<PAGE>

                       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 JUNE 30, 1996

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

COMMISSION FILE NO. 0-16117
                                UNSI Corporation
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

                 Delaware                                     22-2661940
  (STATE OR OTHER JURISDICTION                            (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)                      IDENTIFICATION NUMBER)
c/o Forstmann-Leff Associates, Inc.,
55 East 52nd Street, New York, New York                         10055
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                      ZIP CODE

ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: 212-407-9450

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None 

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                     Common Stock, par value $.01 per share
                                (TITLE OF CLASS)

CHECK WHETHER THE ISSUER (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY
SECTION 13 OR 15 (D) OF THE EXCHANGE ACT DURING THE PAST 12 MONTHS (OR FOR SUCH
SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2)
HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
                           Yes               X  No

CHECK IF THERE IS NO DISCLOSURE OF DELINQUENT FILERS IN RESPONSE TO ITEM 405 OF
REGULATION S-B 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-KSB OR ANY
AMENDMENT TO THIS FORM 10-KSB. [ ]

As of December 31, 1996, 2,210,000 shares of Common Stock were outstanding. As
there is no public trading in the Company's Common Stock, the aggregate market
value of the shares held by non-affiliates of the issuer is not reported.

The issuer's revenues for its most recent fiscal year were $20,652.



<PAGE>



                                     PART I


ITEM 1.           DESCRIPTION OF BUSINESS.

                  Pursuant to the Asset Purchase Agreement among Investor's
Fiduciary Services, Inc. ("IFSI"), UNSI Corporation (the "Company"), Peter Lusk
and CDA Investment Technologies, Inc. ("CDA"), dated as of September 5, 1995
(the "Agreement"), IFSI, a wholly owned subsidiary of UNSI Corporation, sold
substantially all of its assets (the "Purchased Assets") to CDA. Such assets
constituted substantially all of the Company's non-cash operating assets. The
purchase price for the Purchased Assets, subject to post-closing adjustments,
was $2,249,600, consisting of $358,600 in the assumption of IFSI liabilities and
a cash payment of approximately $1,691,000. CDA deposited $200,000 of the cash
proceeds into an escrow account to meet IFSI's potential indemnification
obligations under the Agreement, and to provide security for the collection of
IFSI accounts receivable included in the Purchased Assets. The Escrow Agreement
provided for the release of the escrowed funds in stages over an 18 month
period, commencing with the closing. As of September 30, 1996, the Company had
received $115,017 of such escrow funds and anticipates that it will receive an
additional $67,950 of such escrow funds. The Agreement also provides for two
additional payments of $375,000 each, in the event that certain conditions are
satisfied. CDA made the first payment of $375,000 in January 1997. The Company
does not anticipate that it will satisfy the conditions entitling it to the
second $375,000 payment. See Note B of Notes to the Company's consolidated
financial statements.

                  As a result of this transaction, the Company is no longer
engaged in any operating activities other than the investment of its cash and
the search for possible merger or acquisition opportunities. No such
opportunities have been definitively identified at this time and there can be no
assurance that such opportunities will be identified or that such transactions,
if and when effected, will benefit the Company.

                  During the fiscal year ended June 30, 1996, Live Picture, Inc.
("LPI"), a California corporation engaged as a developer of digital imaging
software for use on personal computers and the Internet borrowed $350,000 from
the Company. In connection with this loan, the Company received warrants to
acquire shares of LPI's capital stock. In September 1996, the Company converted
such loan (including accrued interest) into approximately 201,093 shares of LPI
Series C Preferred Stock (the "LPI Securities").

EMPLOYEES

                  As the Company does not engage in any operating activities, it
has no employees.

ITEM 2.           DESCRIPTION OF PROPERTY.

                  The Company's principal executive office is located at: c/o
Forstmann-Leff Associates, Inc., 55 East 52nd Street, New York, New York 10055.
The Company does not pay rent for the use of this facility.



                                       -2-


<PAGE>



ITEM 3.           LEGAL PROCEEDINGS.

                  See Notes G and M of Notes to the Company's consolidated
                  financial statements.

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

                  Not Applicable.


                                     PART II


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

                  There has been no established trading market for the Company's
Common Stock for at least the past two years. As of December 31, 1996, there
were approximately 35 record holders of the Company's Common Stock. The Company
has not paid any cash dividends on its Common Stock since its inception, and it
does not anticipate paying any cash dividends thereon in the foreseeable future.


ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

                  As a result of the sale of the IFSI assets and because the
Company does not have any other operating activity, the Company's consolidated
financial statements have been presented on a discontinued basis.

Results of operations

                  During the years ended June 30, 1996 and 1995, interest
income, the principal source of the Company's revenue was $20,652 and $16,730,
respectively. Selling, general and administrative expenses ("SG&A") for the
years ended June 30, 1996 and 1995 were $154,177 and $290,759, respectively.
These expenses decreased in fiscal 1996 by approximately 47% from fiscal 1995 as
a result of the sale of IFSI and the decrease in bad debt expense. SG&A in
fiscal 1996 and 1995 includes approximately $139,469 and $230,805, respectively,
of bad debt expense associated with the write-off of non-trade receivables. Bad
debt expense decreased in fiscal by 1996 because the Company had written off a
significant amount of its non-trade receivables in fiscal 1995. See "Item 12.
Certain Relationships and Related Transactions" and Note C of Notes to the
Company's consolidated financial statements.  Approximately $83,000 and
$78,000 of the interest expense for fiscal 1996 and fiscal 1995, respectively,
related to the PIK Debentures (as defined) was paid through the issuance of
additional PIK Debentures .


                                       -3-


<PAGE>



                  The Company's loss from discontinued operations decreased by
approximately 80% from the prior year inasmuch as the fiscal 1996 results only
include losses from IFSI's operations through the date of sale. The Company had
net earnings of $1,542,842 in fiscal 1996 as a result of the sale of IFSI's 
assets. The Company does not anticipate that it will generate earnings or 
positive cash flow (other than the receipt of $375,000 in January 1997 from 
CDA) in the immediate future.

Liquidity and Capital Resources

                  As of June 30, 1996, the Company had total current assets of
$387,144 (exclusive of $350,000 in note receivable from LPI which was converted
into LPI Securities subsequent to year end). The Company's cash position at the
end of fiscal 1996 increased by $92,534 from the beginning of the fiscal year as
a result of the cash generated by the sale of the assets of IFSI.

                  The Company currently engages in no operating activities other
than the investment of its cash and the search for possible merger or
acquisition opportunities. Accordingly, the Company's expenditures consist
primarily of interest expense (which with respect to the PIK Debentures is paid
through the issuance of additional PIK debentures and the balance of which is
owed to Peter Lusk, the payment of which he has deferred) and professional fees.
The Company's working capital is sufficient to meet its near term operating
needs and it has no commitments for any material capital expenditures, other
than as reflected in its consolidated financial statements and the notes
thereto. The Company however, has not determined (other than through the
acquisition of a profitable business entity) how it will satisfy the
indebtedness related to the PIK Debentures that mature in 1999 or the
indebtedness owed to Mr. Lusk. (See Notes B (2), D and E of Notes to the
Company's consolidated financial statements.)


ITEM 7.           FINANCIAL STATEMENTS.
                                                                Page No.

Index to Consolidated Financial Statements                             4

Report of Independent Certified Public Accountants                   F-1

Consolidated Balance Sheet, June 30, 1996 and 1995                   F-2

Consolidated Statements of Operations, years
ended June 30, 1996 and 1995                                         F-4

Consolidated Statements of Stockholders' Deficiency, years
ended June 30, 1996 and 1995                                         F-5

Consolidated Statements of Cash Flows, years
ended June 30, 1996 and 1995                                         F-6

Notes to Consolidated Financial Statements, years
ended June 30, 1996 and 1995                                         F-8


                                       -4-


<PAGE>

                  FINANCIAL STATEMENTS AND REPORT OF
               INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
                    UNSI CORPORATION AND SUBSIDIARY
                        June 30, 1996 and 1995




<PAGE>


               Report of Independent Certified Public Accountants










Board of Directors and Stockholders
UNSI Corporation

We have audited the accompanying consolidated balance sheets of UNSI Corporation
(a Delaware corporation) and Subsidiary as of June 30, 1996 and 1995, and the
related consolidated statements of operations, stockholders' deficiency and cash
flows for each of the two years in the period ended June 30, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

As described in Note B to the accompanying consolidated financial statements, on
September 5, 1995, the Company sold all of its operating assets. As a result,
the Company has no active operations.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of UNSI Corporation
and Subsidiary as of June 30, 1996 and 1995, and the consolidated results of
their operations and their consolidated cash flows for each of the two years in
the period ended June 30, 1996, in conformity with generally accepted accounting
principles.




Atlanta, Georgia
December 9, 1996





                                       F-1


<PAGE>


                         UNSI Corporation and Subsidiary

                           CONSOLIDATED BALANCE SHEETS

                                    June 30,

                                 ASSETS (Note B)




                                                       1996          1995
                                                   ------------  -----------
CURRENT ASSETS
   Cash and cash equivalents                       $    192,569 $    100,035
   Trading securities - at market (Note A-5)             69,815            -
   Accounts receivable                                        -      115,346
   Escrowed sale proceeds (Note B)                      116,333            -
   Convertible note receivable (Note L)                 350,000            -
   Other current assets                                   8,427        3,300
                                                    -----------    ---------

         Total current assets                           737,144      218,681

PROPERTY AND EQUIPMENT, at cost,
   less accumulated depreciation                              -      284,036

OTHER ASSETS
   Other                                                 31,500       39,358
                                                    -----------    ---------



                                                   $    768,644 $    542,075
                                                    ===========  ===========

The accompanying notes are an integral part of these statements.

                                       F-2


<PAGE>




                LIABILITIES AND STOCKHOLDERS' DEFICIENCY (Note B)


<TABLE>
<CAPTION>


                                                              1996             1995
                                                          ------------    -----------
<S>                                                      <C>           <C>  

CURRENT LIABILITIES
     Accounts payable                                     $      9,480   $    292,265
     Unearned revenue                                                -        194,587
     Accrued expenses (Note K)                                 113,457        221,114
     Income taxes payable (Note J)                              30,000              -
     Marketing commissions payable (Note G)                     84,700         84,700
     Capitalized lease obligations,
       current portion (Note F)                                      -            580
     Notes and advances payable to related
       parties - current portion (Notes D and K)                 9,793        853,996
                                                           -----------    -----------
         Total current liabilities                             247,430      1,647,242
                                                           -----------    -----------

LONG-TERM OBLIGATIONS,
   LESS CURRENT PORTION
     Notes payable to stockholder (Notes D and K)              438,325        438,325
     7-7.125% pay-in-kind convertible debentures (Note E)    1,276,952      1,193,413
     5% subordinated convertible debenture (Note D)            331,250        331,250
                                                           -----------      ---------

                                                             2,046,527      1,962,988
                                                           -----------      ---------

COMMITMENTS AND CONTINGENCIES
   (Notes B, F, G and M)                                             -              -

STOCKHOLDERS' DEFICIENCY (Notes B and H)
    Preferred stock, $.01 par value; 1,000,000 shares
     authorized; no shares issued or outstanding                     -              -
   Common stock, $.01 par value; 10,000,000 shares
     authorized; 2,210,000 shares issued
     and outstanding                                            22,100         22,100
   Additional contributed capital                              369,932        369,932
   Accumulated deficit                                      (1,917,345)    (3,460,187)
                                                            ----------      ---------
         Total stockholders' deficiency                     (1,525,313)    (3,068,155)
                                                            ----------      ---------

                                                          $    768,644   $    542,075
                                                           ===========    ===========

</TABLE>


                                       F-3

<PAGE>

                         UNSI Corporation and Subsidiary

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                              Years ended June 30,

                                    (Note B)
<TABLE>
<CAPTION>



                                                                         1996                 1995
                                                                      ------------        --------

<S>                                                                 <C>              <C>    

Interest income                                                      $      20,652     $      16,730
                                                                      ------------       -----------
                                                                            20,652            16,730

Costs and expenses
   Selling, general and administrative expenses (Note G)                   154,177           290,759
   Unrealized loss on trading securities                                    28,442                 -
   Interest (Note K)                                                       163,242           165,401
                                                                      ------------       -----------
                                                                           345,861           456,160
                                                                      ------------      ------------

         Loss from continuing operations
           before income taxes                                            (325,209)         (437,430)

Loss from discontinued operations                                         (256,933)       (1,304,056)
Gain on disposal of discontinued operations,
   net of $30,000 of income taxes                                        2,124,984                 -
                                                                      ------------      ------------

         NET EARNINGS (LOSS)                                         $   1,542,842     $  (1,743,486)
                                                                      ============        ==========

Earnings (loss) per common and common equivalent share (Note I)
     Loss from continuing operations                                 $       (.04)     $        (.20)
     Discontinued operations                                                  .22               (.59)
                                                                      -----------       ------------

                                                                     $        .18      $        (.79)
                                                                      ===========       ============

Earnings per common share - assuming full dilution
     Loss from continuing operations                                 $       (.03)
     Discontinued operations                                                  .15
                                                                      -----------

                                                                     $        .12


</TABLE>


The accompanying notes are an integral part of these statements.

                                       F-4


<PAGE>


                         UNSI Corporation and Subsidiary

               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

                       Years ended June 30, 1996 and 1995

<TABLE>
<CAPTION>


                                           Common stock               Additional
                                                 (Note H)            contributed       Accumulated
                                           Shares      Par value      capital         deficit          Total

<S>                                       <C>         <C>           <C>              <C>               <C>  

Balance, June 30, 1994                    2,210,000      $22,100        $369,932      $(1,716,701)     $(1,324,669)

Net loss for the year                         -             -              -           (1,743,486)      (1,743,486)
                                     --------------    ---------    ------------       ----------       ----------

Balance, June 30, 1995                    2,210,000       22,100         369,932       (3,460,187)      (3,068,155)

Net earnings for the year                     -             -              -            1,542,842        1,542,842
                                     --------------    ---------    ------------       ----------       ----------

Balance, June 30, 1996                    2,210,000      $22,100        $369,932      $(1,917,345)     $(1,525,313)
                                          =========       ======         =======       ==========       ==========



</TABLE>





The accompanying notes are an integral part of these statements.

                                       F-5


<PAGE>


                         UNSI Corporation and Subsidiary

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                              Years ended June 30,
<TABLE>
<CAPTION>



                                                                                 1996               1995
                                                                             -------------     ---------
<S>                                                                         <C>              <C>

Reconciliation of net earnings (loss) to net cash used in operating activities:
     Net earnings (loss)                                                    $   1,542,842     $  (1,743,486)
     Adjustments to reconcile net earnings (loss) to
       net cash used in operating activities:
         Depreciation                                                                   -            66,901
         Expenses paid through issuance of pay-in-kind
           debentures                                                              83,539            78,073
         Bad debt expense                                                         139,469           230,805
         Loss on sale of equipment                                                      -             9,219
         Gain on disposal of discontinued operations                           (2,154,984)                -
         Unrealized loss on investments                                            28,442                 -
         Changes in assets and liabilities net of effects of sale of IFSI
           assets:
              Decrease (increase) in accounts receivable                           43,672               440
              Decrease (increase) in other current assets                          (7,369)           22,064
              Increase in interest due from affiliated entities
                   and an individual                                                    -           (11,463)
              Increase in other assets                                                  -           (29,572)
              Increase (decrease) in accounts payable                             (98,152)          238,335
              (Decrease) increase in unearned revenue                              45,427           (31,551)
              Increase in accrued expenses                                       (107,657)          146,325
              Increase in income taxes payable                                     30,000                 -
                                                                             ------------      ------------
              Total adjustments                                                (1,997,613)          719,576
                                                                             ------------      ------------

              Net cash used in operating activities                              (454,771)       (1,023,910)

Cash flows from investing activities:
   Capital expenditures                                                                 -          (218,638)
   Proceeds from sale of equipment                                                      -             5,822
   Advances to affiliated entities                                                      -           (69,625)
   Proceeds from sale of assets                                                 1,811,439                 -
   Advances on notes receivable                                                  (350,000)                -
   Investment in trading securities                                               (69,815)                -
                                                                             ------------      ------------

           Net cash provided (used) in investing activities                     1,391,624          (282,441)

</TABLE>

                                       F-6

<PAGE>

                         UNSI Corporation and Subsidiary

                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

                              Years ended June 30,
<TABLE>
<CAPTION>


                                                                  1996             1995
                                                           ---------------    ---------
<S>                                                        <C>              <C>

Cash flows from financing activities:
   Principal payments under capital lease obligations               (116)           (9,578)
   Proceeds from (payments on) note payable to bank                    -          (250,000)
   Proceeds from issuance of notes payable to
     an entity                                                  (700,000)          700,000
   Net advances from (payments to) principal stockholder        (144,203)           64,000
   Proceeds from issuance of 7% pay-in-kind
     convertible debentures                                            -           175,340
                                                            ------------      ------------

           Net cash provided by financing activities            (844,319)          679,762
                                                            ------------      ------------

Net (decrease) increase in cash and cash equivalents              92,534          (626,589)
                                                            ------------      -------------

Cash and cash equivalents, beginning of year                     100,035           726,624
                                                            ------------      ------------

Cash and cash equivalents, end of year                     $     192,569     $     100,035
                                                            ============      ============


Cash paid during the year for:

   Interest                                                $      91,014     $           -


Noncash Investing and Financing Activities:


   Pay-in-kind debentures totaling $83,539 and $78,073 were issued in 1996 and
   1995, respectively, in lieu of payment of interest in cash on the then
   outstanding 7-7.125% pay-in-kind debentures.

</TABLE>


The accompanying notes are an integral part of these statements.

                                       F-7

<PAGE>

                         UNSI Corporation and Subsidiary

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       Years ended June 30, 1996 and 1995



NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   1.  Description of Business

   UNSI Corporation and its wholly owned subsidiary, Investors' Fiduciary
   Services, Inc. (hereinafter collectively referred to as the "Company"),
   provided, until September 5, 1995, proxy advisory and related services to
   institutional investors and fund managers (see Note B).

   2.  Cash and Cash Equivalents

   For purposes of the consolidated statement of cash flows, the Company
   considers all highly liquid debt instruments, purchased with a maturity of
   three months or less, to be cash equivalents. The Company maintains a high
   percentage of its cash balances in one financial institution located in New
   York City, New York. These balances are insured by the Federal Deposit
   Insurance Corporation up to $100,000. Amounts held at this financial
   institution in excess of $100,000 are uninsured.

   3.  Property and Equipment

   Depreciation and amortization are provided for in amounts sufficient to
   relate the cost of depreciable assets to operations over their estimated
   service lives. Leasehold improvements are amortized over the lives of the
   respective leases, or the service lives of the improvements, whichever is
   less. Leased property under capital leases is amortized over the lives of the
   respective leases, or the service lives of those leases which substantially
   transfer ownership. The straight-line method of depreciation is followed for
   substantially all assets for financial reporting purposes, but accelerated
   methods are used for tax purposes.

   4.  Income Taxes

   The Company accounts for income taxes under the liability method as provided
   for in Statement of Financial Accounting Standards (SFAS) No. 109, ACCOUNTING
   FOR INCOME TAXES. Under the liability method, deferred tax assets and
   liabilities are determined based on the difference between the financial
   statement and tax bases of assets and liabilities, as measured by the enacted
   tax rates which will be in effect when these differences reverse. Deferred
   tax expense is the result of changes in deferred tax assets and liabilities.
   The principal types of differences between assets and liabilities for
   financial statement and tax return purposes are accumulated depreciation and
   unearned revenue.





                                       F-8


<PAGE>

                         UNSI Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       Years ended June 30, 1996 and 1995



NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

   5.  Trading Securities

   Investments in trading securities are recorded at fair value.

   6.Use of Estimates

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

   7.  Reclassifications

   Certain reclassifications have been made to the 1995 financial statements to
conform to the 1996 presentation.


NOTE B - SALE OF ASSETS AND CERTAIN LIABILITIES OF IFSI

   1.   Sale of IFSI

   On September 5, 1995, the Company sold all of its operating assets, with
   concomitant assumption by CDA Investment Technologies, Inc. of essentially
   all liabilities associated with IFSI's operating activities. The base
   purchase price of $2,249,600 was comprised of assumption of liabilities of
   the Company of approximately $365,000 and payment of cash to the Company of
   approximately $1,691,000. Additionally, the purchaser placed $200,000 of the
   sales proceeds in an escrow account. This $200,000 is being paid to the
   Company by the escrow agent over an eighteen month period commencing on the
   closing of this transaction, subject to payment from this account of any
   unrecorded liabilities related to pre-transaction date activity which arise.
   At June 30, 1996, $66,667 has been paid to the Company. The Company has
   recorded the remaining escrow account, net of unrecorded liabilities related
   to pre-transaction date activity of $17,000, as an asset as of the date of
   the sale transaction. Subsequent to June 30, 1996, an additional payment of
   $66,667, less the $17,000 adjustment, was paid to the Company.




                                       F-9

<PAGE>

                         UNSI Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       Years ended June 30, 1996 and 1995


NOTE B - SALE OF ASSETS AND CERTAIN LIABILITIES OF IFSI - Continued

   Following is a presentation of the computation of the gain on the sale of
IFSI assets:

           Net book value of assets sold                             $  344,421

           Unearned revenue recorded for which future
           services from the Company are not required                  (240,014)
                                                                      ---------

                    Net book value of IFSI assets sold                  104,407

           Consideration received, inclusive of the
           assumption of $348,263 of liabilities                      2,259,391
                                                                      ---------

                    Gain on sale of IFSI assets before income taxes  $2,154,984
                                                                      =========

   The IFSI operations have been reported as a discontinued operation at June
   30, 1996. The Company's prior year's operating results have been restated to
   reflect discontinued operations.

   Additionally, the Company could receive up to an additional $750,000 on the
   sale of the aforementioned operating assets, subject to the achievement by
   the buyer of certain customer retention and product development goals set
   forth in the sale agreement. This contingent consideration has not been
   recorded as part of the sale price, and would be recognized by the Company
   prospectively as achievement against such customer retention and product
   development goals is determined.

   The purchaser has submitted a report which indicates the first of two goals
   necessary for conditional payments was not met as of September 30, 1996.
   Subsequently, an agreement was reached between the Company and the purchaser
   in which a payment of $375,000 will be made to the Company.

   2.   Future Operations

   As reflected in the accompanying financial statements, the Company has a
   stockholders' deficiency of $1,525,313 at June 30, 1996. Accordingly in the
   absence of a resumption of profitable operating activities, the Company will
   not be able to meet all its obligations to its creditors and debenture
   holders. It is, however, management's intentions to identify and acquire a
   business in order for operations to resume.




                                      F-10

<PAGE>

                         UNSI Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       Years ended June 30, 1996 and 1995



NOTE C - AMOUNTS DUE FROM OTHER ENTITIES AND INDIVIDUALS

   During 1995, the Company determined that a total of $230,805 in non-trade
   notes receivable, advances, and accrued interest to be of doubtful
   collectibility, based on past payment patterns. Accordingly, this amount was
   charged to expense in 1995. During 1996, an additional amount of $139,469 was
   charged to expense of which $134,551 was due from an entity, a director of
   which is the principal stockholder of the Company. These notes and advances
   are all due on demand and continue to bear interest at approximately 10% per
   annum.


NOTE D - OBLIGATIONS TO RELATED PARTIES (See Note B-2)

   1.  Notes and Advances Payable to Principal Stockholder

   Notes and advances payable to the Company's principal stockholder totaled
   $448,118 at June 30, 1996. These amounts bear interest at 5% per annum and
   are currently due, based on the conditions for repayment set forth in the
   note payable agreements and presumed in the advances. Included in notes and
   advances payable outstanding at June 30, 1995 was a $100,000 short term note
   payable in connection with a bridge financing (see Note D-2). This note bore
   interest at 24.5% per annum and was repaid subsequent to year-end, including
   accrued interest. In connection with the issuance of this notes payable, the
   Company issued to the principal stockholder Series C and Series D warrants
   for the purchase of 312,150 shares of the Company's common stock (see Note
   H-5) subject to adjustment as provided for therein. Accrued interest on these
   notes and advances payable at June 30, 1996 and June 30, 1995 totaled $6,564
   and $10,136, respectively. The principal stockholder has agreed to defer
   payment of $438,325 of the amounts due him until such time as the Company's
   pay-in-kind debentures have been converted or redeemed.

   2.  Short-Term Notes Payable to Debenture Holder

   Short-term notes payable of $700,000 were outstanding at June 30, 1995 to an
   entity which holds a significant portion of the Company's 7-7.125%
   pay-in-kind debentures. These notes payable were issued in connection with a
   bridge financing which took place during fiscal 1995, bore interest at 24.5%
   per annum, were repaid subsequent to year-end. Accrued interest on these
   notes payable, which totaled $48,732 at June 30, 1995, was also paid
   subsequent to year-end. In connection with the issuance of certain of these
   notes payable during 1995, the Company issued to the entity Series C and
   Series D warrants for the purchase of 2,185,049 shares of the Company's
   common stock (see Note H-5) subject to adjustment as provided for herein.



                                      F-11

<PAGE>

                         UNSI Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       Years ended June 30, 1996 and 1995



NOTE D - OBLIGATIONS TO RELATED PARTIES (See Note B-2) - Continued

   3.  Subordinated Convertible Debenture

   The Company issued a 5% subordinated convertible debenture, with an
   outstanding balance at June 30, 1996 and 1995, of $331,250, to the principal
   stockholder. The 5% subordinated convertible debenture, due January 2, 1999,
   is convertible into 1,650,000 shares of common stock of the Company and
   1,000,000 shares of the Company's Series B preferred stock, with antidilution
   provisions applicable. It cannot be converted in part. The Company has not
   paid the interest due on this debenture. However, the principal stockholder
   has waived the applicable provision of the debenture related to this previous
   non-payment and has agreed to payment of principal as originally set forth in
   the debenture, with prior and current interest due on the next interest due
   date.


NOTE E - PAY-IN-KIND CONVERTIBLE DEBENTURES (See Note B-2)

   The 7-7.125% pay-in-kind convertible debentures, which have an outstanding
   balance at June 30, 1996 and 1995, of $1,276,952 and $1,193,413,
   respectively, and are due May 31, 1999, are convertible into shares of common
   stock of the Company at the rate of one share of common stock for each $.4524
   principal amount of debenture, with antidilution provisions applicable.
   Interest on these debentures can, at the option of the Company, be paid in
   the form of additional issuance of similar convertible debentures, provided
   that no additional pay-in-kind convertible debentures can be issued to
   satisfy interest requirements subsequent to November 30, 1998. The debentures
   will bear interest at the greater of 7-7.125% or the applicable annually
   compounded federal rate for debt instruments (5.188% at June 30, 1996).

   These debentures can be converted into common stock at the option of the
   debenture holder at any time prior to May 31, 1999, but are subject to
   mandatory conversion into shares of the Company's common stock upon the
   achievement by the Company's "profitability" as defined. Generally,
   profitability is defined to be equal to the achievement of revenues in excess
   of $1,500,000 in any twelve month period (provided that within that twelve
   month period, a three month period shall show positive net earnings).








                                      F-12

<PAGE>

                         UNSI Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       Years ended June 30, 1996 and 1995



NOTE F - LEASES

   1.  Capitalized Lease Obligations

   The Company leased certain of its operating equipment under leases which were
   capitalized. The leases, which were noncancelable and expired in 1996, were
   assumed by the buyer in the sale of IFSI assets, as described more fully at
   Note B.

   2.  Operating Leases

   Additionally, the Company leased office space under agreements expiring
   through December 1996. As part of the asset sale agreement discussed more
   fully at Note B, all obligations associated with these leases were
   transferred to the buyer. As of the date of closing, the Company has no
   further obligation with respect to these operating leases.


NOTE G - MARKETING COMMISSIONS PAYABLE

   IFSI had previously entered into a marketing partnership with another firm,
   whereby that firm was paid a percentage of the first year revenues accruing
   to IFSI from clients referred by the other firm. Additionally, the other firm
   owned 30,000 shares of common stock of IFSI, representing 50% of the total
   shares of common stock outstanding at the time the marketing partnership was
   terminated. IFSI reached an agreement with the other firm to settle
   outstanding commissions to be paid under this arrangement, which ceased in
   fiscal year 1993, totaling $84,700. Pursuant to this settlement, the
   Company's principal stockholder and key members of management of IFSI
   purchased the other firm's outstanding shares prior to the recapitalization
   of the Company. While final payment of these accrued marketing commissions
   payable has not been made, management believes that ultimate settlement will
   not materially vary from the amount recorded at June 30, 1996.


NOTE H - STOCKHOLDERS' EQUITY

   1.  Series B Convertible Preferred Stock

   As of December 31, 1993, the Company authorized 1,000,000 shares of Series B
   convertible preferred stock. Each of these shares is convertible into one
   share of the Company's common stock, at the option of the future holder. No
   shares of Series B convertible preferred stock were issued or outstanding at
   June 30, 1996.


                                      F-13

<PAGE>

                         UNSI Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       Years ended June 30, 1996 and 1995



NOTE H - STOCKHOLDERS' EQUITY - Continued

   2.  Common Stock

   At June 30, 1996, a total of 9,316,254 shares of common stock should have
   been reserved for conversion of 5% subordinated and 7-7.125% pay-in-kind
   debentures, stock options, stock warrants, and the possible future conversion
   of the unissued Series B preferred stock.

   3.  Stock Options

   At January 3, 1994, a total of 500,000 shares of common stock was reserved
   under UNSI Corporation's stock option plan. This plan became the Company's
   plan upon the Company's recapitalization which occurred on that date. At
   January 3, 1994, options for 155,000 shares were outstanding and the balance
   of 345,000 shares was available for future grants. No options were granted in
   the period from January 3, 1994 to June 30, 1994. A total of 20,000 options
   were granted in the year ended June 30, 1995. No options were exercised or
   canceled in the period from January 3, 1994 to June 30, 1995. At June 30,
   1995, options for 175,000 shares were outstanding, and the balance of 325,000
   shares was available for future grant. During the year ended June 30, 1996,
   10,000 options were granted and 10,000 options granted in 1995 were retired.
   At June 30, 1996, options for 175,000 shares were outstanding, and the
   balance of 325,000 shares were available for future grant.

   Option prices range from $.12 to $1.00 per share, the equivalent of not less
   than 100% of the fair market value at the date of grant. Upon the exercise of
   options, the proceeds are credited to the common stock account to the extent
   of the par value of the shares issued, and the proceeds in excess of par
   value are credited to the additional contributed capital account.

   4.  Series A and B Warrants to Purchase Common Shares

   During 1994, the Company issued a Series A warrant to one of its directors
   for the purchase of 100,000 shares of the Company's common stock. The Series
   A warrant, which is exercisable at the option of the holder, expires on
   December 31, 1998, and carries an exercise price of $.25 per share, with
   antidilution provisions applicable. Additionally, the Company reserved
   3,750,001 shares of common stock for issuance upon exercise of three Series B
   warrants. The Series B warrants expire on December 31, 2005, and carry an
   exercise price of $.125 per share, with antidilution provisions applicable.
   During 1996, 2,678,563 shares were retired with respect to two of the Series
   B warrants.



                                      F-14
<PAGE>


                         UNSI Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       Years ended June 30, 1996 and 1995


NOTE H - STOCKHOLDERS' EQUITY - Continued

   5.  Series C and D Warrants to Purchase Common Shares

   During 1995, the Company issued Series C and Series D warrants to its
   principal stockholder and a debenture holder in consideration for certain
   notes and advances payable as described at Note E. The Series C and D
   warrants provide for the purchase of the aggregate of 1,617,199 and 880,000
   shares, respectively, of the Company's common stock at an exercise price of
   $.10 per share. The exercise price and number of shares of common stock
   issuable upon exercise of these warrants is subject to adjustment as more
   fully described therein. The Series C and Series D warrants are exercisable
   at the option of the holder in the period from January 4, 1995 through
   January 19, 2000.


NOTE I - EARNINGS (LOSS) PER SHARE

   Primary earnings (loss) per common share is based on the average number of
   shares of common stock and common stock equivalents outstanding during the
   year. The stock warrants (see Note H-4,5) have been considered to be common
   stock equivalents and converted at the beginning of the year. Fully diluted
   earnings (loss) per common share is based on the assumption that all
   convertible debentures (see Notes D and E) were converted at the beginning of
   the year. The computations assume the elimination of interest expense, net of
   income tax, on the debentures. At June 30, 1995, the exercise of stock
   options and warrants would have been antidilutive.


NOTE J - INCOME TAXES

   The  Company has  recognized  current  income tax expense for 1996 of
   $30,000 due to the affects of  alternative minimum tax arising from the sale
   of IFSI assets.

   No income tax expense was recognized in fiscal 1995 due to the losses it
   sustained. The statutory federal tax rate was 35% for the year ended June 30,
   1996 and 1995. The Company's effective tax rate was 6% for the year ended
   June 30, 1996 as a result of the use of certain of the Company's loss
   carryforward. The Company had no tax liability in 1995 as a result of
   operating losses. At June 30, 1996, an operating loss carryforward of
   approximately $614,000, expiring through 2011, is available to offset future
   taxable income for financial reporting purposes. Tax regulations limit the
   utilization of net operating loss carryforwards. Therefore, the Company may
   be required to pay income taxes in future years even though significant
   carryforward benefits exist.




                                      F-15
<PAGE>


                         UNSI Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       Years ended June 30, 1996 and 1995

NOTE J - INCOME TAXES - Continued

   Deferred tax assets and liabilities at June 30, 1996 and 1995, consisted of
the following:

                                                           1996            1995
                                                          ---------    --------
  Deferred tax assets:
      Unearned revenue                                    $       -  $   75,889
      Net operating loss carryforwards                      614,088   1,400,885
                                                           --------   ---------
                                                            614,088   1,476,774
      Less valuation allowance                             (614,088) (1,458,375)
                                                           --------   ---------
                                                                  -      18,399

    Deferred tax liabilities - excess of tax depreciation
         over depreciation recognition for financial
         statement purposes                                       -     (18,399)
                                                           --------   ---------

            Total                                         $       -  $        -
                                                           ========   =========


   The Federal income tax returns of the Company have not been examined in
   recent years. Management believes adequate provision has been made for any
   adjustments which might be assessed at some future date.


NOTE K - RELATED PARTY TRANSACTIONS

   A summary of outstanding amounts due to and from related parties at June 30,
1996 and 1995 is as follows:

                                                              1996       1995
                                                          ----------- ---------

     Notes and advances payable to principal stockholder   $ 448,118  $ 592,321
     Short-term notes payable to debenture holder                  -    700,000
     Accrued interest due to related parties                  47,902     83,643
     5% subordinated convertible debenture due to
         principal stockholder                               331,250    331,250

   A summary of related party transactions during each of the years in the
   two-year period ended June 30, 1996 is as follows:
                                                          1996           1995
                                                      -----------      --------

     Interest expense on related party indebtedness    $19,294          $77,854


                                      F-16
<PAGE>

                         UNSI Corporation and Subsidiary

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                       Years ended June 30, 1996 and 1995


NOTE L - CONVERTIBLE NOTE RECEIVABLE

   In March, 1996, the Company purchased a one-year $350,000 6% convertible
   subordinated note issued by Live Picture, Inc. (an unrelated party). This
   note is convertible, at the options of the Company, into shares of preferred
   stock of Live Picture, Inc. In conjunction with this transaction, the Company
   also received five-year warrants to purchase additional shares of preferred
   stock of the issuer.

   Subsequent to the year ended June 30, 1996, the Company converted the note
   into 201,093 shares of preferred stock. With respect to these shares, the
   Company and the principal stockholder of the Company entered into an
   agreement, expiring June 30, 1998, whereby the Company has the right to
   require the principal stockholder to purchase these shares at $1.80 per
   share. The principal stockholder has the option to purchase the shares from
   the Company at $2.00 per share through December 31, 1996, with the purchase
   price increasing by $.20 per share for each successive six-month period
   thereafter.


NOTE M - LITIGATION

   The Company is a party in a lawsuit which has arisen in the normal course of
   business involving an assertive claim of $24,000. In the opinion of
   management, the ultimate outcome of the lawsuit will not have a material
   impact, if any, on the Company's financial statements.


                                   F-17

<PAGE>


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

                  Not Applicable.

ITEM  9.          DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                  PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

        Name                    Age              Positions and Offices

Peter A. Lusk                    57               Chairman of the Board
Kenneth L. Dowd, Jr.             56               Director and President
Fred S. Katz                     56               Director


                  Peter A. Lusk was elected to serve as a director of the
Company in 1990, and has served as Chairman of the Board of Directors since
1991. For more than the past five years, he has been an officer of
Forstmann-Leff Associates, Inc., a money manager for institutional investors.

                  Kenneth L. Dowd, Jr. has served as President and a director of
the Company since January 1994. He has served as a Managing Director of Cowen &
Company, an investment banking firm and as chief executive officer of its asset
management group since December 2, 1996. During 1996, Mr. Dowd served as a
senior advisor to Rogers Casey, an investment consulting firm. Prior thereto Mr.
Dowd had, since 1991, served as Managing Director of Warren Management
Consultants ("WMCI"), a management consulting firm.

                  Fred Katz was elected to serve as a director of the Company in
1991. Mr. Katz has served as a principal of First Taconic Capital Corporation, a
merchant banker, since 1996. Prior thereto Mr. Katz had, since 1991, served as a
managing director of Whale Securities Co., a broker/dealer. Mr. Katz serves as a
director of Aquagenics, Inc., a company engaged in the water purification
business.

                  All directors hold office until the next annual meeting of
stockholders or until their successors have been elected and qualified. Except
for the grant of Director Options (as defined), directors are not compensated
for any services provided as a director. Non-management directors serving in
such capacity on January 1 are entitled to receive options to acquire 10,000
shares of Common Stock (the "Director Options"). Officers serve at the
discretion of the Board of Directors.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Two reports, with respect to two automatic grants to Fred Katz of non-qualified
stock options, were not filed on a timely basis. Two reports, with respect to
two transactions engaged in by Mr. Lusk were not filed on a timely basis.



                                       -5-


<PAGE>




ITEM 10.          EXECUTIVE COMPENSATION

                  Mr. Lusk, the Company's chief executive officer, was not paid
salary or bonus during the past three fiscal years. See "Item 12. Certain
Relationship and Related Transactions" for further information with respect to
transactions between the Company and Mr. Lusk. None of the Company's other
officers received salary and bonus in excess of $100,000 during the past three
fiscal years.


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

                  Set forth below is information as of December 31, 1996
concerning the stock ownership of all persons known to the Company to own
beneficially 5% or more of the Company's Common Stock, each director of the
Company owning stock, and all officers and directors of the Company as a group.
All shares are beneficially owned and sole investment and voting power is held
by the person named below unless otherwise indicated.


<TABLE>
<CAPTION>

                                                                                        Percentage
Beneficial owner (1)                        Amount of Shares                            of Class
----------------                            ----------------                            --------
<S>                                            <C>                                      <C>  
Peter A. Lusk                                  4,120,258 (2)                            79.9%

Kenneth L. Dowd, Jr.                                 -                                         -

Fred S. Katz                                      162,400 (3)                             6.9%

Murray Koppelman                                  139,800                                 6.3%
825 Third Avenue
New York, NY 10022

M&A Investments, Inc.                          3,450,504 (4)                                61.0%
120 Senlac Drive
Carrollton, Texas 75006

All officers and                               4,372,658 (1)(2)                         80.8%
directors as a group
(two persons owning stock)
</TABLE>


(1)      Unless otherwise indicated, the address for the individuals identified
         above, all of whom, except for Mr. Koppelman and M&A Investments, Inc.
         ("M&A"), are directors of the Company, is c/o Forstmann-Leff
         Associates, Inc., 55 East 52nd Street, New York, New York 10055.

(2)      Includes (a) options to acquire 10,000 shares of Common Stock, (b)
         2,650,000 shares of Common Stock issuable upon conversion of the
         Company's 5% convertible subordinated


                                       -6-


<PAGE>



         debenture due 1999 (inclusive of 1,000,000 share of Common Stock
         issuable upon conversion of the Series B Preferred Stock issuable upon
         conversion of such debenture), (c) Series C Warrants to acquire 202,150
         shares of Common Stock, (d) Series D Warrants to acquire 110,000 shares
         of Common Stock and (e) 1,148,108 shares of Common Stock. Does not
         include Series B Warrants to acquire 1,071,438 shares of Common Stock.
         The number of shares issuable upon exercise of the Series C and Series
         D Warrants is subject to adjustment based upon, among other things, the
         number of outstanding rights or warrants to acquire Common Stock. The
         number of shares set forth above does not give effect to such
         adjustment.

(3)      Includes options and warrants to acquire 40,000 and 100,000 shares of
         Common Stock, respectively.

(4)      Includes (a) 1,265,455 shares of Common Stock issuable upon conversion
         of the Company's Pay-In-Kind Debentures due 1999 ("PIK Debentures"),
         (b) 1,415,049 shares of Common Stock issuable upon exercise of Series C
         Warrants, and (c) 770,000 shares of Common Stock issuable upon exercise
         of Series D Warrants. The number of shares issuable upon exercise of
         the Series C and Series D Warrants is subject to adjustment based upon,
         among other things, the number of outstanding rights or warrants to
         acquire Common Stock. The number of shares set forth above does not
         give effect to such adjustment.


ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                  To provide the Company with liquidity with respect to its LPI
Securities, the Company and Peter Lusk entered into an agreement dated June 27,
1996, providing that through June 30, 1998 the Company had the right to require
Mr. Lusk to purchase the LPI Securities and entitling Mr. Lusk with the option
to purchase the LPI Securities from the Company. Mr. Lusk is entitled to
purchase the LPI Securities at a price equal to $2.00 per share through December
31, 1996, with the purchase price increasing by $.20 per share for each
successive six month period thereafter and the Company is entitled to require
Mr. Lusk to purchase the Securities for $1.80 per share.

                  At June 30, 1995, MVS Incorporated ("MVS"), an entity in which
Mr. Lusk is a director and stockholder, had borrowed an aggregate of $173,443
(inclusive of accrued interest)(the "Initial Loan") from the Company. The
Company determined for fiscal 1995 that the Initial Loan was not collectible.
During the year ended June 30, 1996, the Company advanced to MVS (the "Second
Loan") an additional $134,551 (inclusive of interest that accrued on such
advances and interest that accrued on the Initial Loan). For fiscal 1996, the
Company determined that the Second Loan was not collectible. The Initial Loan
and the Second Loan are unsecured, payable on demand and bear interest at the
rate of ten percent per annum. See Note C of Notes to the Company's consolidated
financial statements.

                  The Company borrowed an aggregate of $700,000 from M&A in
fiscal 1995 (the "M&A Loan"). The M&A Loan, as well as the Additional Lusk Loan
(as defined herein), bore interest at 24.5% per annum. The M&A Loan, including
accrued interest of $80,781 at the date of repayment, was repaid in September
1995. In connection with its loan, M&A was issued five year


                                       -7-


<PAGE>



warrants to acquire 2,185,049 shares of Common Stock, subject to adjustment. As
a condition to making $200,000 of such loans, M&A required that Peter Lusk lend
the Company an aggregate of $100,000 (the "Additional Lusk Loan"). The
Additional Lusk Loan, including accrued interest of $5,672 at the date of
repayment, were repaid in September 1995. In connection with the Additional Lusk
Loan, Mr. Lusk was issued five year warrants to acquire 312,150 shares of Common
Stock, subject to adjustment. See "Item 11. Security Ownership of Certain
Beneficial Owners and Management" and Note H (5) of Notes to the Company's
consolidated financial statements.

         In January 1994, in connection with the acquisition of IFSI, the
Company issued its 5% subordinated convertible debenture in principal amount of
$331,250 to Mr. Lusk. Interest of $16,562 accrued on this debenture during
fiscal 1996. Mr. Lusk has agreed to defer repayment of this debenture and the
accumulated accrued interest balance of $41,338 (through the end of fiscal 1996)
until the Company's PIK Debentures are repaid or converted.

         In January 1994, IFSI issued its 5% promissory note in the principal
amount of $438,825 to Mr. Lusk. Interest of $21,916 accrued on this note during
fiscal 1996. Mr. Lusk has agreed to defer repayment of this note and the
accumulated accrued interest balance of $56,982 (through the end of fiscal 1996)
until the Company's PIK Debentures are repaid or converted.

         From time to time, Mr. Lusk has advanced funds to the Company (in
addition to the Additional Lusk Loan) to meet its short-term cash requirements.
During fiscal 1995, such loans were made for an aggregate of $64,700. Repayments
to Mr. Lusk of $100,700 were made during fiscal 1995, leaving an aggregate
balance at June 30, 1995, of $53,996, plus unpaid accrued interest of $3,833.
During fiscal 1996, Mr. Lusk did not advance any money to the Company.
Repayments to Mr. Lusk during fiscal 1996 were made for an aggregate of $44,203,
leaving a balance at June 30, 1996 of $9,793, plus unpaid and accrued interest
of $6,564. All of such advances bore interest at the rate of 5% per annum.





                                    -8-

<PAGE>



ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K.


(a)Exhibit Index
 2.1  - Agreement and Plan of Merger dated as of January 3,
           1994 by and among UNSI Corporation, IFSI Acquisition,
           Inc. and Investors' Fiduciary Services, Inc. ("IFSI") (1)
 2.2  - Agreement of Purchase and Sale dated as of September 5,
           1995 by and among Investors' Fiduciary Services, Inc.,
           UNSI Corporation, Peter Lusk and CDA Investment Technologies,
           Inc. (7)
 3.1  - Restated Certificate of Incorporation. (2)
 3.2  - By laws of the Registrant. (3)
 3.3  - Certificate of Amendment to the Company's Restated Certificate
           of Incorporation (4)
 4.1  - Series A Warrant. (1)
 4.2  - Form of Series B Warrant (including exhibits A through D
           thereto). (1)
 4.3  - 5% Subordinated Convertible Debenture Due January 2, 1999. (1)
 4.4  - Certificate of Designations, Preferences and Rights of the
           Company in respect of Series B Preferred Stock. (1)
 4.5  - 5% Promissory Note issued by Investors' Fiduciary Services, Inc.
           to Peter Lusk (the "IFSI Note"). (1)
 4.6  - Guaranty of the IFSI Note. (1)
 4.7  - Form of 7% Pay-in-Kind Convertible Debenture due May 31, 1999. (8)
 4.8  - Registrant's Series C Warrant (WC-4).(9)
 4.9 - Registrant's Series C Warrant (WC-5).(9) 
4.10 - Registrant's Series D Warrant (WD-4).(9) 
4.11 - Registrant's Series D Warrant (WD-5).(9)
4.12 - Registrant's Series E 7.12% Additional Convertible Debenture dated
           May 31, 1999.
4.13 - Registrant's Series F 7% Additional PIK Convertible Debenture dated 
           May 31, 1999.
10.1 - Consulting Agreement and Option Agreement between the Company
           and David Bondon. (5)
10.2  - 1986 Stock Option Plan, as amended. (6)
10.6  - Demand note issued by Registrant to United States Trust Company
           of New York. (8)
10.7  - Agreement dated June 27, 1996 between the Company and Peter Lusk.
21.1  - Subsidiaries of the Registrant. (8)
(b)      Reports on Form 8-K. No reports on Form 8-K were filed during the last
         quarter of the period covered by this report.

(1)      Incorporated by reference to the corresponding exhibit of the
         Registrant's Current Report on Form 8-K for January 3, 1994.
(2)      Incorporated by reference to exhibit 3(a) of the Registrant's
         Registration Statement on Form S-18 (File No. 33-11874).
(3)      Incorporated by reference to the exhibit 3(b) of Registrant's Annual
         Report on Form 10-K for the fiscal year ended June 30, 1988.
(4)      Incorporated by reference to exhibit 3.3 of the Registrant's Current
         Report on Form 8-K for May 29, 1991.


                                       -9-


<PAGE>




ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K (CONTINUED).


(5)      Incorporated by reference to exhibit 10(e) of the Registrant's
         Registration Statement on Form S-18 (File No. 33-11874).
(6)      Incorporated by reference to exhibit 10(j) of the Registrant's Annual
         Report on Form 10-K for the year ended June 30, 1988.
(7)      Incorporated by reference to exhibit 2.1 of the Registrant's Current
         Report on Form 8-K dated September 5, 1995.
(8)      Incorporated by reference to the corresponding exhibit of the
         Registrant's Annual Report on Form 10- KSB for the fiscal year ending
         June 30, 1994.
(9)      Incorporated by reference to the corresponding exhibit of the
         Registrant's Annual Report on Form 10- KSB for the fiscal year ending
         June 30, 1995.



                                      -10-


<PAGE>



                                   SIGNATURES

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

Date:  February 3, 1997

                                  UNSI CORPORATION



                                  By: /s/Peter Lusk
                                      Peter Lusk, Chairman of the Board

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


By:/s/Peter Lusk
   Peter Lusk, Chairman of the Board of Directors
   (Principal Executive Officer and Principal
   Financial and Accounting Officer)
Date: February 3, 1997


By:/s/Fred Katz
   Fred Katz, Director
Date: February 3, 1997


By:/s/Kenneth L. Dowd, Jr.
   Kenneth L. Dowd, Jr., Director
Date: February 3, 1997





                                      -11-


<PAGE>






                       SECURITIES AND EXCHANGE COMMISSION
















                                UNSI CORPORATION



                  EXHIBITS TO THE ANNUAL REPORT ON FORM 10-KSB
                     FOR THE FISCAL YEAR ENDED JUNE 30, 1996



                           COMMISSION FILE NO. 0-16117








                                      


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Exhibit
Number            Description

 4.12 - Registrant's Series E 7.12% Additional PIK Convertible Debenture dated
            May 31, 1999. 
 4.13 - Registrant's Series F 7% Additional PIK Convertible
            Debenture dated May 31, 1999.
10.7  - Agreement dated June 27, 1996 between the Registrant and Peter A. Lusk.