SECURITIES AND EXCHANGE COMMISSION
                                              WASHINGTON, D.C. 20549

                                                    FORM 10-KSB

[x]     Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
 Act of 1934 [Fee Required]

For the fiscal year ended December 31, 1995

[ ]     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 0-22934

                                             DEVELOPMENT BANCORP, LTD.
                      (Exact name of small business issuer in its charter)


                         Washington                                  93-1192971
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer 
                                                            Identification No.)

                 14 Quai du Seujet  Geveva, Switzerland                CH-1201
           (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code:           011 41 229 081 598
                                                           --------------------

Securities registered pursuant to Section 12(b) of the Act:              None
                                                             ----------------

Securities registered pursuant to Section 12(g) of the Act:  Common Stock, 
no par value

           Indicate  by check  mark  whether  the  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 the
registrant  was required to file such  reports) and (2) has been subject to such
filing requirements for the past 90 days.
                                                      YES   X        NO

           Check if there is no disclosure of delinquent filers in response to 
Item 405 of Regulation S-B is not
contained in this form, and no disclosure will be contained, to the best of
 registrant's knowledge, in definitive proxy
or information statements incorporated by reference in part III of this Form
 10-K or any amendment to this Form
10-K. [X]

           State issuer's revenues for its most recent fiscal year: $656,482

           The aggregate market value of the voting stock held by non-affiliates
of the  registrant  was  $7,796,925  based upon the average of the bid and asked
price of the Common Stock of $6.25 as of September 20, 1996.

           The number of shares  outstanding  of the issuer's  classes of Common
Stock as of September 20, 1996:

Common Stock, No Par Value - 1,404,423 shares

                                    DOCUMENTS INCORPORATED BY REFERENCE:  NONE


<PAGE>



Item 1.  Description of Business

Business Development

         Development  Bancorp,  Ltd.  (the  "Company") is engaged in providing a
broad range of  financial  services  to its  clients,  through its  subsidiaries
Societe  Fianaciere  de  Distribution  Geneve SA  (located in  Switzerland)  and
Development Bancorp Services Limited (located in Ireland).

         On  November  14, 1995 the Company  acquired  all of the Common  Stock,
representing 99.93%, of KSM Financial Holdings,  a Nevada corporation,  which in
turn owns all of the  capital  stock of Global  Financial  Group  ("Global")  in
exchange for 110,000 shares of Series B Convertible Preferred Stock. Global is a
broker dealer  registered with the National  Association of Securities  Dealers,
Inc.  ("NASD").  The Series B Convertible  Preferred  Stock is convertible  into
110,000  shares of Common  Stock and ranks on a parity  with  Common  Stock with
respect  to any  dividend  payments.  The  holder  of the  Series B  Convertible
Preferred Stock is granted  certain  registration  rights,  including one demand
registration  made before  December 31, 1997, and piggy back rights on any other
registration by the Company (subject to certain limitations). The remaining .07%
ownership of KSM is represented by 2,400 shares of 10%  cumulative,  convertible
preferred  stock by KSM.  Commencing in July 1995,  preferred  stockholders  are
entitled to cumulative cash dividends of $10.00 per share payable quarterly plus
securities  dividends  equal  to  25%  of  all  securities  received  by  KSM in
connection with investment  banking  services  payable  annually.  Each share of
preferred stock is convertible,  at the holder's option,  into 100 shares of KSM
common  stock.  KSM may redeem the  preferred at anytime for $100 per share plus
accrued  dividends.  On November 1, 1996 the Company and KSM mutually  agreed to
rescind the  acquisition of  KSM/Global.  All amounts paid to KSM by the Company
($415,000) were reclassified as debt due at 8% interest in November 2001. Unless
otherwise  stated,   all  information  herein  reflects  the  recission  of  the
KSM/Global transaction.

         In June 1993 the Company commenced developing its business of providing
international  financial  services,  and  organized  in July  1993 an  operating
subsidiary,  SFD Societe  Financiere de Distribution  Geneve S.A.  ("SFD").  SFD
operates out of Geneva,  Switzerland and is a Swiss financial company. In fiscal
1995 the Company organized  Development  Bancorp Services Limited ("Ireland") as
well. SFD's and Ireland's  activities  consist primarily of financial  services.
Neither Ireland nor SFD publicly  solicits  customer  deposits and employs other
banks as custodian of its cash and securities  assets,  and is therefore  exempt
from the banking regulations.

         As of December 1, 1995, SFD was owned 99.3% by the Company and 0.7% by
 Mr. Riccardo Mortara, who
was then the President and director of the Company, and a managing director of
 SFD.  SFD was capitalized in July,
1993 by a capital contribution of 427,000 Swiss Francs ("SFr") by the Company 
and SFr 3,000 by Mr. Mortara.
If not for Mr. Mortara's ownership of SFD, it would be a wholly owned subsidiary
 of the Company and under Swiss
law the Company would be deemed to be liable for all of SFD's liabilities. 
 Societe Financiere de Seujet, S.A. is
a shareholder of the Company, and its shares may be deemed beneficially owned by
 Mr. Mortara.

         The  Company  was  incorporated  on  August  16,  1984 in the  state of
Washington under the name Gold Valley, Inc. for the primary purpose of exploring
and developing gold  properties.  No commercial ore deposits were developed.  In
1986, the Company  acquired an 18.75% interest in an oil partnership  consisting
of five  wells in  Pondera  County,  Montana.  In 1991,  the  Company  sold this
partnership  interest to officers and  directors of the Company for $2,139 on an
installment  contract.  In 1991,  the Company  canceled this contract from these
affiliates in exchange for investment banking and financial  consulting services
when it became  apparent  that the  affiliates  were not willing or able to pay.
After  sale  of  its  partnership  interest,  the  Company  began  to  seek  the
acquisition of a business  opportunity.  On August 13, 1993, the Company changed
its name to  Development  Bancorp,  Ltd. and effected a 165-for-1  reverse stock
split.  The  purpose of the  reverse  stock  split was to attract  institutional
investors who might not otherwise invest in a Company private  placement.  Under
the Washington  Business  Corporation Act, the name change and the reverse stock
split only  required  approval of the Board of  Directors of the Company and not
approval of its shareholders. In conjunction with the special meeting in lieu of
the annual meeting, held on

                                                         2

<PAGE>



October 4, 1993, the Company's shareholders authorized the issuance of preferred
stock, adopted a Stock Option Plan and ratified the reverse stock split.

         All  information  herein has been  adjusted  to reflect  the  165-for-1
referred stock split referenced to above.

Investment Banking Services

         The Company's  investment  banking  services are intended to be equally
divided between securities  underwriting,  both in public and private offerings,
and advising in and arranging mergers and  acquisitions.  The Company intends to
concentrate its activities in the United States, Europe, and South Asia; however
the decision to become involved in any transaction  will be made primarily based
upon the merits of the transaction and not its geographic  location.  Because of
its relatively limited capital, the Company will be limited, at least initially,
to smaller  (less  than $10  million)  and  mid-sized  (less than $100  million)
transactions.  Based on the experience of its  management in financial  advisory
and banking  services  with a special  emphasis on  international  banking,  and
opportunities  which have been  presented to the Company,  the Company  believes
that there exist many opportunities for international investment banking in this
market segment.

         Investment banking compensation is typically paid either on a fee basis
or on a  percentage  commission.  Although  the Company may on occasion  provide
advisory  services  for a fee to its clients,  the major part of its  investment
banking revenues are expected to be derived from underwriting  commissions or on
transaction  fees  from  merger or  acquisitions.  Such  transactional  fees are
usually negotiated in each transaction as a percentage of the total transaction,
but are expected to range from 5 to 15 percent for  underwritings  and a similar
percentage  for  acquisition  and  mergers.  The  Company  intends  to engage in
underwritings for $10 million or less for the foreseeable future.

         The  Company  intends to market its  securities  underwritings  only to
institutions such as mutual funds, banks,  insurance companies and pension funds
and not to the general public, with emphasis on institutions  outside the United
States,  the  Company  does not intend to  conduct  itself as a broker or dealer
within the United  States and does not believe it will be subject to  regulation
as a U.S. broker dealer.

         Although  its  primary  focus  will be on  companies  trading on United
States,  Asian or  European  trading  markets,  the  Company  intends to perform
investment banking services for European,  Asian and American companies that are
in the process of going public, and in particular in the United States. With the
globalization  of financial  markets,  companies from Europe and the Pacific Rim
are  increasingly  desirous of becoming traded in the U.S.  equity markets.  The
costs of going  public  in the  United  States  vary  from  $300,000  to over $1
million.  Costs include legal and accounting  fees,  listing fees, due diligence
costs,  investment  banking  fees,  broker  road-shows,   promotion  costs,  and
printing. For example, for a $10 million transaction for which the Company would
supply bridge  financing,  the costs of going public (exclusive of costs paid at
the closing)  typically  vary from 5% to 7% of the gross amount of the offering.
For companies which already have a firm underwriting commitment, the Company may
make an  investment  in the company from its working  capital  reserves to cover
these costs and to enable the company to obtain  working  capital for  expansion
pending  receipt of the proceeds from the  offering.  Each  potential  company's
working  capital needs will differ and cannot be ascertained at this time.  This
type of investment is often referred to as "bridge  financing." Bridge financing
funds will  typically be provided in U.S.  dollars  regardless  of the region in
which the borrowing company is located.

         In exchange for the bridge investment,  the Company will receive either
a convertible  instrument or stock in the invested  company at a discount to the
estimated  public  market  share  price.  In  addition  to the  original  bridge
investment,  the Company may invest in subsequent offerings after the Company is
public.  As a  component  of the  original  bridge  investment,  the Company may
negotiate  a  small  discount  for the  Company's  participation  in  subsequent
offerings within a one year time period.

         In bridge  financing,  the Company seeks to gain primarily by realizing
the spread between the public valuation and the cost at which the securities are
actually acquired. The Company may also experience gain through

                                                         3

<PAGE>



appreciation  in the  traded  market,  but  there can be no  assurance  that the
Company will be able to sell its investment at a profit. The level of return, if
any,  will be highly  dependent on the success of the  investee  company and the
price of its  securities  in the  public  market,  all of which are  subject  to
numerous events outside the control of the Company.

         The  possibility  of  risk of loss in  connection  with  the  Company's
proposed  activities exists if there is depreciation of securities in the traded
market or if the investee company is unsuccessful for reasons beyond the control
of the Company.

Competition

         Competition in the investment banking industry comes from international
and local brokerage  firms,  banks,  and other financial  institutions.  Most of
these competitors have greater  experience and greater financial  resources than
the  Company.  However,   management  believes  that  most  broker  dealers  and
investment  banking  firms in the  smaller  to  mid-sized  segment  in which the
Company   intends  to  operate  have   limited   experience   in   international
transactions.  This is especially true for U.S. investment banking firms, due to
the large size of the U.S. market.

Employees

         The Company has 7 employees, including its officers.

Regulations

         SFD is  subject  to  numerous  regulations  under the  Swiss  financial
companies statutes.  SFD is subject to annual audit requirements;  must maintain
an  adequate  relationship  between  its equity and its total  liabilities,  and
between its current assets and  liabilities;  and is prohibited from engaging in
money  laundering.  SFD is not  permitted to place  securities  with the general
public, but only with institutional  clients,  and does not hold custody of cash
for customers.  Commissions for securities  transactions are not regulated.  SFD
opens  accounts  for each  customer in an  authorized  bank,  outside of its own
balance sheet.

         Since SFD does not publicly  solicit  customer  deposits,  it is exempt
from many reporting and  regulatory  provisions  ordinarily  applicable to Swiss
financial companies.

         A financial  company like SFD which does not publicly  recommend itself
for the  acceptance  of deposits  can obtain the status of a  bank-like  finance
company  by  means  of a  decision  of  the  Banking  Commission.  Based  on the
activities  of a  finance  company,  the  Banking  Commission  is  empowered  to
interpret the applicability or non-  applicability of certain  provisions of the
Swiss Banking Law.

         In  addition  to  the  general  regulations  applicable  to  all  Swiss
companies, bank-like companies, not publicly soliciting deposits, have to comply
with the following provisions:

         (1)      Pursuant  to  Article  7 of the  Swiss  Banking  Law  they are
                  required to submit to the National  Bank their annual  balance
                  sheet.  If the  National  Bank  requires  it may also  require
                  detailed  semi-annual  balance  sheets,  as well as any  other
                  information and reports which it may consider necessary,  such
                  in connection with the credit and monetary policy.

         (2)      To  enable  the  Banking  Commission  to  determine  whether a
                  bank-like  finance  company does not in fact publicly  solicit
                  deposits,  it is required to submit to the Banking  Commission
                  an  annual  balance  sheet  prepared  in  accordance  with the
                  Implementing  Ordinance  to the Swiss  Banking  Law, an annual
                  report  of the board of  directors,  and an  auditor's  report
                  prepared by an independent and qualified auditing company.


                                                         4

<PAGE>



 (3)      Under Article 8 of the Swiss Banking Law the prior approval of
 the Swiss National Bank is
 required for foreign bond or share issues of SFr 10 million or
 more floated in Switzerland and for
 credits and loans to non-residents in amounts exceeding this sum and with terms
 of longer than
 twelve months.  The rule applies to the placement of medium term foreign 
obligations with a
 maturity of twelve months or more, if the amount placed is expected to total 
Sfr 3 million within
 a year.  The Swiss National Bank is empowered to refuse permission or to impose
 conditions if
 deemed necessary in the light of the Swiss franc exchange rate, the interest 
rate trend on the Swiss
 money and capital markets or the overall national interest.

         In comparison  with banks,  the advantages of a finance company that is
subject to Articles 7 and 8 of the Swiss Banking Law only consist,  for example,
in the  fact  that  in the  exercise  of its  activity  it is not  bound  by the
provisions  of  the  Swiss  Banking  Law  concerning   ratios  between   equity,
liabilities and liquid funds. Moreover, such a finance company would be under no
restriction if, for example,  it proposed to grant substantial credit facilities
to a single  customer,  while real banks are  required  to  maintain an adequate
ratio to their own funds with regard to any single borrower.

         There are no other licensing or other requirements known to the Company
which would be required to enable it to compete effectively in the United States
and foreign markets.

Oil and Gas Investment

         On October 5, 1994, the Company  purchased from Cretaceous  Investments
("Cretaceous")  a 67.5% working interest in the interest of Cretaceous in an oil
and gas project  consisting  of  approximately  1800 acres  located in Van Zandt
County,  Texas known as the  Fruitvale  Field.  The purchase  price was $630,000
cash,  plus a commission  to the broker in the  transaction  equal to 30% of the
Company's  net return on the  investment  after  recovery of the of the purchase
price.  The Company  acquired  this interest as an  investment,  and received no
revenues  and  recorded  no expense  as its share of the  working  interest.  On
February  23,  1995 the  Company  agreed to sell  this  investment  to  Starratt
Resources Limited, a Canadian public company  ("Starratt") for 231,000 shares of
Starratt's  common  stock,  valued for purpose of the  transaction  at $900,000.
Effective  September  30,  1995,  the Company  returned  the  231,000  shares to
Starratt  and received in return  150,000  shares of Company  Stock,  which were
cancelled. The Company has no further relationship with Starratt or Cretaceous.


                                                         5

<PAGE>



Item 2.  Description of Property

         The Company's headquarters are provided by its President at no cost.

Item 3.  Legal Proceedings

         Not Applicable.

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

         Not applicable.

                                                      PART II

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

         (a) Market Information

         Until  October  4, 1993 the  Company's  common  stock was  traded  only
intermittently  over-the-counter  in what is  commonly  referred to as the "pink
sheets." The Common Stock was listed  without  price  quotations  in 1992 and in
1993  through  October 4, 1993.  Thereafter,  the Common Stock was quoted in the
NASD's Electronic Bulletin Board, which reports the following quotations:

                                             Bid Price         Ask Prices
                                       High         Low      High           Low

         Quarter Ended
         December 31, 1993
         (commencing October 5, 1993)  7.50        3.50     9.00           4.00

         March 31, 1994                7.00        4.50     8.00           5.50
         June 30, 1994                 6.50        4.50     8.00           5.50
        September 30, 1994             6.50        4.00     8.00           7.50
         December 31, 1994            7.00          5.50    7.50           7.25
         March 31, 1995                7.00         3.00    7.75           6.00
         June 30, 1995                 5.75        4.00     7.75           6.00
         September 30, 1995            5.00        2.00     7.00           4.00
         December 30, 1995             5.25        3.00     6.00           5.50
         March 31, 1996               5.625        1.50     6.00           3.50
         June 30, 1996                 3.25         .625    4.00           2.00

         These prices  reflect  inter-dealer  prices,  without  retail  mark-up,
markdown or commission and may not represent  actual  transactions.  The Company
does not believe  that  trading of its common  stock  currently  is  necessarily
reflective of an established trading market.

         (b) Holders

         As of September 30, 1996, there were  approximately  168 record holders
of Company  common  stock,  two holders of its Series A Preferred  Stock and one
holder of its Series B  Convertible  Preferred  Stock.  The Series B Convertible
Preferred Stock was cancelled in November 1996.


                                                         6

<PAGE>



         (c) Dividends

         The Company has not paid any dividends on its common stock. The Company
currently  intends to retain any earnings for use in its business and  therefore
does not anticipate paying cash dividends in the foreseeable  future. The Series
A Preferred  Stock has no dividend  rights and does not  restrict the payment of
dividends to holders of Common Stock.  The Series B Convertible  Preferred Stock
ranks on a parity with common stock with respect to any dividends.

         The Company's  subsidiary,  KSM Holdings,  Inc. has  outstanding  2,400
shares of preferred stock.  Commencing in July 1995, preferred  stockholders are
entitled to cumulative cash dividends of $10.00 per share payable quarterly plus
securities  dividends  equal  to  25%  of  all  securities  received  by  KSM in
connection with investment  banking  services  payable  annually.  Each share of
preferred stock is convertible,  at the holder's option,  into 100 shares of KSM
common  stock.  KSM may redeem the  preferred at anytime for $100 per share plus
accrued  dividends.  The Series B Convertible  Preferred  Stock was cancelled in
November 1996.

Item 6.  Management's Discussions and Analysis or Plan of Operations

         The following  discussion  regarding  the  financial  statements of the
Company  should be read in conjunction  with the financial  statements and notes
thereto included in this Report.

         The  following  Summary  Financial  Information  is  derived  from  the
financial statements of the Company.


                                                         7

<PAGE>




<TABLE>
<CAPTION>
Income Statement Data


                                                                                   Year Ended December 31,
                                                                 1995           1994         1993         1992         1991
<S>                                                          <C>           <C>           <C>          <C>          <C>      
Revenues                                                     $  656,482    $   42,106    $   9,843    $      -0-   $      84
Net Income (Loss)                                            $(450,242)    $(127,339)    $(19,338)       (9,728)     (3,117)
Net Income (Loss) Per Share                                  $     (.41)         (.13)        (.08)        (.53)   $    (.18)
Weighted Average
 Shares Outstanding                                           1,095,606       984,090      233,550        18,424      17,063

</TABLE>
<TABLE>
<CAPTION>

Balance Sheet Data

                                                                                     As of December 31,
                                                                 1995           1994         1993         1992         1991

<S>                                                          <C>           <C>            <C>          <C>          <C>     
Working capital                                              $  2,181,582  $ 2,097,051    $ 1,309,393  $   3,221    $  3,221
Long Term Debt                                               $     41,770  $       -0-    $       -0-  $     -0-    $    -0-

Total Assets                                                 $  4,857,460  $ 4,308,941    $ 3,808,696  $   3,221    $  3,221

Shareholder's
 Equity                                                      $  3,446,447  $ 3,881,892    $ 3,032,264  $   3,221    $  3,221

</TABLE>

Results of Operations

         Year ended  December 31, 1995 compared to year ended December 31, 1994.
Revenues for 1995 include  two-month's  operations of Global Financial Holdings,
acquired  in  November  1995.  Substantially  all of the  increase in revenue of
fiscal  1995  over  fiscal  1994 is due to the  operation  of  Global  Financial
Holdings.

         The  results of  operations  for the year ended  December  31, 1996 are
expected to be similar to the year ended December 31, 1994.

Oil and Gas Investment

         On October 5, 1994, the Company  purchased from Cretaceous  Investments
("Cretaceous")  a 67.5% working interest in the interest of Cretaceous in an oil
and gas project  consisting  of  approximately  1800 acres  located in Van Zandt
County,  Texas known as the  Fruitvale  Field.  The purchase  price was $630,000
cash,  plus a commission  to the broker in the  transaction  equal to 30% of the
Company's  net return on the  investment  after  recovery of the of the purchase
price.  The Company  acquired  this interest as an  investment,  and received as
revenues  and  recorded  no expense  as its share of the  working  interest.  On
February  23,  1995 the  Company  agreed to sell  this  investment  to  Starratt
Resources Limited (Toronto OTC:SRCI), a Canadian public company ("Starratt") for
231,000 shares of Starratt's common stock, valued for purpose of the transaction
at $900,000.  Effective  September  30, 1995,  the Company  returned the 231,000
shares to Starratt and received in return 150,000  shares of Company Stock.  The
Company has no further relationship with Starratt or Cretaceous.

         The Company purchased Class G shares of Gestion PEMP, Inc. ("PEMP") for
$921,000  in  September  1993.  The  shares  are  held by a  custodian  bank not
affiliated  with the Company.  The Class G shares are not  transferable,  except
that in the event Gestion  Guychar  (Canada)  Inc.  sells its Class G shares the
Company  shall have the right to put its shares at the same  price.  The Class G
shareholders are also obligated to vote in favor of any proposed public offering
of PEMP.



                                                         8

<PAGE>



Liquidity and Capital Resources

         The Company is  currently  raising  additional  funds  through  private
placements,  and  believes  that such funds,  together  with  current  financial
resources,  are sufficient to support  operations  over the next 12 months.  The
Company  has not,  however,  adopted  any formal  budget.  No  material  capital
expenditures are contemplated at this time.

Item 7.  Financial Statements and Supplementary Data

         Financial Statements

         The following financial statements are included herein:

                  Independent Auditors' Report
                  Consolidated Balance Sheet at December 31, 1995 and 1994
                  Consolidated  Statement  of  Operations  for the  years  ended
                  December   31,  1995  and  1994   Consolidated   Statement  of
                  Shareholders' Equity Consolidated  Statement of Cash Flows for
                  the  years  ended   December   31,  1995  and  1994  Notes  to
                  Consolidated Financial Statements

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

         The  Registrant's  former  independent  accountant  Terrence  J. Dunne,
C.P.A.  ("Dunne") resigned from that capacity on December 6, 1995. The report by
Dunne on the  financial  statements  of the  Registrant  dated  June  27,  1995,
including  balance sheets as of December 31, 1994 and 1993 and the statements of
operations, cash flows and statement of stockholders' equity for the years ended
December  31,  1994,  1993 and 1992 did not  contain  an  adverse  opinion  or a
disclaimer  of opinion,  or was qualified or modified as to  uncertainty,  audit
scope or  accounting  principles.  During  the period  covered by the  financial
statements through the date of resignation of the former accountant,  there were
no  disagreements  with  the  former  accountant  on any  matter  of  accounting
principles or practices,  financial statement  disclosure,  or auditing scope or
procedure.  A letter from the former  independent  accountant for the Registrant
was  attached  as an Exhibit to a Form 8-K dated  December  6, 1995 in which the
resignation  of Mr.  Dunne was  reported.  On February  28, 1996 the  Registrant
engaged  Silverman,  Olson,  Thorvilson & Kaufmann  Ltd. as its new  independent
accountant.


                                                         9

<PAGE>



                                                     PART III

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

         The members of the Board of  Directors  of the Company  serve until the
next  annual  meeting  of  stockholders,  or until  their  successors  have been
elected.  Information as to the directors and executive  officers of the Company
as of October 16, 1996 is as follows. No annual meeting has been set.

         Riccardo Mortara           President and Director
         Dempsey K. Mork                     Chief Financial Officer, Secretary 
                                    and Director

Riccardo Mortara

         Riccardo  Mortara,  age 49, has been  President  and a Director  of the
Company  since  June  1993.  Mr.  Mortara is the  managing  director  of Societe
Financiere du Seujet,  Geneva,  Switzerland,  a company which provides portfolio
management  and financial  services to banks,  corporations,  and high net-worth
individuals primarily in Europe. Between the years of 1984 and 1991, Mr. Mortara
was a director  of a Geneva  private  portfolio  management  company in which he
still  is a  co-owner.  Mr.  Mortara  currently  serves  on the  boards  of five
financial services companies.

Dempsey K. Mork

         Dempsey K. Mork, age 54, has been the Secretary/Treasurer and a 
Director of the Company since December
1992 and was President from December 1992 to June 1993.  From 1989 to 1992 Mr.
 Mork served as president of
Whitehall Company, Ltd. a financial services and banking investment company. 
 Mr. Mork is also president and a
director of A.G. Holdings, Inc.

Item 10. Executive Compensation

         The following  table sets forth the cash  compensation of the Company's
executive officers and directors during each of the last three fiscal years. The
remuneration  described in the table does not include the cost to the Company of
benefits  furnished  to the named  executive  officers,  including  automobiles,
premiums for health  insurance and other benefits  provided to such  individuals
that are extended in connection with the conduct of the Company's business.  The
value  of such  benefits  cannot  be  precisely  determined,  but the  executive
officers named below did not receive other  compensation in excess of the lesser
of $50,000 or 10% of such officer's cash compensation.


                                                        10

<PAGE>


<TABLE>
<CAPTION>

                                            Summary Compensation Table

                       ANNUAL COMPENSATION                                        LONG TERM COMPENSATION
    Name and                                                   Other Annual        Awards       Payouts        All
    Principal Position      Year     Salary         Bonus      Compensation                                   Other
                                                                              Restricted        Options/     LTIP
                                                                              Stock ($)SARs(#)   Payouts ($)


<S>                        <C>                       <C>         <C>          <C>       <C>        <C>            <C>
 Riccardo Mortara          1995(1)                   0           60,000       0         0          0              0
 President and Director    1994(1)                   0             0              0    83,500          0          0

                           1993(1)                   0             0              0        0           0          0

 Dempsey K. Mork           1995(1)                   0           60,000       0         0          0              0
 Chief Financial Officer,  1994(1)                   0             0              0    83,500          0          0
 Secretary and Director    1993(1)                   0             0              0        0           0          0

</TABLE>

(1)  The above table does not include fringe  benefits since such amount is less
     than  $25,000  for each  person,  and does not  include  20,000  shares  of
     restricted  stock  awarded to each of the named  persons  for  services  in
     fiscal 1994. The Board of Directors  awarded  $120,000 to Messrs.  Mork and
     Mortara  for  services  in fiscal  1995 but the  Company  has not paid such
     amount nor allocated it between the two officers.

Options Granted in Fiscal 1995

     There were no options granted in fiscal 1995.

Option Exercises and Year-end Value Table

    The following  table contains  information  concerning the exercise of stock
options and employment  related  options and  information  in unexercised  stock
options held as of December 31, 1995 by the named executive officers:
<TABLE>
<CAPTION>

                              Value of Unexercised
                              In-the-Money Options
                                                            Number of Unexercised                     at
                             Shares                           Options & Warrants                December 31, 1995
                           Acquired on       Value
                            Exercise       Realized(1)   Exercisable     NonExercisable          Exercisable(2)
<S>                              <C>       <C>    <C>        <C>                   <C>            <C>          
Riccardo Mortara                -0-        $     -0-         83,500                0              $     260,938
Dempsey K. Mork                 -0-        $     -0-         83,500                0              $     260,938

</TABLE>


(1)      Market Value at time of exercise less exercise price.
(2)      The average of the closing bid price of the Common Stock at December
 28, 1995 was $5-5/8.  Value equals
         the difference between market value and exercise price.

         In fiscal 1994,  the Company  issued  20,000  shares to each of Messrs.
Mork and  Mortara  for  services  rendered.  The shares were valued at $2.20 per
share,  and the number of shares was not based upon the hours of services to the
Company.  In April 1994 the Company issued options to purchase 200,000 Shares at
$2.50 per share, exercisable until April, 2004, including 83,500 options to each
of Messrs. Mork and Mortara. The options were not issued under the 1993 Plan.

         Except as noted above,  the Company has no agreement or  understanding,
express or implied,  with any officer or director, or any other person regarding
employment  with the  Company or  compensation  for  services.  Compensation  of
officers and directors is determined by the Company's  board of directors and is
not subject to shareholder approval.

                                                        11

<PAGE>



Stock Option Plan

         The  Company has  adopted  the 1993 Stock  Option Plan (the  "Plan") to
offer  an  incentive  based  compensation  system  to  employees,  officers  and
directors and to outside  consultants  or advisors,  and, as is  frequently  the
practice,  including to the  professional  corporations  of such  consultants or
advisors.

         A total of 800,000  shares are  authorized for issuance under the Plan.
As of December 31, 1994, no options had been granted under the Plan. The Company
may increase the number of shares  authorized for issuance under the Plan or may
make other  material  modifications  to the Plan without  shareholder  approval.
However, no amendment may change the existing rights of any option holder.

         Any shares  which are subject to an award but are not used  because the
terms and  conditions  of the award are not met, or any shares which are used by
participants to pay all or part of the purchase price of any option may again be
used for awards  under the Plan.  However,  shares with respect to which a stock
appreciation right has been exercised may not again be made subject to an award.

         In the discretion of a committee  comprised of  non-employee  directors
outside consultants or advisors,  including to the professional  corporations of
such consultants or advisors (the  "Committee"),  directors,  officers,  and key
employees of the Company and its  subsidiaries  or  employees of companies  with
which the Company does business  become  participants in the Plan upon receiving
grants in the form of stock options or restricted  stock.  Pending  formation of
the Committee, the Board of Directors is acting as the Committee.

         Stock  options  may  be  granted  as  non-qualified  stock  options  or
incentive  stock  options,  but incentive  stock options may not be granted at a
price  less  than 100% of the fair  market  value of the stock as of the date of
grant (110% as to any 10% shareholder at the time of grant); non-qualified stock
options may not be granted at a price less than 85% of fair market  value of the
stock as of the date of grant.  Restricted  stock may not be  granted  under the
Plan in connection with incentive stock options.

         Stock  options  may be  exercised  during a period of time fixed by the
Committee except that no stock option may be exercised more than ten years after
the date of grant or three years after death or disability,  whichever is later.
In the discretion of the Committee, payment of the purchase price for the shares
of stock  acquired  through the  exercise of a stock option may be made in cash,
shares of the Company's Common Stock or by delivery or recourse promissory notes
or a combination  of notes,  cash and shares of the Company's  common stock or a
combination  thereof.  Incentive  stock options may only be issued to directors,
officers and employees of the Company.

         Stock  options  may be granted  under the Plan may include the right to
acquire an Accelerated Ownership  Non-Qualified Stock Option ("AO"). All options
granted to date have included the "AO" feature.  If an option grant contains the
AO feature and if a  participant  pays all or part of the purchase  price of the
option with shares of the  Company's  common  stock,  then upon  exercise of the
option the participant is granted an AO to purchase, at the fair market value as
of the date of the AO grant,  the number of shares of common  stock the  Company
equal  to the sum of the  number  of whole  shares  used by the  participant  in
payment of the purchase price and the number of whole shares,  if any,  withheld
by the Company as payment for withholding  taxes. An AO may be exercised between
the date of grant and the date of expiration, which will be the same as the date
of expiration of the option to which the AO is related.

         Stock  appreciation  rights and/or  restricted  stock may be granted in
conjunction  with, or may be unrelated to stock  options.  A stock  appreciation
right entitles a participant to receive a payment,  in cash or common stock or a
combination  thereof,  in an amount equal to the excess of the fair market value
of the stock at the time of exercise  over the fair market  value as of the date
of grant.  Stock  appreciation  rights may be exercised  during a period of time
fixed by the  Committee not to exceed ten years after the date of grant or three
years after death or disability,  whichever is later.  Restricted stock requires
the  recipient  to  continue  in service as an  officer,  director,  employee or
consultant  for a fixed period of time for  ownership of the shares to vest.  If
restricted  shares or stock  appreciation  rights  are  issued  in  tandem  with
options,  the  restricted  stock or stock  appreciation  right is canceled  upon
exercise of the option and the option will  likewise  terminate  upon vesting of
the restricted shares.


                                                        12

<PAGE>



         Directors  currently  receive  no  compensation  for  their  duties  as
directors.

         Compliance with Section 16

         Not Applicable.

Item 11. Security Ownership of Certain Beneficial Owners and Management

         Principal  Shareholders.  The  following  table sets forth  information
relating  to  the  beneficial  ownership  of  Company  securities  by  executive
officers,  directors and those persons  beneficially holding more than 5% of the
Company capital stock,  based on 1,404,423  common shares  outstanding and 1,000
Class A Preferred Shares outstanding at September 20, 1996.
<TABLE>
<CAPTION>


                                            Name and Address                      Amount and Nature
                                              of Beneficial                         of Beneficial                Percent
  Title of Class                                Ownership                             Ownership                 of Class

<S>                                      <C>                                         <C>                          <C>  
Common Stock                             Dempsey K. Mork(2)                           204,500                      13.7%
                                         74900 Highway 111
                                         Suite 121
                                         Indian Wells, CA 92210

                                         Riccardo Mortara(3)                          129,415                       8.7%
                                         14 Quai du Seujet
                                         CH-1201 Geneva
                                         Switzerland

                                         Hermes Imperial Investment, L.P.             400,000                      28.9%
                                         De Ruyterkade 32
                                         Curacao

                                         Pemp Group, Inc.                             400,000                      28.9%
                                         1010 Rue de la Gauchetiere Ouest
                                         5th Floor
                                         Montreal, Quebec
                                         Canada H3B2N2

Series A
  Preferred
  Stock(1)                               Dempsey K. Mork                                  500                      50.0%
                                         74900 Highway 111
                                         Suite 121
                                         Indian Wells, CA 92210


                                         Riccardo Mortara                                 500                      50.0%
                                         14 Quai du Seujet
                                         CH-1201 Geneva
                                         Switzerland

All directors and officers and
as a Group (2 persons)                                                                  1,000                       100%

Common Stock                                                                          333,995                      21.3%
Series A Preferred Stock                                                                1,000                       100%
</TABLE>

(1)      The holders of the  beneficial  ownership  of Series A Preferred  Stock
         have  the  right  to  collectively  elect  two-thirds  of the  Board of
         Directors.

                                                        13

<PAGE>



(2)      Includes options to purchase 83,500 shares, as well as shares held in
 the name of a corporation controlled
         by Mr. Mortara
(3)      Includes 10,000 Shares held by the spouse of Mr. Mortara of which Mr.
Mortara disclaims beneficial
         ownership, and options to purchase 83,500 Shares.

Item 12. Certain Relationships and Related Transactions

         Certain  conflicts  of  interest  now exist and will  continue to exist
between the Company and its officers and directors due to the fact that each has
other business interests to which he devotes his primary attention. Each officer
and director may continue to do so notwithstanding the fact that management time
should be  devoted to the  business  of the  Company.  No  procedures  have been
adopted to resolve such conflicts of interest.

         On August 22, 1995 Kevin and Joy Miller loaned $108,000 to the Company.
The loan bears  interest  at the rate of 15% per annum and is payable in August,
1996.

         On November 4, 1994 Resource Bank & Trust loaned $35,000 to the Company
 .  This note is due November
1999 and interest is payable monthly at the rate of 10.5%

                  The  Company  issued  20,000,  20,000,  and  15,000  shares to
Dempsey K. Mork,  Riccardo Mortara,  and Jehu Hand in December 1994 for services
rendered valued at $2.20 per share as officers of the Company.

                                                        14

<PAGE>



                                                      PART IV

Item 13. Exhibits


                                  
    Exhibit No.            Document Description    

      3.                   Articles of Incorporation and Bylaws

           3.1             Articles of Incorporation, (1)
           3.2             Bylaws (1)
           3.3             Amendment to Articles of Incorporation changing name
                            to Development Bancorp, Ltd.(1)
           3.4             Amendment to Articles of Incorporation authorizing 
                           Series A
                           Preferred Stock. (1)
           3.5             Certificate of Designation for Series B Convertible
                           Preferred Stock(2)

21.   Subsidiaries.  The Company's subsidiary, Societe Financiere de
       Distribution, Geneva, SA is incorporated in
Switzerland.  The subsidiary Development Corp. Services Limited is incorporated 
   in Ireland; KSM Holding
Corporation is incorporated in Minnesota; and Global Financial Group, a 
  subsidiary of KSM Holding Corporation,
is a Colorado corporation.

--------------------------------
(1)   Incorporated by reference to the Company's registration statement on Form
    10-SB, file no. 0-22934.
(2)   Filed herewith.

                                                        15

<PAGE>




                                                    SIGNATURES


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


Dated:    January 9, 1997                              DEVELOPMENT BANCORP, LTD.



                                                        By:/s/ Dempsey K. Mork
                                                       Dempsey K. Mork
                                                       Secretary/Treasurer

          Pursuant to the  requirements of 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 indicated on January 9, 1997.



By:/s/ Riccardo Mortara
   Riccardo Mortara
   President (principal executive officer) and Director



By:/s/ Dempsey K. Mork
   Dempsey K. Mork
   Secretary/Treasurer (principal accounting and financial officer)
   and Director


                                                        16

<PAGE>




                                           INDEPENDENT AUDITORS' REPORT



Board of Directors and Shareholders
Development Bancorp, Ltd.
Indian Wells, California


We have  audited the  accompanying  consolidated  balance  sheet of  Development
Bancorp,  Ltd. as of December 31, 1995, and the related consolidated  statements
of  operations,  shareholders'  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  financial  statements  of  Development  Bancorp,  Ltd. as of
December  31, 1994 were audited by another  auditor  whose report dated June 27,
1995, expressed on unqualified opinion on those statements.

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 consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Development Bancorp,
Ltd. as of December 31, 1995, and the results of their operations and their cash
flows for the year then ended in conformity with generally  accepted  accounting
principles.




SILVERMAN OLSON THORVILSON & KAUFMANN LTD
CERTIFIED PUBLIC ACCOUNTANTS
Minneapolis, Minnesota

September 6, 1996, except Notes 3 and 18 which are dated November 1, 1996




















                                           INDEPENDENT AUDITOR'S REPORT

                                                        17

<PAGE>






Board of Directors and Shareholders
Development Bancorp, Ltd.
Indian Wells, California


We have audited the consolidated balance sheet of Development  Bancorp,  Ltd. as
of December 31, 1994,  and the related  consolidated  statements of  operations,
shareholders'  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.

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 consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Development Bancorp,
Ltd. as of December 31, 1994, and the results of their operations and their cash
flows for the year then ended in conformity with generally  accepted  accounting
principles.




TERRENCE J. DUNNE
CERTIFIED PUBLIC ACCOUNTANT
Spokane, Washington

June 27, 1995














                                                        18

<PAGE>


<TABLE>
<CAPTION>

                                                 DEVELOPMENT BANCORP, LTD.
                                                CONSOLIDATED BALANCE SHEET
                                                December 31, 1995 and 1994


           ASSETS                                                                     1995                 1994
                                                                                 --------------       ---------
Current assets:
<S>                                                                              <C>                  <C>       
    Cash and equivalents                                                         $1,518,327           $1,725,446
    Commissions receivable                                                            244,874                    -
    Other receivables                                                                   92,728                 7,297
    Marketable securities (Note 2)                                                 1,572,608               485,000
    Foreign exchange contracts                                                              -              295,357
    Other current assets                                                              122,288                11,000
                                                                                 ------------         -------------
               Total current assets                                                3,550,825            2,524,100

Investments (Note 3)                                                                  888,381           1,784,841
Intangible assets, net (Note 4)                                                       278,935                    -
Property and equipment, net (Note 5)                                                  139,319                    -
                                                                                 ------------         ------------

               Total assets                                                      $4,857,460           $4,308,941
                                                                                 ==========           ==========

           LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Note payable - bank (Note 6)                                                 $     50,000         $         -
    Notes payable - related parties (Note 7)                                          304,875                    -
    Accounts payable                                                                  482,467                10,692
    Accrued payroll and commissions                                                   253,587              121,000
    Other accrued liabilities (Note 13)                                               251,433                    -
    Foreign exchange contracts                                                             -               295,357
    Current portion of long-term debt (Note 8)                                          26,881                   -
                                                                                 -------------        ------------
           Total current liabilities                                               1,369,243               427,049

Long-term debt (Note 8)                                                                   6,770                  -
Long-term debt - related party (Note 9)                                                 35,000                   -
                                                                                 -------------        ------------
               Total liabilities                                                   1,411,013               427,049
                                                                                 -----------          ------------

Commitments and contingencies (Note 10)                                                     -                    -

Shareholders' equity:
    Class B convertible preferred stock, no par value; 110,000
        shares designated, issued and outstanding (Note 11)                           165,000                    -
    Common stock, no par value; 50,000,000 shares
        authorized, 1,034,923 and 1,089,923 shares
        issued and outstanding, respectively                                       3,673,496            4,082,496
    Accumulated deficit                                                           (   795,771)         (   345,529)
    Translation adjustment                                                            403,722              144,925
                                                                                 ------------         ------------
               Total shareholders' equity                                          3,446,447            3,881,892
                                                                                 -----------          -----------

               Total liabilities and shareholders' equity                        $4,857,460           $4,308,941
                                                                                 ==========           ==========
</TABLE>

                                         The accompanying  notes are an integral
                                             part of the financial statements.

                                                            19

<PAGE>



<TABLE>
<CAPTION>

                                                 DEVELOPMENT BANCORP, LTD.
                                           CONSOLIDATED STATEMENT OF OPERATIONS
                                      For the Years Ended December 31, 1995 and 1994



                                                                                      1995                 1994
                                                                                 --------------       ---------
Revenues:
<S>                                                                              <C>                  <C>         
    Commissions and consulting fees                                              $   606,482          $     42,106
    Consulting fees - related parties (Note 12)                                         50,000                   -
                                                                                 -------------        ------------

               Total revenues                                                         656,482                42,106

General and administrative expenses                                                1,186,400               193,456
                                                                                 -----------          ------------

               Loss from operations                                               (   529,918)         (   151,350)
                                                                                 ------------         ------------

Other income (expense):
    Gain on sale of marketable securities                                             582,849                     116
    Unrealized gain (loss) on marketable
        securities portfolio (Note 2)                                                   16,805         (     46,063)
    Interest income                                                                     43,609               16,490
    Interest expense                                                              (     29,490)                  -
    Legal settlement (Note 13)                                                    (   210,500)                   -
    Foreign currency transaction gain (loss) (Note 14)                            (   323,597)               53,326
    Miscellaneous                                                                           -                     142
                                                                                 -----------------    ---------------

               Total other income (expense)                                       (     79,676)              24,011
                                                                                 -------------        -------------

               Net loss                                                          $(  450,242)         $(  127,339)
                                                                                 ===========          ===========

Per share information:
    Net loss per share                                                           $(          .41)     $(          .13)
                                                                                 ===============      ===============

    Weighted average number
        of common shares outstanding                                               1,095,606               984,090
                                                                                 ===========          ============


</TABLE>









                                         The accompanying  notes are an integral
                                             part of the financial statements.

                                                            20

<PAGE>



<TABLE>
<CAPTION>

                                                     DEVELOPMENT BANCORP, LTD.
                                                 STATEMENT OF SHAREHOLDERS' EQUITY
                                           For the Years Ended December 31, 1995 and 1994



                                                                                                                           Total
                                  Preferred Stock           Common Stock          Stock      Accumulated  Translation  Shareholders'


                                Shares       Amount      Shares      Amount   Subscriptions    Deficit     Adjustment      Equity



Balances at
<S>       <C> <C>                          <C>            <C>      <C>        <C>            <C>          <C>          <C>         
 December 31, 1993                    --   $      --      700,093  $3,186,924 $      31,572  $ (218,190)  $    31,958  $  3,032,264
Issuance of common stock
  under subscription                  --          --      229,830     31,572       (31,572)           --           --            --
Issuance of common stock
  for cash                            --          --      160,000    864,000             --           --           --       864,000
Equity adjustment from
  foreign currency translation        --           --         --         --             --           --        112,967      112,967
Net loss                              --          --           --         --             --    (127,339)           --     (127,339)



Balances at
  December 31, 1994                   --          --    1,089,923  4,082,496             --    (345,529)      144,925     3,881,892
Issuance of common
  stock for cash                      --          --       50,000    270,000             --           --           --       270,000
Issuance of common
  stock for services                            --         45,000     121,000        --           --           --     121,000
Issuance of preferred
  stock in acquisition
  of KSM Holding Corp-
  oration (Notes 17 and 18)             110,000     165,000      --         --             --           --           --      165,000
Redemption of common
  stock in sale of
  investments (note 3)               --           --(150,000)      (800,000)        --       --       --                   (800,000)
Equity adjustment from
  foreign currency
  translation                         --          --           --         --             --           --      258,797       258,797
Net loss                              --          --           --         --             --    (450,242)           --     (450,242)


Balances at
  December 31, 1995              110,000   $ 165,000    1,034,923  $3,673,496 $          --  $ (795,771)  $   403,722  $  3,446,447


</TABLE>


















                                             The accompanying   notes   are  an
                                                  integral part of the financial
                                                  statements.

                                                                 21

<PAGE>

<TABLE>
<CAPTION>


DEVELOPMENT BANCORP, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS

For the Years Ended December 31, 1995 and 1994

                                                                                      1995                 1994
                                                                                 --------------       ---------
Cash flows from operating activities:
<S>                                                                              <C>                   <C>     
    Net loss                                                                     $(  450,242)           $(  127,339)
    Adjustments to reconcile net loss to net
        cash provided by (used in) operating activities:
           Depreciation and amortization                                                22,064                 2,986
           Common stock issued for services                                           121,000                    -
           Non-cash gain on sale of investment                                    (       9,572)                 -
           Unrealized (gain) loss on marketable securities                        (     62,868)              46,063
           Foreign currency transaction loss                                          106,032                  6,260
        (Increase) decrease in assets:
           Commissions receivable                                                 (   200,067)                   -
           Other receivables                                                      (     32,195)        (       3,305)
           Marketable securities                                                  (   632,107)                   -
           Other current assets                                                   (     59,305)                   -
           Stock subscription receivable                                                    -              900,000
        Increase (decrease) in liabilities:
           Accounts payable                                                           327,972          (       9,578)
           Accrued liabilities                                                        350,011              121,000
                                                                                 ------------         ------------

               Net cash provided by (used in) operating activities                (   519,277)             936,087
                                                                                 ------------         ------------

Cash flows from investing activities:
    Purchase of investments                                                                 -          (1,161,181)
    Increase in intangible assets                                                 (     52,482)                  -
    Purchase of property and equipment                                            (     41,962)                  -
                                                                                 -------------        ------------

               Net cash used in investing activities                              (     94,444)        (1,161,181)
                                                                                 -------------        -----------

Cash flows from financing activities:
    Repayment of notes payable - related parties                                  (   112,094)                   -
    Repayment of long-term debt                                                   (       5,101)                 -
    Repayment of long-term debt - related party                                   (       5,000)                 -
    Proceeds from issuance of common stock                                            270,000              864,000
                                                                                 ------------         ------------

               Net cash provided by financing activities                              147,805              864,000
                                                                                 ------------         ------------

Effect of exchange rate changes on cash                                               258,797              112,967
                                                                                 ------------         ------------
Increase (decrease) in cash and equivalents                                       (   207,119)             751,873
Cash and equivalents - beginning of year                                           1,725,446               973,573
                                                                                 -----------          ------------
Cash and equivalents - end of year                                               $1,518,327           $1,725,446
                                                                                 ==========           ==========
</TABLE>

                                        The accompanying  notes are an integral
                                             part of the financial statements.

                                                            22

<PAGE>



<TABLE>
<CAPTION>
                                                    
                                                 DEVELOPMENT BANCORP, LTD.
                                           CONSOLIDATED STATEMENT OF CASH FLOWS
                                      For the Years Ended December 31, 1995 and 1994


                                                                                      1995                 1994
                                                                                 --------------       ---------

<S>                                                                             <C>                  <C>  
    Cash paid during the year for interest                                       $     11,057         $        -
                                                                                 ============         ==========
</TABLE>

Supplemental  schedule of non-cash  investing and financing  activities:  During
    1995:

        The  Company  redeemed  150,000  shares of its  common  stock  valued at
        $800,000 in the sale of oil and gas investments valued at $790,428 (Note
        3).

        In connection  with the  acquisition  of KSM, the Company issued 110,000
        shares of  preferred  stock  valued at $165,000 in exchange for assuming
        various liabilities and various non-cash assets (Note 17).

    During 1994:

        The Company  incurred  $295,357 of debt in exchange for foreign exchange
contracts.























                                          Theaccompanying  notes are an integral
                                             part of the financial statements.

                                                            23

<PAGE>




                                                 DEVELOPMENT BANCORP, LTD.
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 For the Years Ended December 31, 1995 and 1994
Note 1:           Organization and Significant Accounting Policies

                  Nature of Organization:

                      Development Bancorp, Ltd. ("Development" or "the Company")
                      is a holding company  organized in the state of Washington
                      for the  purpose  of  providing  international  investment
                      banking services through its majority-owned  subsidiaries:
                      Development   Corp  Services  Limited  (Ireland  -  99.93%
                      owned),  SFD Societe  Financere De Distribution  Geneve SA
                      (Switzerland - 99.3% owned),  and KSM Holding  Corporation
                      ("KSM")  (United States - 99.93% owned).  KSM owns 100% of
                      Global Financial Group ("Global") (United States).

                  Basis of Presentation:

                      For the year ended  December  31, 1995,  the  consolidated
                      financial  statements  include the accounts of Development
                      Bancorp,   Ltd.   and   its   wholly-owned   subsidiaries,
                      Development Corp Services Limited,  SFD Societe Financiere
                      De Distribution Geneve SA, and KSM Holding Corporation for
                      the  period  from  acquisition   (November  14,  1995)  to
                      December 31, 1995 (Note 17).  For the year ended  December
                      31, 1994, the consolidated  financial  statements  include
                      the  accounts  of  Development   Bancorp,   Ltd.  and  its
                      wholly-owned   subsidiaries,   Development  Corp  Services
                      Limited and SFD Societe Financiere De Distribution  Geneve
                      SA.

                      All  references  to  "the  Company"  in  these   financial
                      statements   relate  to  the  consolidated   entity.   All
                      significant  intercompany  accounts and  transactions  are
                      eliminated in consolidation.

                  Cash and Equivalents:

                      Cash  equivalents  include all highly  liquid  investments
                      purchased with a maturity of three months or less.

                  Marketable Securities:

                      Marketable  securities  consist of various equity and debt
                      securities  and are stated at current  market  value.  All
                      equity securities are considered  "trading" securities and
                      all debt  securities are  considered  "available for sale"
                      under the provisions of Statement of Financial  Accounting
                      Standards No. 115,  Accounting and Certain  Investments in
                      Debt  and  Equity  Securities  (SFAS  115).   Accordingly,
                      unrealized  gains  and  losses on  equity  securities  are
                      reflected in operations,  and unrealized  gains and losses
                      on debt securities are credited or charged to "translation
                      adjustment" on the accompanying balance sheet.


                                                        24

<PAGE>



                      Market value is  determined  by the quoted market price as
                      of the balance  sheet date.  Net realized  gains or losses
                      are determined on the specific identification cost method.
                                                 DEVELOPMENT BANCORP, LTD.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                For the Years Ended December 31, 1995 and 1994

Note 1:           Organization and Significant Accounting Policies (Continued)

                  Foreign Exchange Contracts:
                      Foreign  exchange  contracts  are entered  into as a hedge
                      against foreign currency rate fluctuations.  The contracts
                      are initially recorded at cost and thereafter  adjusted to
                      market value at year-end.  Unrealized  gains or losses are
                      credited  or charged to  "translation  adjustment"  on the
                      accompanying balance sheet.

                  Investments:
                      Investments  consist of various equity ownership interests
                      in    privately-held    corporations   or    partnerships.
                      Investments  are stated at cost,  as adjusted  for foreign
                      currency translation gains or losses, if any.

                  Intangible Assets:
                      Intangible  assets  consist of the costs of  broker/dealer
                      network development and related customer lists acquired in
                      the acquisition of KSM Holding  Corporation.  These assets
                      are being  amortized  on a  straight-line  basis over five
                      years.

                  Property and Equipment:
                      Property and equipment is stated at cost.  Depreciation is
                      computed using  straight-line and accelerated methods over
                      the  estimated  five to  seven  year  useful  lives of the
                      assets.

                      Expenditures    for   additions   and   improvements   are
                      capitalized, while repairs and maintenance are expensed as
                      incurred.

                  Income Taxes:
                      Income   taxes  are   provided  for  the  tax  effects  of
                      transactions  reported  in the  financial  statements  and
                      consist of taxes  currently  due plus deferred  taxes,  if
                      any.  Deferred  taxes  represent  the net tax  effects  of
                      temporary  differences  between  the  carrying  amounts of
                      assets and  liabilities for financial  reporting  purposes
                      and the amounts used for income tax purposes.

                  Net Loss Per Share:

                      Loss per share is calculated based on the weighted average
                      number  of  common  shares  outstanding  as the  effect of
                      including common stock equivalents would be anti-dilutive.

                  Financial Instruments:

                      The  carrying  amounts of  financial  instruments  such as
                      cash,   commissions  and  other  receivables,   marketable
                      securities,  and short-term liabilities approximated their
                      fair value based upon the  short-term  maturities of these
                      instruments.





                                                        25

<PAGE>



                                                 DEVELOPMENT BANCORP, LTD.
                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  For the Years Ended December 31, 1995 and 1994

Note 1:           Organization and Significant Accounting Policies (Continued)

                  Concentrations of Credit Risk:

                      Financial instruments that potentially subject the Company
                      to  concentration  of credit risk consist  principally  of
                      cash,  commissions  receivable,   and  the  Company's  and
                      customers' margin transactions.

                      Cash

                         The Company  maintains  cash in bank  deposit  accounts
                         which, at times, may exceed federally insured limits or
                         are in foreign banks.  The Company  believes it has its
                         cash  deposits at high quality  financial  institutions
                         and that no significant credit risk exists with respect
                         to these deposits.

                      Commissions Receivable

                         Commissions  receivable  arise from the introduction of
                         customers'   security   trades  to  the  Company's  two
                         carrying  brokers  who collect and remit to the Company
                         their allocable share of the  commissions  earned.  The
                         Company  believes it's carrying brokers are financially
                         stable  entities and no significant  credit risk exists
                         with respect to these receivables.

                      Company's Margin Transactions

                         In  the  normal   course  of  business,   Global  sells
                         securities not yet purchased  (short sales) for its own
                         account.  The  establishment of short positions exposes
                         Global to  off-balance  sheet  market risk in the event
                         prices increase,  as Global may be obligated to acquire
                         the securities at prevailing market prices.

                      Customers' Margin Transactions

                         The  activities of Company  customers are transacted on
                         either a cash or margin basis through the facilities of
                         its  clearing  broker.  In  margin  transactions,   the
                         clearing   broker  extends  credit  to  the  customers,
                         subject to various regulatory and margin  requirements,
                         collateralized by cash and securities in the customer's
                         account.  In  connection  with  these  activities,  the
                         clearing    broker   executes   and   clears   customer
                         transactions  involving the sale of securities  not yet
                         purchased ("short sales").

                         These   transactions   may   expose   the   Company  to
                         significant  off-balance sheet risk in the event margin
                         requirements  are not  sufficient to fully cover losses
                         which  the  customers  may  incur.  In  the  event  the
                         customers  fail to  satisfy  their  obligations  to the
                         clearing  broker,   the  Company  may  be  required  to
                         compensate the clearing  broker for losses  incurred on
                         behalf of its customers.

                                                        26

<PAGE>



                      DEVELOPMENT BANCORP, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1995 and 1994

Note 1:           Organization and Significant Accounting Policies (Continued)

                  Concentrations of Credit Risk (continued):

                      Customers' Margin Transactions (continued)

                         The  Company,  through its clearing  brokers,  seeks to
                         control  the  risk   associated   with  its  customers'
                         activities  by requiring  customers to maintain  margin
                         collateral in compliance  with various  regulatory  and
                         internal  guidelines.   The  clearing  brokers  monitor
                         required  margin  levels  daily and,  pursuant  to such
                         guidelines, requires the customer to deposit additional
                         collateral, or reduce positions, when necessary.

                  Newly-Issued Accounting Standards:

                      In March 1995, Statement of Financial Accounting Standards
 No. 121,
                      "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived
                      Assets to be Disposed Of" ("SFAS No. 121") was issued. 
 The Company will
                      adopt SFAS No. 121 in the first quarter of 1996.

                      This statement requires that long-lived assets and certain
                      intangibles be reviewed for impairment  whenever events or
                      changes in circumstances  indicate that the carrying value
                      of an  asset  may not be  recoverable.  In  adopting  this
                      standard,  the Company  will be  required to estimate  the
                      future  cash flows  expected to result from the use of the
                      asset  and  its  eventual  disposition.  If the sum of the
                      expected  future  cash  flows  (undiscounted  and  without
                      interest  charges) is less than the carrying amount of the
                      asset, an impairment loss would be recognized.

                      Management believes that any impact of adopting SFAS No.
                        121 will not be
                      material.

                  Use of Estimates:

                      The preparation of financial statements in conformity with
                      generally   accepted   accounting    principles   requires
                      management to make certain estimates and assumptions about
                      the  future  outcome  of  current  transactions  which may
                      affect the reporting and disclosure of these transactions.
                      Accordingly,   actual  results  could  differ  from  those
                      estimates  used  in the  preparation  of  these  financial
                      statements.

                  Reclassifications:

                      Certain  reclassifications  have  been  made  in the  1994
                      financial   statements  in  order  to  conform  with  1995
                      financial statement presentation.  These reclassifications
                      have no  effect on  accumulated  deficit  or net loss,  as
                      originally reported.

                                                        27

<PAGE>



DEVELOPMENT BANCORP, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1995 and 1994

Note 2:           Marketable Securities

                  Marketable  securities  consisted of the following at December
31:

<TABLE>
<CAPTION>

                   <S>                                                           <C>               <C>  
                  Estimated
                  1995                                                                                Market
                                                                                      Cost             Value
                     Equity securities                                           $1,155,803        $1,170,108
                     Debt securities                                                  400,000           402,500
                                                                                 ------------      ------------
                                                                                   $1,555,803      $1,572,608

                                    Estimated
                  1994                                                                                Market
                                                                                      Cost             Value
                     Equity securities                                           $   130,189       $     75,000
                     Debt securities                                                  400,874           410,000
                                                                                 ------------      ------------
                                                                                  $   531,063     $   485,000
                                                                                    ===========     ===========
</TABLE>

                  Unrealized  gain (loss)  included in marketable  securities at
                  December  31,  1995  and  1994  was  $16,805  and   $(46,063),
                  respectively.

                  At December 31, 1995,  the maturities of debt  securities,  at
                  estimated market value,  which are classified as available for
                  sale are as follows:

                           Within one year                           $   201,250
                           One - five years                              201,250
                                                                    ------------
                                                                    $   402,500




Note 3:           Investments

                  Investments consists of the following at December 31:



                                                            1995            1994
                                                       -------------  ---------
                                           
                  120,000 shares of Gestion Pemp, Inc. $264,312      $   295,838
                  Investment in Gestion Pemp Network    624,069          698,575
                  Investment in oil and gas leaseholds       -           790,428
                                                          
                      Total other investments       $   888,381       $1,784,841
                                                    ===========       ==========

                  The  Company  owns  120,000  shares,  or  approximately  a  6%
                  interest  in  Gestion  Pemp,  Inc.,  a  Canadian  corporation.
                  Additionally,  the Company  owns an  interest in Gestion  Pemp
                  Network,  a  multiple-level  marketing system of Pemp, Inc., a
                  related Canadian corporation. The decline in value experienced
                  in 1995  was  due to  foreign  exchange  rate  declines  which
                  management considers to be temporary.

                                                        28

<PAGE>



                  During  1995  and  1994,  the  Company  received  $35,017  and
                  $42,106, respectively, in commissions from this investment.



                                                        29

<PAGE>



                                                 DEVELOPMENT BANCORP, LTD.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 For the Years Ended December 31, 1995 and 1994


Note 3:           Investments (Continued)

                  In 1995,  the  Company  sold its  interest  in the oil and gas
                  leaseholds  for a  redemption  of  150,000  shares of  Company
                  common stock valued at $800,000.

Note 4:           Intangible Assets

                  Intangible   assets  arose  in  the  acquisition  of  KSM  and
                  consisted of the following at December 31, 1995 (Note 17):
<TABLE>
<CAPTION>


                  <S>                                                <C>       
                  Broker/dealer network development                   $  233,665
                  Customer lists                                          50,000
                                                                    ------------

                                                                        283,665
                  Less accumulated amortization                    (      4,730)
                                                                   -------------

                  Intangible assets, net                              $  278,935
                                                                      ==========

</TABLE>

                  Amortization expense was $4,730 in 1995.

                  On November 1, 1996, the Company  rescinded its acquisition of
                  KSM (Note 18) and accordingly the remaining  intangible assets
                  will be written-off as part of the recision.

Note 5:           Property and Equipment

                  Property and equipment  consisted of the following at December
31, 1995:

                  Furniture and equipment                             $  178,710
                  Leasehold improvements                                  13,176
                                                                    ------------
                                                                         191,886

                  Less accumulated depreciation                     (    52,567)
                                                                    ------------

                  Property and equipment, net                        $  139,319
                                                                      ==========

                  Depreciation expense aggregated $17,334 in 1995.

Note 6:           Note Payable - Bank

                  In 1995,  the  Company  had a  $100,000  bank  line of  credit
                  available,  of which $50,000 was  outstanding  at December 31,
                  1995.  Interest  accrues at a variable rate (10.0% at December
                  31,  1995).  The line of credit  expires  in March 1996 and is
                  personally  guaranteed  by  an   officer/shareholder   of  the
                  Company.



                                                        30

<PAGE>



                                                 DEVELOPMENT BANCORP, LTD.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  For the Years Ended December 31, 1995 and 1994


Note 7:           Note Payable - Related Parties

                  At December 31, 1995, the Company had notes payable to related
                  parties as follows:

                  Note payable - officer/shareholder bearing
                  interest at 15%.  The note is unsecured and
                  matures August 1996.                                $  108,000

                  Note  payable -  affiliated  company  related  through  common
                  control,  bearing  interest at 10%.  The note was created when
                  the  affiliate  transferred  ownership  of certain  marketable
                  securities  to the  Company  and is  repaid  by  returning  an
                  equivalent  number of the same  marketable  securities  to the
                  affiliated  company upon demand. As a result, the note payable
                  principal  fluctuates with the market price of the securities.
                  The note is personally guaranteed
                  by an officer/shareholder of the Company.              196,875
                                                                     -----------

                                                                      $  304,875

Note 8:           Long-Term Debt
<TABLE>
<CAPTION>

                  Long-term  debt  consisted  of the  following  at December 31,
1995:

                  <S>                                                            <C>    
                  Note payable - investment broker bearing
                  interest at 9%.  The note matures in January
                  1997 and is secured by furniture and equipment.                $    12,091

                  Note payable - equipment bearing interest at
                  13.5%.  The note matures in March 1997 and
                  is secured by equipment.                                             21,560
                                                                                       33,651
                  Less current portion                                            (    26,881)
                                                                                 ------------

                  Long-term debt                                                 $      6,770
                                                                                 ============
</TABLE>

Note 9:           Long-Term Debt - Related Party

                  At December 31,  1995,  the Company had a $35,000 note payable
                  to an  officer of the  Company.  The note  bears  interest  at
                  10.5%,  payable  monthly,  with principal due upon maturity in
                  November 1999. The note is unsecured.



                                                        31

<PAGE>



DEVELOPMENT BANCORP, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1995 and 1994

Note 10:          Commitments and Contingencies

                  Development Stock Option Plan:

                      At December  31, 1995,  an aggregate of 600,000  shares of
                      common  stock were  reserved for  issuance  upon  exercise
                      under the  Company's  1993 stock option plan.  Pursuant to
                      the plan,  the board of  directors  may grant  options  to
                      employees,   officers,   directors   or  others  at  their
                      discretion.  As of December 31, 1995,  no options had been
                      granted under the plan.

                  Other Development Stock Options:

                      As of December 31, 1995, an aggregate of 200,000 shares of
                      common stock were  reserved for issuance  upon exercise of
                      non-qualified  stock  options  outstanding  to purchase an
                      aggregate  of  200,000  shares of  common  stock (of which
                      167,000 were to Company  officers) at $2.50 per share. The
                      options  expire  in April  2004.  These  options  were not
                      issued under the Company's 1993 stock option plan.

                  KSM Convertible/Redeemable Preferred Stock:

                      KSM  has  2,400  shares  of  10%  cumulative,  convertible
                      preferred   stock   outstanding   at  December  31,  1995,
                      representing   a  .07%   interest   in  this   subsidiary.
                      Commencing  in  July  1995,  preferred   stockholders  are
                      entitled to cumulative  cash dividends of $10.00 per share
                      payable  quarterly plus securities  dividends equal to 25%
                      of all  securities  received by the Company in  connection
                      with investment  banking services payable  annually.  Each
                      share of preferred stock is  convertible,  at the holder's
                      option,  into 100 shares of KSM common stock.  The Company
                      may redeem  the  preferred  stock at anytime  for $100 per
                      share plus accrued dividends.

                  Operating Leases:

                      The  Company  leases its  corporate  offices  and  certain
                      equipment under noncancellable operating leases.

                      Future minimum lease payments are as follows for the years
                      ended December 31:
<TABLE>
<CAPTION>
                           <S>                                                   <C>    
                           1996                                                  $     70,910
                           1997                                                         57,702
                           1998                                                         41,258
                           1999                                                         21,578
                           2000                                                         12,330
                                                                                 -------------

                                                                                 $   203,778
</TABLE>

                  Rent expense in 1995 aggregated $58,837.

                                                            32

<PAGE>



DEVELOPMENT BANCORP, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1995 and 1994

Note 10:          Commitments and Contingencies (Continued)

                  KSM 401(k) Retirement Plan:

                      KSM has a 401(k) retirement plan available for the benefit
                      of its employees.  All employees who have completed  1,000
                      hours  of  service  to  the   Company   are   eligible  to
                      participate.   Company   contributions  are  made  at  the
                      discretion  of the board of directors.  Participants  vest
                      immediately in their  contributions  and over a three year
                      period for any  Company  contributions.  During  1995,  no
                      Company contributions were made to the plan.

                  KSM Employment Agreement:

                      The Company has a five-year  employment  agreement  with a
                      KSM officer.  Pursuant to the  employment  agreement,  the
                      officer receives a base salary plus a variable  percentage
                      of KSM monthly  gross sales.  In addition,  the officer is
                      entitled to a bonus payable in registered  common stock of
                      Development  Bancorp,  Ltd.,  equal  to  one-third  on any
                      non-accountable  expense allowance received by the Company
                      and 25% of all  underwriter's  shares or warrants received
                      by the Company in connection  with any  underwriting.  The
                      agreement provides for a five-year covenant not to compete
                      and  six  month  severance  package  if  terminated.   The
                      agreement  automatically renews for a one-year term unless
                      notice is given by either the  Company or the  employee 90
                      days before the end of the agreement.

                  Global Restriction Agreement:

                      Global has entered into a "Restriction Agreement" with the
                      National  Association of Securities  Dealers,  Inc. (NASD)
                      which  provides,  among  other  things,  that  Global must
                      obtain  NASD  approval to expand its  business  related to
                      volume  (personnel,  number  of  trades,  market  value of
                      securities traded) and services provided.

Note 11:          Preferred Stock

                  The Company has authorized an aggregate of 1,000,000 shares of
                  no par preferred stock as follows:

                  Class A Preferred Stock:

                      The Company has  designated  1,000  shares of no par value
                      Class A  preferred  stock.  Class A  shareholders  are not
                      entitled to receive  dividends.  At December  31, 1995 and
                      1994,  there  were no  shares of Class A  preferred  stock
                      issued or outstanding.



                                                        33

<PAGE>



DEVELOPMENT BANCORP, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1995 and 1994

Note 11:          Preferred Stock (Continued)

                  Class B Convertible Preferred Stock:

                      The Company has designated  110,000 shares of no par value
                      convertible Class B preferred stock.  Class B shareholders
                      are entitled to receive  dividends in a manner  similar to
                      common   shareholders   when  declared  by  the  board  of
                      directors.  Each  Class B share  is  convertible  into one
                      share of common stock,  at the option of the  shareholder,
                      provided  that the market price for the  Company's  common
                      stock is at or above $4.50 per share. In 1995, the Company
                      issued  110,000  shares of Class B preferred  stock in the
                      acquisition of KSM.

Note 12:          Related Party Transactions

                  Consulting Services:

                      During 1995, the Company provided  consulting  services to
                      an affiliated  company through common control.  Total fees
                      received aggregated $50,000 and are included in consulting
                      fees - related parties.

Note 13:          Legal Settlement

                  In 1995,  KSM was a  respondent,  along  with  another  former
                  broker/dealer,  owned  by  an  officer/director  of  KSM,  and
                  various individuals,  in two separate legal matters before the
                  NASD. The complaints  sought  reimbursement of trading losses,
                  aggregating  approximately  $126,000 plus  interest,  fees and
                  punitive damages.

                  Subsequently in 1996, the NASD  arbitration  panel awarded the
                  claimants  approximately  $210,500 in full settlement of their
                  complaints.  Accordingly,  the Company has recorded the entire
                  settlement in "other accrued  liabilities" in the accompanying
                  balance sheet.

Note 14:          Foreign Currency Transaction Gain (Loss)

                  Foreign  currency  transaction  gains or losses  result from a
                  change in exchange  rates between the  functional  currency of
                  the Company or its  subsidiaries  and the  currency in which a
                  foreign transaction is denominated.  These gains or losses are
                  comprised of actual  currency  gains or losses  realized  upon
                  settlement  of  foreign  currency  transactions  and  expected
                  (unrealized)  currency  gains or losses on  unsettled  foreign
                  currency transactions.

                  For 1995 and  1994,  the  foreign  currency  transaction  gain
                  (loss) was $(323,597) and $53,326, respectively.




                                                        34

<PAGE>



                                                 DEVELOPMENT BANCORP, LTD.
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 For the Years Ended December 31, 1995 and 1994



Note 15:          Income Taxes

                  The  effective  tax  rate  varies  from  the  maximum  federal
                  statutory rate as a result of the following items:
<TABLE>
<CAPTION>

                                                                                    1995             1994
                                                                                -----------      --------
                 <S>                                                            <C>               <C>    
                  Tax benefit computed at the
                     maximum federal statutory rate                              (    34.0)%      (    34.0)%

                  Foreign income exclusion                                            30.5               4.7
                  Net (increase) decrease  due to various
                     temporary and permanent differences                         (    13.6)                -

                  Net operating loss carryforward                                     17.1             29.3
                                                                                ----------       ----------

                  Income tax provision                                                    -  %             -  %
                                                                                =============    =============
</TABLE>


                  Deferred taxes consisted of the following at December 31:
<TABLE>
<CAPTION>


                                                                                    1995             1994
                                                                                -----------      --------
                  Asset:
                     <S>                                                         <C>              <C>       

                     Net operating loss carryforward                            $    47,000      $   17,000
                     Other                                                       (      7,000)            -
                                                                                -------------    ----------
                  Net deferred tax asset before
                     valuation allowance                                              40,000          17,000
                  Less valuation allowance                                       (    40,000)     (   17,000)
                                                                                ------------     -----------

                  Net deferred tax asset                                        $        -       $       -
                                                                                ===============  =========
</TABLE>

                  For  financial  statement  purposes,  no tax  benefit has been
                  reported in 1995 or 1994 as the  Company  has had  significant
                  losses in recent years and  realization of the tax benefits is
                  uncertain.   Accordingly,   a  valuation  allowance  has  been
                  established for the full amount of the deferred tax asset.

                  At December  31,  1995,  the Company  had net  operating  loss
                  carryforwards as follows for income tax purposes:

                                 Carryforward                     Net Operating
                           Expires December 31:               Loss Carryforwards
                           --------------------               ------------------
                                    2005                           $       3,000
                                    2006                                  19,000
                                    2007                                   2,000
                                    2009                                  62,000
                                    2010                                 226,000
                                                                    ------------
                                                                     $   312,000

                                                        35

<PAGE>



DEVELOPMENT BANCORP, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1995 and 1994

Note 15:          Income Taxes (Continued)

                  The utilization of the $312,000 of  carryforwards  relating to
                  Global prior to its November 14, 1995 acquisition is dependent
                  upon the  ability  of Global to  generate  sufficient  taxable
                  income  during  the   carryforward   period  (separate  return
                  limitation  regulations).  In addition,  utilization  of these
                  carryforwards  is limited due to ownership  changes as defined
                  in the Internal Revenue Code.

Note 16:          Industry and Geographical Segment Reporting

                  The Company operated and had assets in the investment  banking
                  and broker/dealer industries as follows:
<TABLE>
<CAPTION>

                                                                                      1995              1994
                     <S>                                                        <C>                 <C>                             
                      Revenues:
                      Investment banking                                         $     39,952      $     42,106
                      Broker/dealer                                                   616,530                 -
                                                                                 ------------      ------------

                             Total revenues                                      $   656,482       $     42,106
                                                                                 ===========       ============

                  Operating Loss:
                      Investment banking                                         $(  478,659)      $(  151,350)
                      Broker/dealer                                               (     51,259)               -
                                                                                 -------------     ------------

                             Total operating loss                                $(529,918)        $(151,350)
                                                                                 =========         =========

                  Identifiable Assets:
                      Investment banking                                         $3,994,611        $4,308,941
                      Broker/dealer                                                   862,849                 -
                                                                                 ------------      ------------

                             Total identifiable assets                           $4,857,460        $4,308,941
                                                                                 ==========        ==========

                  The Company operated and had assets in the United States and Europe as follows:
                      Revenues:
                      United States                                              $    621,465      $     24,501
                      Europe                                                           35,017            17,605
                                                                                 ------------      ------------

                             Total revenues                                      $    656,482      $     42,106
------------------                                                               ============      ============
                  Operating Loss:
==================
                      United States                                              $  (538,141)      $  (146,375)
==================
                      Europe                                                            8,223           (4,975)
                                                                                 ------------      -----------

                  Total operating loss                                           $   (29,918)      $  (151,350)
------------------                                                               ===========       ===========

                  Identifiable Assets:
                      United States                                              $  2,121,811      $      1,817
==================
                      Europe                                                        2,735,649         4,307,124
                                                                                 ------------      ------------


                                                        36

<PAGE>



                             Total identifiable assets                           $  4,857,460      $  4,308,941
------------------                                                               ============      ============

</TABLE>

                                                        37

<PAGE>



DEVELOPMENT BANCORP, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1995 and 1994

Note 17:          KSM Holding Company Acquisition

                  On November 14,  1995,  the Company  exchanged  110,000 of its
                  convertible  preferred  stock for all 3,617,143  shares of KSM
                  common  stock  issued and  outstanding  (not  including  2,400
                  shares of preferred stock outstanding).  The exchange resulted
                  in KSM becoming a 99.93% owned subsidiary of the Company.

                  The  total KSM  purchase  price was  $217,482,  consisting  of
                  110,000 shares of Company  convertible  preferred stock valued
                  at $165,000 and acquisition costs totalling $52,482. The $1.50
                  price  per  share  used  to  value  the  preferred  stock  was
                  determined based upon the market value of an equivalent number
                  of shares of common stock due to the conversion  rights less a
                  discount to factor in the  reduction  in value  stemming  from
                  restrictions  in  conversion  and the size of the newly issued
                  block.

                  The Company  accounted for the acquisition  under the purchase
                  method whereby the assets and  liabilities of KSM are recorded
                  at their net book value,  which approximated fair market value
                  as of the date of acquisition as estimated by management.  The
                  following items represent the net tangible assets acquired and
                  liabilities assumed:

                           Commissions receivable                   $     44,807
                           Other receivables                              53,236
                           Marketable securities                         392,633
                           Other current assets                           51,983
                           Net property and equipment                    114,691
                           Note payable - bank                     (     50,000)
                           Notes payable - related parties          (   416,969)
                           Accounts payable                         (   143,803)
                           Accrued liabilities                     (     34,009)
                           Long-term debt                          (     38,752)
                           Long-term debt - related parties        (     40,000)
                                                                   -------------

                                    Net assets (liabilities)       $(    66,183)
                                                                    ============

                  The $283,665 excess purchase price of the fair market value of
                  tangible assets and  liabilities  acquired has been identified
                  as  broker/dealer   network  development  and  customer  lists
                  acquired and is being amortized over a five-year period.


                                                        38

<PAGE>


                                                 DEVELOPMENT BANCORP, LTD.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  For the Years Ended December 31, 1995 and 1994



Note 17:          KSM Holding Company Acquisition (Continued)

                  Summarized  below is the  unaudited  condensed  and  pro-forma
                  consolidated statement of operations as if the KSM acquisition
                  had taken place at the  beginning  of the year ended  December
                  31, 1995.
<TABLE>
<CAPTION>

                                                           1995 Pro-forma Consolidated
                                                      Statement of Operations (Unaudited)
                                                                                Pro-forma
                                       Development       KSM Holding            Pro-forma         Development
                                      Bancorp, Ltd.      Corporation          Consolidating      Bancorp, Ltd.
                                      Consolidated    Consolidated (1)         Entries (2)       Consolidated
     <S>                             <C>              <C>                   <C>                  <C>          
     Revenues                        $     656,482    $     1,571,490       $              -     $   2,227,972
     General &
       administrative                  (1,186,400)        (1,831,532)               (52,003)       (3,069,935)
                                     ------------     --------------        ---------------      ------------
     Loss from operations                (529,918)          (260,042)               (52,003)         (841,963)
-----
     Other income (expense)                 79,676           (37,342)                      -            42,334
                                     -------------    --------------        ----------------     -------------
     Net loss                        $   (450,242)    $     (297,384)       $       (52,003)     $   (799,629)
                                     ============     ==============        ===============      ============
     Net loss per share              $       (.41)                                               $       (.73)
                                     ============                                                ============
     Weighted average number
       of shares outstanding             1,095,606                                                   1,095,606
                                     =============                                               =============
</TABLE>

(1)      Represents KSM Holding Corporation  consolidated unaudited activity for
         the  period  from  January  1,  1995 to  November  14,  1995  (date  of
         acquisition).
(2)      Represents  adjustment to amortization of intangible assets acquired in
         the KSM Holding Corporation  acquisition for the period from January 1,
         1995 to November 14, 1995 (date of acquisition).

Note 18:          Subsequent Event

                  On November 1, 1996, the Company  rescinded its acquisition of
                  KSM Holding Company (KSM).  Accordingly,  all 3,617,143 shares
                  of KSM common  stock were  returned to KSM in exchange for the
                  return  and  cancellation  of all  110,000  shares of  Company
                  convertible  preferred stock  outstanding.  Additionally,  all
                  amounts  paid to KSM will be  considered  as  unsecured  loans
                  ($415,000 as of December 31, 1995) bearing  interest at 8% and
                  due in November 2001.