          transcribers are recognized when services rendered are billable, which
          generally occurs at the time the final documents are transcribed and
          completed.

          PROPERTY AND EQUIPMENT

          Property and equipment are recorded at cost. Depreciation is computed
          using both accelerated and straight-line methods over the estimated
          useful lives of the assets. Leasehold improvements are amortized over
          the shorter of the estimated useful lives of the assets or lease
          terms. Maintenance and repairs are charged to expenses as incurred
          while improvements are capitalized.

          GOODWILL AND OTHER INTANGIBLE ASSETS
<PAGE>
                           ESQUIRE COMMUNICATIONS LTD.
                                AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                    (Dollars in Thousands, Except Share Data)


          The cost in excess of the fair values of net identifiable tangible and
          intangible assets of acquired businesses (goodwill) is amortized using
          the straight-line method over 25 years. The Company assesses the
          recoverability of this intangible asset by determining whether the
          amortization of the goodwill balance over its remaining life can be
          recovered through undiscounted future operating cash flows of the
          acquired operation. The assessment of the recoverability of goodwill
          will be impacted if estimated future operating cash flows are not
          achieved.

<PAGE>
                           ESQUIRE COMMUNICATIONS LTD.
                                AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                    (Dollars in Thousands, Except Share Data)


          Other intangible assets consisting of customer lists, covenants not to
          compete, and deferred financing costs, are amortized using the
          straight-line method over the assets' respective estimated lives or
          terms, typically no more than ten years.

          Amortization expense for fiscal years 1996, 1995 and 1994 related to
          intangible assets was $824, $699 and $476, respectively.

          INCOME TAXES

          The Company utilizes the asset and liability method of accounting for
          income taxes. Under this method, deferred tax assets and liabilities
          are recognized for the future tax consequences attributable to
          differences between the financial statement carrying amounts of
          existing assets and liabilities and their respective tax bases.
          Deferred tax assets and liabilities are measured using enacted tax
          rates expected to apply to taxable income in the years in which those
          temporary differences are expected to be recovered or settled. The
          effect on deferred tax assets and liabilities of a change in tax rates
          is recognized in income in the period that includes the enactment
          date.

          EARNINGS (LOSS) PER COMMON SHARE

          Earnings (loss) per common share are computed on the basis of weighted
          average number of common shares outstanding. No effect has been given
          to outstanding warrants and options or convertible preferred stock
          since their assumed exercise would be antidilutive or not have a
          material effect on dilution.

          RECENT ACCOUNTING PRONOUNCEMENTS

          Accounting For Stock-Based Compensation

          Prior to January 1, 1996, the Company accounted for its stock option
          plan in accordance with the provisions of Accounting Principles Board
          (APB) Opinion No. 25, "Accounting for Stock Issued to Employees", and
          related interpretations. As such, compensation expense would be
          recorded on the date of grant only if the current market price of the
          underlying stock exceeded the exercise price. On January 1, 1996, the
          Company adopted Statement of Financial Accounting Standards (SFAS) No.
          123, "Accounting for Stock-Based Compensation", which permits entities
          to recognize as expense, over the vesting period, the fair value of
          all stock-based awards on the date of grant. Alternatively, SFAS No.
          123 also allows entities to continue to apply the provisions of APB
          Opinion No. 25 and provide pro forma net income and pro forma earnings
          per share disclosures for employee stock option grants made in 1995
          and future years as if the fair-value-based method defined in SFAS No.
          123 had been applied. The Company has elected to continue to apply the
          provisions of APB Opinion No. 25 and provide the pro forma disclosure
          provisions of SFAS No. 123. See note 6.
<PAGE>
                           ESQUIRE COMMUNICATIONS LTD.
                                AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                    (Dollars in Thousands, Except Share Data)


          Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed
          Of

          The Company adopted the provisions of SFAS No. 121, "Accounting for
          the Impairment of Long-Lived Assets and for Long-Lived Assets to be
          Disposed Of," on January 1, 1996. This statement requires that
          long-lived assets and certain identifiable intangibles be reviewed for
          impairment whenever events or change in circumstances indicate that
          the carrying amount of an asset may not be recoverable. Recoverability
          of assets to be held and used is measured by a comparison of the
          carrying amount of an asset to future cash flows (undiscounted and
          without interest charges) expected to be generated by the asset. If
          such assets are considered to be impaired, the impairment to be
          recognized is measured by the amount by which the carrying amount of
          the assets exceed the fair value of the assets. Assets to be disposed
          of are reported at the lower of the carrying amount or fair value less
          selling costs. Adoption of this statement did not have a material
          impact on the Company's financial position or results of operations.

          FAIR VALUE OF FINANCIAL INSTRUMENTS

          The carrying value of cash, accounts receivable, the current
          maturities of long-term debt, and accounts payable approximate their
          fair value because of the short-term maturity of these instruments.
          The carrying value of debt approximates its fair value as such amounts
          bear rates of interest which approximate the Company's current
          borrowing rate for instruments with similar terms.


 (2)     BUSINESS COMBINATIONS

          Effective June 22, 1994, the Company acquired 100% of the outstanding
          stock of Sarnoff Deposition Service, Inc. (SDS), a Southern
          California-based court reporting company. The purchase price,
          inclusive of associated costs, consisted of approximately $4,331 in
          cash, a $1,500 promissory note payable over seven years with interest
          at 10%, and 750,000 unregistered shares of the Company's common stock
          valued at $2,250. The acquisition, accounted for under the purchase
          method of accounting, resulted in the inclusion of the results of
          operations of SDS from the date of acquisition. The excess of the cost
          of the Company's investment over the fair values of the assets
          acquired and liabilities assumed at the date of acquisition amounted
          to approximately $8,031.

<PAGE>
                           ESQUIRE COMMUNICATIONS LTD.
                                AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                    (Dollars in Thousands, Except Share Data)


          Effective January 27, 1995, the Company acquired the assets and
          liabilities of Coleman, Haas, Martin & Schwab (CHMS), Inc., a
          California-based court reporting company, and entered into consulting
          and noncompetition agreements for the total consideration of $1,413
          consisting of cash in the amount of $400, promissory notes in the
          aggregate of $800 with interest at 9% payable monthly over seven
          years, and 76,923 unregistered shares of the Company's common stock
          valued at $213. In addition, the purchase agreement provided for an
          additional $150 payment based upon the attainment of certain revenues
          in 1995. The principal amount payable under one of the promissory
          notes is subject to adjustment based upon revenue levels attained in
          1995 and 1996. As a result, the principal balance increased by
          approximately $143 in 1996 and $35 in 1995. The acquisition, accounted
          for under the purchase method of accounting, has resulted in the
          inclusion of the results of operations of CHMS from the date of
          acquisition. The excess of the cost of the Company's investment over
          the fair values of the assets acquired and liabilities assumed
          amounted to approximately $1,900.

          On July 26, 1996, the Company acquired the assets and liabilities of
          Kitlas, Dickman & Associates (KDA), a court reporting agency based in
          San Diego, California. The acquisition, accounted for under the
          purchase method of accounting, has resulted in the inclusion of the
          results of operations of KDA from the date of acquisition which has
          had an immaterial effect on the operating results of the Company. The
          total purchase price, inclusive of associated costs, consisted of $305
          in cash, $315 estimated earn out and assumption of net liabilities of
          $221. The excess of the cost of the Company's investment over the fair
          values of the assets acquired and liabilities assumed, including the
          estimated earn out, approximated $841.

          On October 28, 1996, the Company acquired the assets and liabilities
          of M&M Reporting Referral Services, Inc. (M&M), a Southern
          California-based court reporting company. The purchase price,
          inclusive of associated costs, consisted of approximately $2,991 of
          cash, subordinated promissory notes in the aggregate amount of $2,713,
          and 132,258 unregistered shares of the Company's common stock valued
          at $309. The principal amount of one of the notes and cash portion of
          the purchase price are subject to revision based on the revenue
          derived from M&M's business for 12 months commencing November 1, 1996.
          The Company will account for any such revisions as an adjustment to
          goodwill, when such contingencies are resolved. The subordinated
          promissory notes are payable in equal quarterly installments over a
          period of five years, together with interest at the rate of 9% per
          annum. The excess of the cost of the Company's investment over the
          fair values of the assets acquired and liabilities assumed
          approximated $5,418.

          On November 15, 1996, the Company acquired the assets and liabilities
          of Sherry Roe & Associates, Inc. (SRA), a Washington, D.C.-based court
          reporting company. The purchase price, inclusive of associated costs,
          consisted of approximately $656 of cash, subordinated promissory notes
          in the aggregate amount of $530, and 71,748 unregistered shares of the
          Company's common stock valued at $200. The principal amount of one of
          the notes and cash portion of the purchase price are subject to
          revision based on the revenue derived from SRA's business for 24
          months commencing December 1, 1996. The Company will account for any
          such revisions, as an adjustment to goodwill, when such contingencies
          are resolved.

<PAGE>
                           ESQUIRE COMMUNICATIONS LTD.
                                AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                    (Dollars in Thousands, Except Share Data)


          The subordinated promissory notes are payable in equal quarterly
          installments over a period of six years, together with interest at the
          rate of 8% per annum. The excess of the cost of the Company's
          investment over the fair values of the assets acquired and liabilities
          assumed approximated $1,155.

          The following unaudited pro forma information assumes the M&M and SRA
          acquisitions, the private placement of Series A convertible preferred
          stock, the Company's repurchase of its common stock and the revolving
          loan credit agreement and related repayment of certain existing debt
          occurred on January 1, 1995. These results are not necessarily
          indicative of future operations nor of results that would have
          occurred had the acquisitions and other transactions been consummated
          as of the beginning of the periods presented.

                                                     1996           1995
                                                     ----           ----

   Revenues                                     $     30,275        27,683
   Net (loss) income applicable to
      common stockholders                               (211)           97
                                                    =========    =========

   (Loss) earning per common share                   $  (.05)          .03
                                                        ====         ====

          On January 3, 1997, the Company acquired the assets and liabilities of
          Nevill & Swinehart and Pelletier & Jones, both Southern
          California-based court reporting companies, and entered into
          consulting and noncompetition agreements for an aggregate
          consideration of $2,560 consisting of cash in the amount of $1,550,
          subordinated promissory notes and installment payments in the
          aggregate amount of $735 payable in equal quarterly installments over
          a period of six years and 100,000 unregistered shares of the Company's
          common stock valued at $275. The business combinations are to be
          accounted for under the purchase method, the excess of cost over the
          fair value of assets acquired and liabilities assumed is expected to
          be approximately $1,950, and other intangible assets of approximately
          $425 are expected to be recognized. The Company borrowed approximately
          $1,500 under its revolving credit agreement to finance the
          acquisition.


 (3)     PROPERTY AND EQUIPMENT

          Property and equipment consists of the following as of December 31,
1996 and 1995:

                                                                    Depreciable
                                            1996       1995            lives
                                            ----       ----            -----

  Office condominium                    $      203        203           31 years
  Equipment                                  2,365      1,590       5 to 7 years
  Leasehold improvements                       820        283      5 to 10 years
                                           -------    -------      =============
                                             3,388      2,076

  Less accumulated depreciation              1,442      1,050
                                           -------    -------

                                        $    1,946      1,026
----------------                            =======    =======

          Depreciation expense amounted to $392, $327, $178 for the years ended
          December 31, 1996, 1995 and 1994, respectively.
<PAGE>
                           ESQUIRE COMMUNICATIONS LTD.
                                AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

                    (Dollars in Thousands, Except Share Data)

        (4)       LONG-TERM DEBT

          Long-term debt consists of the following as of December 31, 1996 and
          1995:

                                                        1996         1995
                                                        ----         ----

    Revolving loan agreement (A)                  $      8,218            -
    Subordinated debentures (D)                             -          5,440
    Promissory notes (B)                                 5,181         2,367
    Revolving credit note (E)                               -          1,600
    Contract obligation (C)                                496           609
    Other notes and obligations (F)                        390           223
                                                      --------     ---------
                                                        14,285        10,239

    Less current portions                                1,394         1,605
                                                      --------     ---------

                                                  $     12,891         8,634
----------------                                      ========     =========

     (A)  In December 1996, the Company entered into a three-year revolving loan
          agreement (Loan Agreement) with a financial institution which provides
          for borrowings up to $20,000 based on operating cash flows as defined
          therein. Borrowings under the Loan Agreement bear interest at either
          prime rate or London Interbank Offered Rate (LIBOR), at the Company's
          election, plus applicable margin rate. The applicable margin varies on
          the basis of operating cash flows and overall leverage ratio as
          defined in the Loan Agreement. The effective rate at December 31, 1996
          was 9%. The Loan Agreement , which is secured by substantially all the
          assets of the Company, restricts future indebtedness, investments,
          distributions, acquisitions or sale of assets and capital expenditures
          and also requires the maintenance of certain financial ratios and
          covenants. In addition, substantially all other lenders to the Company
          have entered into a subordination agreement with this financial
          institution. The initial borrowings under the Loan Agreement were used
          to repay all amounts outstanding under the Company's credit agreement
          with a bank and approximately $4.5 million of its subordinated
          debentures due June 2001.

     (B)  Promissory notes with former stockholders of acquired businesses are
          generally payable in quarterly installments plus interest at rates
          ranging from 8% to 10% through November 2002.

     (C)  Contract obligation - an agreement with a former employee of an
          acquired company, who is related to an officer/director of the
          Company, provides for monthly payments of $9 through June 2002. The
          obligation is carried net of imputed interest, at 8%, of $47 and $91
          at December 31, 1996 and 1995, respectively.

     (D)  Debentures - in June 1994, the Company completed a private placement
          of subordinated debentures (the Debentures) in the aggregate principal
          amount of $5,000 to fund the cash portion of the purchase price of the
          SDS acquisition and entered into an agreement with the
          debentureholders (the Investment Agreement). The Debentures provided
          for quarterly principal payments commencing in January 1996 in the
          amount of $125 through June 2001. The Debentures were repaid in 1996.

     (E)  Revolving credit note - in September 1994, the Company entered into a
          three-year revolving credit agreement (the Credit Agreement) with a
          bank which provided for borrowings up to $3,000 based on eligible
          accounts receivables as defined therein. The borrowings under the
          Credit Agreement bore interest at prime plus 1% and interest payments
          were required monthly. The Company repaid the outstanding balance
          under the Credit Agreement from borrowings under the Loan Agreement.
          In conjunction with the repayment and termination of the Credit
          Agreement and Investment Agreement, the Company recognized an
          extraordinary loss of $157, net of a $104 tax benefit, relating to
          unamortized deferred financing costs.

     (F)  Other notes and obligations - outstanding amounts relate to various
          equipment capital leases and are payable in aggregate monthly
          installments with interest at 9% to 19% maturing through 1999.

          Scheduled annual principal payments of long-term debt subsequent to
          December 31, 1996 are as follows:

                   1997                          $      1,394
                   1998                                 1,183
                   1999                                 9,413
                   2000                                 1,135
                   2001                                 1,005
                   Thereafter                             155
                                                    ---------
                                                      $14,285
                                                      =======

 (5)     STOCKHOLDERS' EQUITY

          In May 1993, the Company completed an initial public offering of its
          securities comprised of 1,250,000 shares of common stock at a price of
          $4.00 per share and 1,250,000 warrants to purchase common stock at
          $.10 per warrant.

          The warrants are exercisable until May 18, 1998 at an exercise price
          of $4.50 per share. The exercise price and the number of shares of
          common stock issuable upon the exercise of the warrants are subject to
          adjustment in certain circumstances, as defined. The Company may call
          the warrants for redemption at a price of $.01 per warrant, provided
          the sales price of the common stock has been at least 150% of the then
          effective exercise price of the warrants over a specified period of
          time. If the warrants are called for redemption, they must be
          exercised prior to such redemption or the right to purchase the
          applicable shares of common stock is forfeited. As part of the Initial
          Public Offering, the underwriters exercised an "overallotment" and
          acquired an additional 187,500 of warrants at $.09 per warrant, net of
          discount. In addition, they received a purchase option (subject to
          certain antidilutive provisions) to acquire, until May 18, 1998,
          264,751 shares and warrants at a price of $2.64 and $.06,
          respectively. The warrants are exercisable at an exercise price of
          $4.50 per share.

          In connection with the private placement of Debentures in 1994, the
          Company issued warrants to the holders to acquire an aggregate of
          625,000 shares of common stock. The exercise price of the warrants is
          $2.90, subject to revision under specified circumstances. The warrants
          expire upon the earlier of (a) six years from the date of the final
          payment on the Debentures, or (b) the tenth anniversary of the date of
          issuance.

          In connection with the acquisition of SDS in June 1994, the Company
          issued 750,000 shares of common stock at a recorded share price of
          $3.00. The Company granted warrants to acquire 100,000 shares of its
          common stock at $4.50 per share to its investment bankers in
          connection with the SDS acquisition in addition to cash compensation.
          The warrants are exercisable at any time prior to June 1999.

          In connection with the acquisition of CHMS in January 1995, the
          Company issued 76,923 shares of common stock at a recorded share price
          of $2.76.

          On October 23, 1996, the Company completed a private placement of
          7,500 shares of Series A convertible preferred stock (the Preferred
          Stock) for an aggregate purchase price of $7,500 and entered into an
          agreement (the Agreement) with the Preferred Stockholders. Under the
          Agreement, the Preferred Stockholders have the right within 21 months
          to acquire up to an additional 7,500 shares of Preferred Stock at a
          price of $1,000 per share. The Preferred Stock is convertible into
          common stock of the Company at a conversion price of $3.00 per share
          (subject to antidilution adjustments) and bears cumulative annual
          dividends at the rate of 6% per annum. The holders of Preferred Stock
          have a liquidation preference of $1,000 per share, plus accrued
          dividends. The Preferred Stockholders have the right to vote with the
          holders of common stock and are entitled to one vote for each whole
          share of common stock into which the Preferred Stock is convertible
          (presently 333-1/3 votes per share). The Agreement restricts future
          dividend payments on common stock, issuance of certain equity
          securities, mergers, acquisitions and sale of assets. In connection
          with the private placement, the Company granted the placement agent
          warrants to acquire 187,500 of common stock of the Company at an
          exercise price of $3.00 per share in addition to cash compensation.
          The warrants are exercisable at any time prior to October 2001.

          In connection with the acquisitions of M&M on October 28, 1996 and SRA
          on November 15, 1996, the Company issued 204,006 shares of common
          stock valued at approximately $509.

          In November 1996, the Company purchased 433,500 shares of its
          outstanding common stock at $3.00 per share.


 (6)     STOCK OPTION PLAN

          In 1993, the Company adopted a stock option plan (the Plan) pursuant
          to which the Company's Board of Directors may grant stock options to
          officers, employees, directors, consultants and independent
          contractors to the Company. The Plan authorizes grants of options to
          purchase up to 1,400,000 shares of authorized but unissued common
          stock subject to stockholder approval. Stock options are granted with
          an exercise price equal to the stock's fair market value at the date
          of grant. All stock options have ten-year terms and generally vest and
          become fully exercisable over a three-year period, commencing one year
          from date of grant.

          The per share weighted-average fair value of stock options granted
          during 1996 and 1995 was $1.03 and $1.35 on the date of grant using
          the Black Scholes option-pricing model with the following
          weighted-average assumptions: 1996 - expected volatility 25%, expected
          dividend yield 0%, risk-free interest rate of 6%, and an expected life
          of five years; 1995 - expected volatility 20%, expected dividend yield
          0%, risk-free interest rate of 7%, and an expected life of five years.

          The Company applies APB Opinion No. 25 in accounting for its Plan and,
          accordingly, no compensation cost has been recognized for its stock
          options in the consolidated financial statements. Had the Company
          determined compensation cost based on the fair value at the grant date
          for its stock options under SFAS No. 123, the Company's net income
          would have been reduced to the pro forma amounts indicated below:

                                                            1996     1995
                                                            ----     ----

  Net (loss) income applicable to common stockholders:
        As reported                                         (541)      279
        Pro forma                                           (587)      265
  Net (loss) income per common share:
     As reported                                            (.13)      .07
     Pro forma                                              (.14)      .06
                                                            ====       ===

          Pro forma net (loss) income reflects only options granted in 1996 and
          1995. Therefore, the full impact of calculating compensation cost for
          stock options under SFAS No. 123 is not reflected in the pro forma net
          (loss) income amounts presented above because compensation cost is
          reflected over the options' vesting period of three years and
          compensation cost for options granted prior to January 1, 1995 is not
          considered.

          Stock option activity during the periods indicated is as follows:


                                                                     Weighted-
                                                     Number           average
                                                       of            exercise
                                                     shares            price
                                                   --------          ----------

    Balance at December 31, 1993                     227,100       $   4.00
    Granted                                          320,650           4.00
    Exercised                                             -            -
    Forfeited                                        (32,933)          4.00
    Expired                                               -            -
                                                  ----------
    Balance at December 31, 1994                     514,817           4.00

    Granted                                          105,000           4.00
    Exercised                                             -            -
    Forfeited                                        (41,217)          4.00
    Expired                                               -            -
                                                  ----------
    Balance at December 31, 1995                     578,600           4.00

    Granted                                          170,000           2.99
    Exercised                                             -            -
    Forfeited                                        (20,100)          4.00
    Expired                                               -            -

    Balance at December 31, 1996                     728,500           3.76
                                                  ==========          =====


          At December 31, 1996, the range of exercise prices and
          weighted-average remaining contractual life of outstanding options was
          $2.77 - $4.00 and 8.5 years, respectively.

          At December 31, 1996 and 1995, the number of options exercisable was
          395,569 and 216,877, respectively, and the weighted-average exercise
          price of those options was $4.00 in each year.

(7)       PROFIT SHARING PLAN

          In September 1995, the Company adopted a 401(k) savings plan covering
          all eligible employees. The plan allows employees to voluntarily
          contribute up to 15% of compensation. The Company may make matching
          contributions as may be determined prior to the end of each plan year.
          The current matching percentage is 10%. The Company may also make
          discretionary additional contributions to the plan. The Company's
          total contributions to the plan for 1996 and 1995 amounted to $12 and
          $8, respectively.


 (8)     INCOME TAXES

          The income tax provision (benefit) for the years ended December 31,
          1996, 1995 and 1994, excluding the income tax benefit of $104
          attributed to the extraordinary loss in 1996, is as follows:



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

      Current tax expense:
         Federal                                 $ 284      363       130
         State and city                             96      163        70
                                                 -----    -----    ------

                   Total current                   380      526       200

      Deferred tax (benefit) expense:
         Federal                                  (135)      16       (92)
         State and city                            (33)       7       (49)
                                                 -----    -----    ------

                   Total deferred                 (168)      23      (141)
                                                 -----    -----    ------

                                             $     212      549        59
                                                 =====    =====    ======


          The income tax provision differs from the amount of income tax
          determined by applying the U.S. federal income tax rate to income
          before income taxes for the years ended December 31, 1996, 1995 and
          1994 due to nondeductible expenses, primarily goodwill amortization,
          amounting to approximately $230, $227 and $128, respectively.

          Significant components of the Company's net deferred tax assets and
          liabilities as of December 31, 1996 and 1995 are as follows:


                                                               1996    1995
                                                               ----    ----

    Deferred tax assets:
       Contract obligation                                 $    199      269
       Allowances and accrued expenses                          317      115
       Net operating loss carryforwards                          -         2
       Tax credits                                               21       21
                                                               ------   ----

          Total deferred tax assets                             537      407
                                                              -----    -----

    Deferred tax liabilities:
       Depreciation and amortization                            282      149

       Cash versus accrual accounting differences, net          115      286
                                                              -----      ----

                Total deferred tax liabilities                  397      435
                                                              -----    -----

                Net deferred tax asset (liability)          $   140      (28)
----                                                          =====    ======


          The Company has state minimum tax credit carryforwards of
          approximately $22 which may be carried forward to reduce future year
          tax liabilities through the year 2004.

          Based upon recoverable taxes paid, historical taxable income and
          projections of future taxable income over the periods which the
          deferred tax assets are deductible, management believes that it is
          more likely than not that the Company will realize the benefits of
          deductible temporary differences.


 (9)     COMMITMENTS

       (A)    EMPLOYMENT AGREEMENTS

          The chairman of the board entered into an employment agreement with a
          five-year term through May 1998 which is renewable on a year to year
          basis thereafter. The agreement provides for a base salary of $180
          plus cost of living increases, and an annual bonus based on a
          percentage of the pretax earnings of the Company in excess of
          specified levels. No bonus was earned under the agreement in each of
          the years ended December 31, 1996, 1995 and 1994.

          In connection with the acquisition of David Feldman & Associates (USA)
          Ltd. (DFA) in September 1993 and SDS in 1994, the Company entered into
          employment and noncompetition agreements with the former stockholders
          of each of the companies, which expire in September 1997 and June
          1998, respectively. The agreements provide for an annual base salary
          of $180 plus cost of living increases for each individual. The DFA
          agreement also provides for an annual bonus based on percentages of
          consolidated revenues in excess of specified levels. Total bonus
          amounts earned under the DFA employment agreement amounted to $359 and
          $239 for the respective years ended December 31, 1996 and 1995.

 (B)    LEASE COMMITMENTS

          The Company is obligated under operating leases for office facilities
          which expire through December 2005. The leases provide, among other
          things, that the Company is responsible for its share of increases in
          certain utilities, maintenance and property taxes over a base amount.
          In addition, the Company is also obligated under various equipment and
          vehicle leases which expire through September 1999. Total lease
          expense for 1996, 1995 and 1994 under the above leases amounted to
          approximately $720, $375 and $337, respectively.

          During 1996, the Company relocated its headquarters and recognized a
          $262 expense related to the net present value of future rental
          payments, net of sublease income, pertaining to the vacated premises.

          The Company leases its Santa Ana, California office from an affiliate
          of an officer/director which expires in June 1999 with an option to
          renew for five years. Management believes that the terms of the lease
          agreement are comparable to market rates. Total lease expense for 1996
          and 1995 amounted to $265 in each year.

          The anticipated future annual lease payments under operating leases at
          December 31, 1996, inclusive of the base utility, maintenance and
          property tax charges for the office facilities, are as follows:


                     1997             $    868
                     1998                  773
                     1999                  546
                     2000                  291
                     2001                  251
                     Thereafter            815
                                          =====


          Future annual rental income under remaining noncancelable subleases is
          as follows: 1997 - $63, 1998 - $79, 1999 - $79 and 2000 - $13.

(10)       SUPPLEMENTAL CASH FLOW INFORMATION

          Cash payments for the years ended December 31, 1996, 1995 and 1994
          have included:


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

        Interest                         $  1,140     1,074       528
                                            =====     =====      ====

        Income taxes                     $  1,007       200        12
                                            =====     =====      ====


          During 1996, $75 in preferred stock dividends were accrued and unpaid.

          In connection with the acquisitions of M&M and SRA, during 1996, the
          Company issued 204,006 shares of common stock valued at $509.
<PAGE>
                                   SIGNATURES

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


                                         ESQUIRE COMMUNICATIONS LTD.



March 31, 1997                          By: /S/
                                            ------------------------
                                            Malcolm L. Elvey
                                            Chief Executive Officer


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


Name                                 Title                       Date


/S/----------------------      Chairman of the Board
Malcolm L. Elvey               and Chief Executive
                               Officer (Principal
                               Executive and
                               Financial Officer)            March 31, 1997



/S/----------------------      Principal Financial
Vasan Thatham                  Officer                       March 31, 1997



/S/----------------------      Director                      March 31, 1997
Mortimer R. Feinberg



/S/----------------------      Director                      March 31, 1997
David Feldman




/S/----------------------      Director                      March 31, 1997
Andrew P. Garvin



/S/----------------------      Director                      March 31, 1997
Joseph P. Nolan



_________________________      Director                      March __, 1997
Bruce V. Rauner



/S/----------------------      Director                      March 31, 1997
Cary A. Sarnoff