SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

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

                                   FORM 10-KSB

(Mark One)

/X/  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the fiscal year ended SEPTEMBER 30, 1996

/ /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from          to
                              ----------  ----------

                         Commission file number 0-24928

                           THE SOLOMON-PAGE GROUP LTD.
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)


                Delaware                              51-0353012
 --------------------------------------      ------------------------------
     (State or other jurisdiction of         (IRS Employer Identification
      incorporation or organization                     Number)

              1140 Avenue of the Americas, New York, New York 10036
--------------------------------------------------------------------------------
 (Address of Principal Executive Offices)              (Zip Code)

       Registrant's telephone number, including area code: (212) 764-9200

           Securities registered pursuant to Section 12(b) of the Act:

                                      NONE

           Securities registered pursuant to Section 12(g) of the Act:

                      Common Stock, without par value $.001
                         Common Stock Purchase Warrants


                  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
                                                                    ----- -----
<PAGE>

                  Check  if there  is no  disclosure  of  delinquent  filers  in
response to Item 405 of Regulation S-B contained in this form, and no disclosure
will be  contained,  to the best of the  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. / /

                  State the issuer's  revenues for its most recent  fiscal year:
The  issuer's  revenues  for the  fiscal  year  ended  September  30,  1996 were
$17,165,836.

                  The  aggregate  market  value  of the  voting  stock  held  by
non-affiliates of the Registrant computed by reference to the price at which the
stock was sold on December 20, 1996 was  approximately:  $6,459,100.  Solely for
the purposes of this  calculation,  shares held by directors and officers of the
Registrant  have  been  excluded.   Such  exclusion   should  not  be  deemed  a
determination  or an admission by the Registrant that such  individuals  are, in
fact, affiliates of the Registrant.

                  Indicate  the  number  of  shares  outstanding  of each of the
issuer's classes of common stock, as of the latest practicable date: At December
20, 1996,  there were outstanding  5,139,285  shares of the Registrant's  Common
Stock, $.001 par value.

                       DOCUMENTS INCORPORATED BY REFERENCE

                  Certain   portions  of  the   Registrant's   definitive  proxy
statement to be filed not later than January 28, 1997 pursuant to Regulation 14A
are  incorporated  by reference in Items 9 through 12 of Part III of this Annual
Report on Form 10-KSB.

                  Transitional Small Business Disclosure Format (check one):

                  Yes / /   No /X/
<PAGE>

                                     PART I


ITEM 1.           DESCRIPTION OF BUSINESS

GENERAL

         The Company is primarily engaged in the business of providing personnel
placement services in three sectors:  executive search,  contingency recruitment
and professional temporary staffing.  Executive search services are furnished in
three industry-specific categories to clients in the publishing, capital markets
and managed health care industries.  The contingency  recruitment  sector of the
Company's   business   consists   of   four   functional   practices   and   one
industry-specific   practice.   The  functional  practices  provide  contingency
recruitment  services to all industries  seeking  personnel in the legal,  human
resources,   information  systems  and  technology  and  accounting  areas.  The
industry-specific  practice  provides  contingency  recruitment  services to the
fashion services industry. Professional temporary staffing services are provided
to the information systems and technology  marketplace by Information Technology
Partners,  Inc. ("ITP"), a Delaware  corporation and wholly-owned  subsidiary of
the Company organized during 1994.

         The  Company's  revenues  are derived  primarily  from fees paid by its
clients in connection with placements  conducted by the Company on behalf of its
clients.  In the executive  search and  contingency  recruitment  sectors of the
Company's  business,  fees usually range  between 20% and 33% of the  guaranteed
first year's compensation payable to a placed employee.  In the executive search
sector,  the Company usually obtains a non-refundable  retainer of approximately
one-third  of the  estimated  fee at the  inception  of an  engagement  with the
balance of the fee payable on terms  negotiated  with the client.  A substantial
portion  of the  deferred  payment  is  usually  contingent  on  the  successful
completion  of the  placement  and,  in certain  circumstances,  no  retainer is
obtained  and the entire fee is  contingent  on a successful  placement.  In the
contingency  recruitment  sector,  the  entire fee is  usually  contingent  upon
successful  completion of the placement,  although under certain circumstances a
non-refundable  retainer  payment of a portion of the fee may be received at the
outset.  In  the  professional   temporary   staffing  sector,  the  Company  is
compensated by its clients for services provided by temporary employees assigned
by the  Company,  based on the number of hours or days  worked by each  assigned
employee at a dollar rate  negotiated  with the client.  The  Company's  primary
costs,  in  addition  to its fixed  costs such as rental  expense,  salaries  of
administrative personnel and advertising, are the variable costs attributable to
its employee  compensation.  The Company's placement counselors receive either a
base salary or a draw against  commission,  plus a commission  generally ranging
between 30% and 65% of the fees  generated by each  placement  they  effectuate,
which  percentage  varies  depending  upon  the  counselors'   seniority  and/or
historical productivity.

         The Solomon-Page  Group Ltd. is a Delaware  corporation  formed in June
1993 that succeeded to the business of a predecessor New York  corporation  with
the same name  through a merger that was effected in May 1994.  The  predecessor
commenced operations in 1990.
<PAGE>

References herein to the "Company" are references to The Solomon-Page Group Ltd.
and its subsidiary, ITP.

STAFFING INDUSTRY

         The staffing industry consists of four segments, temporary help, search
and recruitment,  professional  employer  organization  (PEO) and  outplacement.
According to the Staffing  Industry Report,  revenues for the staffing  industry
are  estimated to be $72.6  billion for 1996.  The  temporary  help segment will
generate  approximately 62%, or $45.1 billion, of the $72.6 billion in revenues.
Search and recruitment,  PEOs and outplacement  will account for 12%, 24% and 1%
respectively, of the estimated $72.6 billion.

         According to the UNITED STATES CENSUS BUREAU 1992 ANNUAL  SURVEY,  this
industry is expected to grow to over $100 billion annually by the year 2000. The
Company  believes that the staffing  industry is characterized by a large number
of small  providers of recruitment  and placement  services,  as well as several
larger providers that offer a full range of services from temporary  assignments
to permanent placement of executives.

         Permanent employee  placements can be made directly by employers or can
be made through the utilization of recruitment and placement services firms such
as the Company, which typically charge a placement fee based on the first year's
compensation  of the employee.  The Company  believes that many  recruitment and
placement  firms  specialize  in  serving  various  aspects  of this  market for
permanent   employees,   often   characterized  by   concentrations  in  certain
industries,  types  of  businesses  or  compensation  levels.  For  instance,  a
recruitment  and placement  services firm that normally  places  secretarial  or
clerical workers might not also place executives or other highly paid employees.

         Many  personnel  services  firms  such  as the  Company  specialize  in
satisfying the short-term or temporary  personnel needs of their clients.  These
firms typically are compensated based on the amount of time that their temporary
employees provide to their clients.  These firms generally  maintain a roster of
available  temporary  employees,  who are paid by the  personnel  services  firm
itself, for use by the firm's clients. Clients then arrange to pay the temporary
personnel  services firm fixed or hourly amounts for the use of these  temporary
employees, and these personnel services firms then pay their temporary employees
a lesser amount.

         PEOs,  also  known  as  "employee  leasing"  companies,  provide  human
resource  outsourcing to businesses.  PEOs assume many functions associated with
employment,  including pay processing, benefits administration,  recruitment and
various other functions.

         Certain  personnel  services  firms may also provide  more  generalized
consulting  services,  such  as  outplacement,  advising  their  clients  as  to
downsizing  strategies  and what  type of  employees  they may  require  and the
alternative  methods of securing  such  employees.  In this way, a business  may
allocate its  personnel  needs as  appropriate  between  permanent and temporary
workers.


                                       -2-
<PAGE>

         The Company believes that while the search and recruitment business may
be the most  profitable  component  of the  staffing  industry,  the  ability to
provide  interim  and  temporary  staffing  assistance  to clients  is  becoming
increasingly important as the staffing industry continues to evolve.

SCOPE OF STAFFING SERVICES PROVIDED

         The Company provides its services to clients  primarily in the New York
metropolitan  area, but increasingly on a nationwide and global basis to certain
of the industries and functional  areas that it serves.  The Company's  retained
executive search and contingency  recruitment business is currently divided into
eight groups.

Retained Executive Search

         CAPITAL MARKETS (SALES AND  TRADING/INVESTMENT  BANKING). The Company's
capital markets group primarily  services domestic and international  investment
and commercial banking  institutions.  This group places traders,  institutional
sales  people,  investment  bankers,  research  and  quantitative  analysts  and
portfolio  managers,  and focuses on middle and senior level  positions.  As the
financial  markets are global in nature,  some of the  Company's  searches  have
extended throughout North America, Asia and Europe.

         HEALTH  CARE.  The  Company's  health  care group  services  hospitals,
managed  care firms,  group  health  insurance  companies  and other health care
related companies.  The Company fills primarily middle to senior level executive
positions in various functional areas of the health care industry such as sales,
marketing, operations, financial management and medical management. In addition,
the Company  recruits  professionals  in the clinical area,  such as physicians,
nurses, therapists and other specialists.

         PUBLISHING  AND NEW  MEDIA AND  TECHNOLOGY.  The  Company's  publishing
division  provides  executive search services to businesses  engaged in consumer
and business magazine publishing, educational publishing, professional reference
and trade book publishing,  and information services on a nationwide basis. This
group  handles  primarily  retained  senior  executive  level  searches  in such
functional  areas as editorial,  marketing,  sales,  circulation and product and
technology  development.  One of the fastest  growth areas within the publishing
industry is New Media and Technology. The marketplaces serviced within this area
include  educational  and  consumer  software  publishers,  internet and website
developers,  on-line services, CD-ROM producers and distance learning companies.
The group also provides interim consulting services to this marketplace.


                                       -3-
<PAGE>

Contingency Recruitment

         INFORMATION  TECHNOLOGY.  The Company's  information  technology  group
typically   undertakes  search  assignments  in  the  computer  and  information
technology  industries  for a  diverse  client  base,  including  those  in  the
investment  banking,  financial  services,   communications,   retail  and  high
technology industries. The Company fills positions at many levels and functions,
such  as  Chief  Information  Officers  and  Directors,   project  managers  and
programmers,  as well as  less  technical  positions  such as  systems  liaison,
business systems analyst and systems analyst.

         LEGAL PROFESSIONALS.  The Company's legal professional  division serves
primarily the New York metropolitan  area,  providing  suitable attorneys to law
firms,  financial  institutions and public and privately held companies.  In law
firms,  the division fills  positions at the  associate,  of counsel and partner
level.  For  corporations,  lawyers are  provided  for all  positions  under the
auspices  of  General  Counsel.  Specialty  practice  areas  include  corporate,
banking,  real estate,  ERISA and tax law, labor and  employment,  environmental
law, trusts and estates, intellectual property and litigation.

         HUMAN  RESOURCES:  The Company's  human  resources  division  typically
undertakes  search  assignments  for a diverse  client  base,  from  Fortune 500
companies to privately-held  companies,  in various industries such as financial
services, consumer products, manufacturing,  publishing,  telecommunications and
high  technology.  The Company fills positions for such human resources areas as
management  and  organizational  planning,   compensation  and  benefits,  labor
relations  and  training.  In  addition,  the  Company  recruits  communications
professionals  with  backgrounds in areas  including  marketing  communications,
internal communications,  investor relations, public relations, media relations,
writing and editing.

         FINANCE AND  ACCOUNTING.  The Company's  finance and  accounting  group
specializes  in  providing  financial  and  accounting  personnel  such as chief
financial  officers,  controllers,  treasurers,  financial  analysts,  financial
systems  managers,  bookkeepers and other related personnel to a wide variety of
corporate  employers  in  various  industries  such  as  publishing,  investment
banking,  advertising,  insurance,  healthcare,  apparel and real estate. Within
this division, the Company has added a concentration in strategic planning. This
area  focuses  on  addressing  the needs of  clients  in the  areas of  business
planning/strategy and corporate development.

         FASHION  SERVICES.  The Company's fashion services group specializes in
providing  management,  design and other professionals to clients engaged in the
fashion services and retail industries,  including manufacturers,  specialty and
department  stores,  chains,  mass  merchandisers and catalogue  companies.  The
Company  typically fills positions at the middle to senior  executive  levels in
many industry functions such as buyers, general merchandise managers, designers,
sales people and production  professionals.  This group also provides  strategic
consulting   services  regarding   organizational   structures,   merchandising,
marketing and product development to clients in these industries.


                                       -4-
<PAGE>

Professional Temporary Staffing

         INFORMATION TECHNOLOGY PARTNERS:

         ITP  provides  professional  consulting  and  staffing  services  on an
interim basis within the  information  technology  field.  ITP services  clients
within the banking,  brokerage,  consumer products manufacturing,  insurance and
telecommunications  industries.  ITP supplies skilled professionals in the areas
of Application  Development,  Business Analysis, Help Desk Support,  Networking,
Project  Management and Quality  Assurance.  ITP supplies its clients with these
professionals primarily on a time and materials basis.


OPERATIONAL PROCEDURES

         The  Company   concentrates  on  establishing  and  maintaining  strong
relationships  with its clients in each  industry or functional  group.  In this
way, it is able to become  familiar with and sensitive to its clients'  specific
needs, thereby facilitating its ability to provide high-quality services,  which
in turn enhances client loyalty and repeat business.

         Upon  receiving  a request  to locate an  appropriate  candidate  for a
position,  the Company reviews its data base of qualified candidates to identify
the best possible  candidates to meet its client's needs.  The Company  contacts
its targeted candidates directly and meets with them prior to their introduction
to its client, so as to confirm their suitability. After arranging an interview,
the Company  continues to act as a liaison  between its client and the candidate
until an agreement is reached.  The Company communicates with most clients on an
ongoing basis in order to remain  informed as to progress of the placed employee
and the prospect of additional staffing requirements.

         The  Company   strengthens  its  relationships   with  its  clients  by
maintaining  communication  with them on an  ongoing  basis,  whether or not the
client  has a  current  outstanding  requirement  for  the  Company's  permanent
placement or temporary staffing services. In this way, the Company believes that
it is able to provide  its  clients  with the  benefit of its  experience.  This
methodology helps to develop long-term client relationships and market knowledge
whether or not the  Company is in a position  to derive an  immediate  financial
benefit.  The Company believes that its focus on comprehensive client service is
one of the primary reasons it receives a large number of new business  referrals
from existing clients.

         The  Company  recruits  its  candidates   primarily   through  targeted
telephone  solicitation and referrals by past and current candidates and through
advertising in local and national media and on the Internet.


                                       -5-
<PAGE>

         One  customer of the Company  accounted  for  approximately  15% of the
Company's revenues during the fiscal year ended September 30, 1996.

BUSINESS EXPANSION

         During the next fiscal year, the Company  intends to continue to expand
its current retained executive search,  contingency recruitment and professional
temporary  staffing business sectors through the retention of its existing staff
of  experienced  personnel  counselors as well as the addition of new counselors
with placement  experience,  who will complement the Company's  current scope of
business. Also, the Company aggressively pursues opportunities to attract highly
skilled  staffing  industry  professionals  in new areas of  retained  executive
search,  contingency recruitment and professional interim staffing on an ongoing
proactive basis.

         The  Company  intends  to focus on  blending  temporary  and  permanent
placement  services by expanding its existing presence within the Accounting and
Finance, Legal, Human Resources and New Media and Technology businesses in order
to  capitalize  on  synergies  in  client  relationships  as well  as  extensive
knowledge of applicants and consultants in these functional areas of expertise.

         The Company  believes that this expansion will achieve benefits without
major start up costs due to the  infrastructure  assembled  during the launch of
the Company's Information  Technology temporary staffing subsidiary (ITP) during
the prior two fiscal years.  This expansion  will be facilitated  through either
acquisition or continued internal growth.

         ITP is aggressively  pursuing a strategy of continued rapid  expansion,
either  by  attracting  seasoned  sales  and  recruitment  professionals  or  by
acquisition.  According to staffing industry  analysts,  information  technology
temporary  placement is the most rapidly  growing sector of the staffing  market
with high gross margins and continued forecasts of additional  long-term revenue
growth  potential.  ITP has  recruited  experienced  marketing,  recruiting  and
administrative  professionals to service Fortune 1000 and mid-sized clients on a
local,  regional and subsequently  nationwide  basis. The staff comprises senior
level individuals with existing client and consultant  relationships so that the
business  can  continue  to grow in an  expedient  manner  with a high degree of
customer satisfaction.

         This  extension  of  services  would  enable the  Company to expand its
product  mix and would  further  the  consultative  nature of  long-term  client
relationships.  This expansion  would also enable the Company to market a number
of  recruitment  services  to clients by  cross-selling  the firm's  diversified
capabilities.

COMPETITION

         The Company  believes  that the personnel  services  industry is highly
competitive  and that the services  provided by the Company are also provided by
many other companies  ranging from local,  small operations to large recruitment
and placement and temporary personnel agencies,


                                       -6-
<PAGE>

many  of  which  are  national  in  scope.  Some of the  Company's  competitors,
including all of the national firms, are  substantially  larger and have greater
financial resources than the Company.

         The Company  believes  that many  clients  generally  use more than one
company to satisfy their personnel requirements, and the major factors affecting
competition in the industry are customer service,  the availability of qualified
personnel,  reputation  for  integrity  and, to varying  degrees,  pricing.  The
Company  believes  that  it  has  a  favorable   competitive  position  that  is
attributable  to its  firm-wide  dedication  to client  service,  integrity  and
knowledge  of the markets it serves,  which  enables it to fulfill its  clients'
needs expeditiously and effectively. In addition, the diverse number of industry
categories and functional  areas of placement  provided by the Company creates a
number of  cross-selling  opportunities  in enhancing  the potential for account
penetration and increased revenues.

EMPLOYEES

         As of  September  30,  1996,  the staff of the Company  consisted of 85
full-time  employees,  including  the  Company's  four  executive  officers,  64
recruitment  and  placement   counselors  and  17  administrative  and  clerical
employees.   None  of  the  Company's   employees  is  represented  by  a  labor
organization  and  the  Company  is not  aware  of  any  activity  seeking  such
organization.  The Company considers its relationships  with its employees to be
excellent.

REGULATION

         The Company's operations are subject to state laws and regulations that
may require  employment  agencies  and/or other  personnel  services firms to be
licensed.   The  principal   requirements  of  such  laws  and  regulations  are
satisfactory  prior  experience  and  good  moral  character.  Requirements  for
licensing vary from state to state in those states that mandate  licensing.  The
Company believes that it has obtained all licenses and registrations material to
the conduct of its business.

TRADEMARKS AND SERVICE MARKS

         The Company does not own any  registered  trademarks,  service marks or
trademarks,  but may seek  the  registration  of its  logo or trade  name in the
future.

ITEM 2.           DESCRIPTION OF PROPERTY

         In May 1993,  the Company  entered  into a lease,  expiring  August 31,
2006, for approximately 9,400 square feet of office space in New York, New York,
which is the  Company's  principal  executive  office.  The lease  provides  for
minimum annual rental and utility  obligations  for years two through six of the
lease (after one rent-free year) of approximately  $210,000. It further provides
for minimum annual rental and utility  obligations for years seven through 11 of
the lease of  approximately  $226,000 and for minimum  annual rental and utility
obligations for years 12 and 13 of the lease of approximately $282,000.


                                       -7-
<PAGE>

         In December  1994,  the Company  amended the lease  described  above to
include  approximately  9,400 square feet of additional office space at the same
location.  The minimum annual rental and utility  obligations for the additional
office space through  September 30, 2000 is  approximately  $259,000 (after four
rent-free  months  following the first  anniversary  and four  rent-free  months
following  the second  anniversary  of the amendment  commencement  date) and is
$306,000 from October 1, 2000 through August 31, 2006. The Company occupied this
space in July 1995.

ITEM 3.           LEGAL PROCEEDINGS

         On July 3, 1996, Information Technology Partners,  Inc., a wholly-owned
subsidiary  of the Company  ("ITP")  commenced an action in the Supreme Court of
the State of New York,  County of New York against  Eastbourne Loss  Prevention,
Inc.  ("Eastbourne")  seeking  damages for breach of contract  for  Eastbourne's
failure to pay for  services  provided  by ITP.  Subsequently,  on July 9, 1996,
Eastbourne commenced an action in the same court against the Company, ITP, Lloyd
Solomon,  the Vice  Chairman  of the Board and a director of the  Company,  Eric
Davis,  the Chief  Financial  Officer and a director of the Company,  and Martin
Cook,  a former  executive  of ITP,  alleging in  connection  with  products and
services  provided to  Eastbourne  by ITP (i) common law breach of contract  and
breach of contract under the Uniform Commercial Code (the "UCC"), (ii) breach of
warranty of  merchantability  under the UCC,  (iii)  breach of implied  warranty
under the UCC,  (iv) fraud and (v) breach of implied  covenant of good faith and
fair dealing, and seeking a declaratory judgment that Eastbourne is not required
to pay any money to the Company for such products and services and to enjoin the
Company  from  making  any  statement  to the  effect  that  Eastbourne  has any
obligations  to  the  Company.  Eastbourne  is  seeking  damages  in  excess  of
$3,050,000.  ITP has moved to  consolidate  the  actions,  which motion is still
pending.

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

         The  Company's  Common Stock is traded on the National  Association  of
Securities Dealers Automated Quotation (Nasdaq) SmallCap market under the symbol
SOLP. The table below sets forth the range of sale prices of the Common Stock as
reported by Nasdaq for the fiscal periods specified,  beginning with the date on
which trading in the Common Stock commenced on Nasdaq.


                                       -8-
<PAGE>

                                                               Common Stock
                                                             High         Low
                                                             ----         ---
FISCAL 1996

First Quarter .......................................       $15/16        $1/2
Second Quarter ......................................        7/8          5/16
Third Quarter .......................................       2-1/2         27/32
Fourth Quarter ......................................      2-11/16        1-1/2

FISCAL 1995

First Quarter (commencing October 21, 1994) .........       $6-5/8       $1-1/8
Second Quarter ......................................       2-1/4           1
Third Quarter .......................................      3-11/32       1-3/16
Fourth Quarter ......................................       1-1/2         13/16


         As of December 20, 1996,  there were 33 record holders of the Company's
Common Stock.  The Company  believes that there are in excess of 700  beneficial
owners of its Common Stock additional to such record holders.

         The Company has never paid any  dividends  on its Common Stock and does
not  intend  to pay  such  dividends  in the  foreseeable  future.  The  Company
currently  intends to retain any future  earnings for the development and growth
of the Company.

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

         The  following  discussion  of the  Company's  financial  condition and
results  of  operations  should  be  read in  conjunction  with  the  historical
financial statements and notes thereto appearing elsewhere in this document.

OVERVIEW

         The Company is primarily engaged in the business of providing personnel
placement services in three sectors:  executive search,  contingency recruitment
and professional temporary staffing.  Executive search services are furnished in
three industry-specific categories to clients in the publishing, capital markets
and managed health care industries.  The contingency  recruitment  sector of the
Company's   business   consists   of   four   functional   practices   and   one
industry-specific   practice.   The  functional  practices  provide  contingency
recruitment  services to all industries  seeking  personnel in the legal,  human
resources,   information  systems  and  technology  and  accounting  areas.  The
industry-specific  practice  provides  contingency  recruitment  services to the
fashion services industry. Professional temporary staffing services are provided
to the


                                       -9-
<PAGE>

information systems and technology marketplace by ITP, a wholly-owned subsidiary
of the Company.

         The following is a summary of the Company's  consolidated financial and
operating data:

                                               Fiscal Year Ended September 30,
                                               -------------------------------
Statements of Operations Data:                    1996                   1995
------------------------------                    ----                   ----
Revenue                                       $17,165,836            $7,331,053
Income [Loss] from Operations                     509,313            (2,093,633)
Net Income [Loss]                                 710,326            (1,927,834)
Primary Income [Loss] Per Common Share               $.14                 $(.39)
                                          
Balance Sheet Data:                          September 30, 1996
-------------------                          ------------------
Working Capital                                $5,530,320
Total Assets                                    9,613,173
Long-term Debt, Net of Current Maturities          98,203
Stockholders' Equity                            7,065,350

RESULTS OF OPERATIONS

FISCAL 1996 COMPARED TO FISCAL 1995

         Revenue  increased  to  approximately  $17,166,000  for the fiscal year
ended  September 30, 1996,  from  approximately  $7,331,000  for the fiscal year
ended  September 30, 1995,  an increase of  approximately  $9,835,000,  or 134%.
Revenues  from  the  Company's   retained   executive   search  and  contingency
recruitment  business were  approximately  $10,559,000 for the fiscal year ended
September 30, 1996 compared to  approximately  $5,831,000 for the same period in
1995  and  revenues  from  the  professional   interim  staffing  business  were
approximately  $6,607,000 for the fiscal year ended  September 30, 1996 compared
to approximately $1,500,000 for the same period in 1995.

         The increase in revenues for the fiscal year ended  September  30, 1996
compared  with the  fiscal  year  ended  September  30,  1995 for the  Company's
retained  executive search and contingency  recruitment sector can be attributed
to the expansion of its client base,  strong demand for personnel  from existing
clients and hiring of additional  experienced  counselors.  In addition,  during
1995 the Company expanded into providing executive search services to clients in
the  publishing  industry and augmented its presence in the managed  health care
area through the expansion of executive  search  services to managed health care
clients on the West Coast.  These expanded  operations  also  contributed to the
increase in revenues for the fiscal year ended September 30, 1996. The Company's
professional  interim staffing business,  which commenced operations in November
1994,  experienced a significant  increase in revenues for the fiscal year ended
September  30,  1996  compared  to the same  period in 1995.  The  increase  was
attributable  to the retention of experienced  sales and  recruiting  personnel,
establishment  of various  customer  relationships as well as the expansion into
new geographical markets.


                                      -10-
<PAGE>

         Selling  expenses for the fiscal year ended  September 30, 1996 totaled
approximately   $12,763,000  (74%  of  revenues)   compared  with  approximately
$6,255,000  (85% of revenues) for the fiscal year ended  September 30, 1995. The
improvements as a percentage of revenues  relates to operating  efficiencies and
economies of scale associated with increased  revenues.  The increase in selling
expenses is directly related to the Company's  subsidiary ITP, which contributed
approximately  $5,369,000  of the  increased  costs for the  fiscal  year  ended
September  30,  1996.  Such  costs  consist  primarily  of payroll  relating  to
temporary staffing requirements, salaries and commissions on sales and recurring
personnel, employee benefits and advertising expenses.

         General  and   Administrative   expenses   increased  to  approximately
$3,653,000  (21% of revenues) for the fiscal year ended  September 30, 1996 from
approximately  $3,021,000  (41% of revenues) for the fiscal year ended September
30,  1995.  The  improvement  as a percentage  of revenues  relates to operating
efficiencies  and economies of scale  associated  with increased  revenues.  The
increase in general  and  administrative  expenses is  primarily a result of the
Company's  planned  business  expansion  through  the  retention  of  additional
administrative personnel, leasing additional office space and professional fees.

         Depreciation  and  Amortization for the fiscal year ended September 30,
1996 totaled approximately  $241,000 compared to approximately  $148,000 for the
same period in 1995. The increase is due to  amortization  of intangible  assets
related to the  acquisition of trade names along with the acquisition of capital
assets,  such as  computer  equipment,  furniture  and  fixtures  and  leasehold
improvements.

         Income  from  operations  as a result  of the  above-mentioned  factors
increased to  approximately  $509,000 in fiscal 1996 from an  operating  loss of
approximately $2,094,000 in fiscal 1994.

         Due to  the  factors  mentioned  above  net  income  was  approximately
$710,000 for the fiscal year ended  September 30, 1996 compared to a net loss of
approximately $1,928,000 for the fiscal year ended September 30, 1995.

FISCAL 1995 COMPARED TO FISCAL 1994

         Total Revenues increased from  approximately  $4,914,000 for the fiscal
year 1994 to  approximately  $7,331,000 for the fiscal year 1995, an increase of
approximately  $2,417,000 or 49%.  Revenues from the Company's  executive search
and contingency recruitment business were approximately  $5,831,000 and revenues
from the information  technology temporary staffing and consulting business were
approximately $1,500,000 in fiscal 1995.

         The  increase  in revenues  from fiscal 1994 to 1995 for the  Company's
executive  search and  contingency  recruitment  sector can be attributed to the
expansion of its client  base,  increased  revenues  from  existing  clients and
hiring of  additional  experienced  counselors.  In  addition,  during  1995 the
Company purchased a business  providing  executive search services to clients in
the  publishing  industry and augmented its presence in the managed  health care
area through the


                                      -11-
<PAGE>

acquisition  of a  California-based  provider of  executive  search  services to
managed health care clients on the West Coast. This acquisition also contributed
to the increase in revenues.

         Selling expenses for fiscal 1995 totalled approximately $6,255,000 (85%
of  revenues),  compared  with  approximately  $3,667,000  (75% of revenues) for
fiscal 1994.  The increase in selling  expenses was accounted for in part by the
commencement  of operations of the Company's  subsidiary,  ITP,  which  provides
professional   temporary  staffing  services  to  the  information  systems  and
technology  marketplace.  The primary  selling  expense  associated  with ITP is
payroll  and  related   expenses  for  the  temporary   employees,   which  were
approximately  70% of ITP revenues for fiscal  1995.  The Company also  incurred
other costs in connection with ITP and the expansion of its executive search and
contingency  recruitment  businesses,  consisting  primarily of salaries,  sales
commissions and related  employee  benefits,  advertising,  public relations and
various other costs. The Company  anticipates that revenue growth will more than
offset the increase in selling expenses.

         General  and  Administrative   expenses  increased  from  approximately
$1,171,000  in fiscal 1994 (24% of  revenues)  to  approximately  $3,021,000  in
fiscal 1995 (41% of  revenues),  an increase of  approximately  $1,850,000.  The
increase in general and  administrative  expenses is primarily the result of the
Company's planned business expansion, which included the retention of additional
administrative and financial  personnel and the leasing of new office space. The
Company  anticipates  that  general  and  administrative  expenses  will  remain
relatively constant in subsequent fiscal years and are expected to be sufficient
to support the Company's  anticipated revenue growth for the foreseeable future.
The Company also incurred increased professional fees.

         Depreciation and  Amortization  expenses  increased from  approximately
$60,000 in fiscal 1994 to approximately  $148,000 in fiscal 1995, an increase of
approximately  $88,000.  The increase is  primarily  due to the  acquisition  of
capital assets, such as computer equipment, furniture and fixtures and leasehold
improvements.

         Interest income increased to approximately $274,000 in fiscal 1995 from
approximately  $9,000 for the same period in 1994, an increase of $265,000.  The
increase is due directly to  investing  the  proceeds of the  Company's  initial
public offering of common stock in October 1994.  Interest expense  increased to
approximately  $66,000  for fiscal  1995 from  approximately  $53,000 for fiscal
1994, an increase of $13,000,  due to capital lease  obligations  for furniture,
fixtures and equipment.

         Net Loss as a result of the  above-mentioned  factors was approximately
$1,928,000  in fiscal 1995 compared to a net loss of  approximately  $259,000 in
fiscal 1994.


                                      -12-
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         As of September 30, 1996, the Company's  sources of liquidity  included
approximately   $3,424,000  in  cash  and  cash   equivalents   and   short-term
investments.  In  addition,  the Company had  working  capital of  approximately
$5,530,000  at September  30,  1996.  Capital  expenditures  for fiscal 1997 are
expected to be approximately  $400,000.  The Company is currently in the process
of  establishing a credit facility to increase  liquidity,  although there is no
assurance  that such a facility on terms  satisfactory  to the  Company  will be
established.

         Cash flows used in operating activities were approximately $650,000 for
the fiscal year ended  September 30, 1996. The primary use of cash for operating
activities  was to fund the  increase in accounts  receivable  related to higher
revenues.  Accounts receivable  increased  approximately  $2,945,000 compared to
September 30, 1995. Cash used in investing  activities for the fiscal year ended
September 30, 1996 totaled approximately $1,568,000,  most of which was used for
the purchase of investments.

         The Company is engaged in negotiations  for an additional  9,400 square
feet at its  current  headquarters  with a rental  rate  similar to that for the
floors it occupies under its existing lease.

         The Company  believes  that its current cash  position  and  investment
balances will be sufficient to support current working capital  requirements for
the next 12 months.

IMPACT OF INFLATION

         Inflation has not been a major factor in the Company's  business  since
inception. There can be no assurances that this will continue.

NEW AUTHORITATIVE ACCOUNTING PRONOUNCEMENTS

         The Financial  Accounting  Standards Board ["FASB"] issued Statement of
Financial  Accounting Standards ["SFAS"] No. 121, "Accounting for the Impairment
of Long-Lived  Assets and for Long-Lived Assets to Be Disposed Of, " in March of
1995.  SFAS No. 121  establishes  accounting  standards  for the  impairment  of
long-lived assets,  certain  identifiable  intangibles,  and goodwill related to
those  assets  to be held  and  used,  and for  long-lived  assets  and  certain
identifiable  intangibles  to be  disposed  of.  SFAS No. 121 is  effective  for
financial  statements issued for fiscal years beginning after December 15, 1995.
Adoption  of SFAS No.  121 is not  expected  to have a  material  impact  on the
Company's financial statements.

         The FASB has also  issued  SFAS No. 123,  "Accounting  for  Stock-Based
Compensation,"  in October of 1995.  SFAS No. 123 uses a fair value based method
of accounting for stock options and similar equity  instruments as contrasted to
the  intrinsic  value  based  method  of  accounting  prescribed  by  Accounting
Principles  Board  ["APB"]  Opinion  No.  25,  Accounting  for  Stock  Issued to
Employees.  The  accounting  requirements  of SFAS  No.  123 are  effective  for
transactions  entered into in fiscal  years that begin after  December 15, 1995;
the disclosure


                                      -13-
<PAGE>

requirements  of SFAS No. 123 are effective for financial  statements for fiscal
years beginning after December 15, 1995. The Company  anticipates  continuing to
account for stock-based  compensation using the intrinsic value method. SFAS No.
123 will not have an impact on the Company's  results of operations or financial
position.

         The FASB issued SFAS No. 125,  "Accounting  for Transfers and Servicing
of Financial Assets and  Extinguishment  of Liabilities." In June 1996, SFAS No.
125 provides  accounting and reporting  standards  which are based on consistent
application of a "financial-components  approach" that focuses on control. Under
that approach,  after a transfer of financial  assets,  an entity recognized the
financial and servicing  assets it controls and the liabilities it has incurred,
derecognizes   financial   assets  when  control  has  been   surrendered,   and
derecognizes  liabilities  when  extinguished.  SFAS No.  125 is  effective  for
transfers  and  servicing  of financial  assets  extinguishment  of  liabilities
occurring  after December 31, 1996.  Adoption of SFAS No. 125 is not expected to
have an impact on the Company's financial statements.


ITEM 7.           FINANCIAL STATEMENTS

         See Index to Financial Statements.

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

         None.


                                      -14-
<PAGE>

                                    PART III

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

                  The  information  required  by this  item is  incorporated  by
reference from the Company's  definitive  proxy  statement to be filed not later
than  January  28,  1997  pursuant to  Regulation  14A of the General  Rules and
Regulations under the Securities Exchange Act of 1934 ("Regulation 14A").

ITEM 10.          EXECUTIVE COMPENSATION.

                  The  information  required  by this  item is  incorporated  by
reference from the Company's  definitive  proxy  statement to be filed not later
than January 28, 1997 pursuant to Regulation 14A.

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

                  The  information  required  by this  item is  incorporated  by
reference from the Company's  definitive  proxy  statement to be filed not later
than January 28, 1997 pursuant to Regulation 14A.

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

                  The  information  required  by this  item is  incorporated  by
reference from the Company's  definitive  proxy  statement to be filed not later
than January 28, 1997 pursuant to Regulation 14A.


                                      -15-
<PAGE>

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

(a)      EXHIBITS

Exhibit
Number                          Exhibits
------                          --------

3.1   (a)   Certificate of Incorporation,  as amended, of The Solomon-Page Group
            Ltd.  (Incorporated  by reference to Exhibit 3.1(a) to  Registration
            Statement on Form SB-2, No. 33-81026)

      (b)   Certificate  of Amendment to  Certificate  of  Incorporation  of The
            Solomon- Page Group Ltd (Incorporated by reference to Exhibit 3.1(b)
            to Registration Statement on Form SB-2, No. 33-81026)

3.2         Amended  and  Restated  By-Laws  of  the  Company  (Incorporated  by
            reference to Exhibit 3 to the Company's  Current  Report on Form 8-K
            dated June 8, 1995)

4.1         Specimen  Common  Stock  Certificate  (Incorporated  by reference to
            Exhibit 4.1 to Registration Statement on Form SB-2, No. 33-81026)

4.2         Specimen Warrant Certificates  (Incorporated by reference to Exhibit
            4.2 to Registration Statement on Form SB-2, No. 33-81026)

10.1        1993 Long Term Incentive Plan  (Incorporated by reference to Exhibit
            10.2 to Registration Statement on Form SB-2, No. 33-81026)

10.2        1995 Directors'  Stock Option Plan of the Company  (Incorporated  by
            reference to Exhibit 99.1 to the  Company's  Current  Report on Form
            8-K dated June 8, 1995)

10.3        Employment  Agreement  dated June 14, 1993, as amended,  between the
            Company and Herbert  Solomon  (Incorporated  by reference to Exhibit
            10.3 to Registration Statement on Form SB-2, No. 33-81026)

10.4        Employment  Agreement  dated June 14, 1993, as amended,  between the
            Company and Lloyd Solomon (Incorporated by reference to Exhibit 10.4
            to Registration Statement on Form SB-2, No. 33-81026)

10.5        Amendment  dated June 8, 1995 to that certain  Employment  Agreement
            dated as of June 14,  1993,  by and  between  the  Company and Lloyd
            Solomon  (Incorporated by reference to Exhibit 99.4 to the Company's
            Current Report on Form 8-K dated June 8, 1995)

10.6        Employment  Agreement  dated June 14, 1993, as amended,  between the
            Company and Scott Page (Incorporated by reference to Exhibit 10.5 to
            Registration Statement on Form SB-2, No. 33-81026)

10.7        Amendment  dated June 8, 1995 to that certain  Employment  Agreement
            dated as of June 14, 1993, by and between the Company and Scott Page
            (Incorporated by reference to Exhibit 99.5 to the Company's  Current
            Report on Form 8-K dated June 8, 1995)


                                      -16-
<PAGE>

*10.8       1996 Stock Option Plan

10.9        Form  of  Indemnification  Agreement  between  the  Company  and its
            officers and directors  (Incorporated  by reference to Exhibit 10.13
            to the Company's Form 10-KSB for the fiscal year ended September 30,
            1995)

10.10       Charter  of the Audit  Committee  of the Board of  Directors  of the
            Company  (Incorporated by reference to Exhibit 99.2 to the Company's
            Current Report on Form 8-K dated June 8, 1995)

10.11       The  Company's  Policy on  Transactions  in  Company  Securities  by
            Company Officers, Directors and Employees (Incorporated by reference
            to Exhibit 99.3 to the  Company's  Current  Report on Form 8-K dated
            June 8, 1995)

*23         Consent of Moore Stephens P.C. dated December __, 1996

*27         Financial Data Schedule

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

*        Filed herewith.

(b)      Reports on Form 8-K

         None.


                                      -17-
<PAGE>

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

                                        THE SOLOMON-PAGE GROUP LTD.


Dated:   December 27, 1996              By: /S/ LLOYD SOLOMON
                                            ------------------------------------
                                            Lloyd Solomon
                                            Vice Chairman of the Board

         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 and on the dates indicated:


      Signature                      Title                          Date
      ---------                      -----                          ----

/S/ HERBERT SOLOMON       Chairman of the Board and           December 27, 1996
-----------------------
Herbert Solomon           Director



/S/ LLOYD SOLOMON         Vice Chairman of the Board and      December 27, 1996
-----------------------   Director (Principal Executive
Lloyd Solomon             Officer)                     



-----------------------   President and Director              December __, 1996
Scott Page



/S/ ERIC M. DAVIS         Vice President - Finance, Chief     December 27, 1996
-----------------------   Financial Officer and Director    
Eric M. Davis             (Principal Financial and          
                          Accounting Officer)               



                          Director                            December __, 1996
-----------------------
Edward Ehrenberg


/S/ JOEL A. KLARREICH     Director                            December 27, 1996
-----------------------
Joel A. Klarreich


                                      -18-
<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
--------------------------------------------------------------------------------

INDEX TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                                                                            PAGE


Independent Auditor's Report ..........................................    F-2..

Consolidated Balance Sheet as of September 30, 1996 ...................    F-3..

Consolidated Statements of Operations for the years ended
September 30, 1996 and 1995............................................    F-5..

Consolidated Statements of Stockholders' Equity for the years ended
September 30, 1996 and 1995............................................    F-6..

Consolidated Statements of Cash Flows for the years ended
September 30, 1996 and 1995............................................    F-7..

Notes to Consolidated Financial Statements ............................    F-9..


                             . . . . . . . . . . . .


                                       F-1
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT


To the Stockholders and Board of Directors of
   The Solomon-Page Group Ltd.


                  We have audited the accompanying consolidated balance sheet of
The Solomon-Page Group Ltd. and its subsidiary as of September 30, 1996, and the
related consolidated  statements of operations,  stockholders'  equity, and cash
flows for each of the two fiscal years in the period ended  September  30, 1996.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
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  consolidated   financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and  significant  estimates made by  management,  as well as evaluating the
overall  consolidated  financial  statement  presentation.  We believe  that our
audits provide a reasonable basis for our opinion.

                  In our opinion, the consolidated financial statements referred
to above present fairly, in all material  respects,  the consolidated  financial
position of The  Solomon-Page  Group Ltd. and its subsidiary as of September 30,
1996, and the consolidated  results of their operations and their cash flows for
each of the two  fiscal  years  in the  period  ended  September  30,  1996,  in
conformity with generally accepted accounting principles.


                                        /s/ MOORE STEPHENS, P. C.

                                        MOORE STEPHENS, P. C.
                                        Certified Public Accountants.

Cranford,  New Jersey
December 6, 1996, except as to
Note 15, for which the date is
December 18, 1996


                                       F-2
<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
--------------------------------------------------------------------------------

CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1996.
--------------------------------------------------------------------------------

ASSETS:
CURRENT ASSETS:
   Cash and Cash Equivalents                                     $     2,113,556
   Short-Term Investments                                              1,310,325
   Accounts Receivable - [Net of Allowance for                 
     Doubtful Accounts of $89,900]                                     4,160,090
   Other Current Assets                                                  129,977
                                                                 ---------------
                                                               
   TOTAL CURRENT ASSETS                                                7,713,948
                                                                 ---------------
FURNITURE AND EQUIPMENT:                                       
   Furniture and Fixtures                                                274,716
   Office Equipment                                                      850,715
   Leasehold Improvements                                                223,350
                                                                 ---------------
                                                               
   Total - At Cost                                                     1,348,781
   Less: Accumulated Depreciation and Amortization                       409,962
                                                                 ---------------
   FURNITURE AND EQUIPMENT - NET                                         938,819
                                                                 ---------------
                                                               
OTHER ASSETS:                                                  
   Intangible Assets - [Net of Accumulated                     
     Amortization of $46,274]                                            553,327
   Due from Related Parties                                              176,283
   Security Deposits                                                      85,278
   Restricted Investment                                                  34,466
   Other Assets                                                          111,052
                                                                 ---------------

   TOTAL OTHER ASSETS                                                    960,406
                                                                 ---------------

   TOTAL ASSETS                                                  $     9,613,173
                                                                 ===============

              The Accompanying Notes are an Integral Part of these
                       Consolidated Financial Statements.


                                       F-3
<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
--------------------------------------------------------------------------------

CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1996.
--------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
   Accrued Salaries and Commissions                             $     1,293,193
   Accounts Payable and Accrued Expenses                                676,955
   Current Portion of Obligations Under Capital Leases                  120,918
   Other Current Liabilities                                             92,562
                                                                ---------------

   TOTAL CURRENT LIABILITIES                                          2,183,628
                                                                ---------------

LONG-TERM LIABILITIES:
   Obligations Under Capital Leases                                      98,203
   Deferred Credit                                                      265,992
                                                                ---------------

   TOTAL LONG-TERM LIABILITIES                                          364,195
                                                                ---------------

COMMITMENTS AND CONTINGENCIES                                                --
                                                                ---------------
STOCKHOLDERS' EQUITY:
   Preferred Stock - Par Value $.001 Per Share; Authorized
     2,000,000 Shares, None Issued or Outstanding                            --

   Common Stock - Par Value $.001 Per Share;
     Authorized 20,000,000 Shares, Issued and
     Outstanding 5,139,285 Shares                                         5,139

   Additional Paid-in Capital                                         8,488,247

   Accumulated Deficit                                               (1,428,036)
                                                                ---------------

   TOTAL STOCKHOLDERS' EQUITY                                         7,065,350
                                                                ---------------

   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $     9,613,173
                                                                ===============


              The Accompanying Notes are an Integral Part of these
                       Consolidated Financial Statements.


                                       F-4
<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                  YEARS ENDED
                                                                 SEPTEMBER 30,
                                                           1 9 9 6             1 9 9 5
                                                           -------             -------
<S>                                                    <C>                 <C>            
REVENUE                                                $    17,165,836     $     7,331,053
                                                       ---------------     ---------------

SELLING EXPENSES                                            12,762,977           6,255,251

GENERAL AND ADMINISTRATIVE                                   3,652,619           3,021,184

DEPRECIATION AND AMORTIZATION                                  240,927             148,251
                                                       ---------------     ---------------

   TOTAL OPERATING EXPENSES                                 16,656,523           9,424,686
                                                       ---------------     ---------------

   INCOME [LOSS] FROM OPERATIONS                               509,313          (2,093,633)
                                                       ---------------     ---------------

OTHER INCOME [EXPENSES]:
   Interest and Dividend Income                                130,937             274,302
   Interest Expense                                            (49,215)            (65,951)
   Net Realized and Unrealized Gain on Investments             137,411                  --
   Amortization of Deferred Financing Costs                         --             (60,000)
   Other Income [Expense]                                        1,080             (13,000)
                                                       ---------------     ---------------

   TOTAL OTHER INCOME                                          220,213             135,351
                                                       ---------------     ---------------

   INCOME [LOSS] BEFORE INCOME TAX EXPENSE [BENEFIT]           729,526          (1,958,282)

INCOME TAX EXPENSE [BENEFIT]                                    19,200             (30,448)
                                                       ---------------     ---------------

   NET INCOME [LOSS]                                   $       710,326     $    (1,927,834)
                                                       ===============     ===============

PRIMARY INCOME [LOSS] PER COMMON SHARE                 $           .14     $          (.39)
                                                       ===============     ===============

FULLY DILUTED INCOME [LOSS] PER COMMON SHARE           $           .13     $          (.39)
                                                       ===============     ===============
</TABLE>

              The Accompanying Notes are an Integral Part of these
                       Consolidated Financial Statements.


                                       F-5
<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                     Additional                      Total
                                                                                     ----------                      -----
                                      Preferred Stock          Common Stock            Paid-in     Accumulated   Stockholders'
                                      ---------------          ------------            -------     -----------   -------------
                                     Shares      Amount     Shares       Amount        Capital       Deficit        Equity
                                     ------      ------     ------       ------        -------       -------        ------
<S>                                 <C>        <C>          <C>        <C>         <C>           <C>             <C>         
BALANCE - SEPTEMBER 30, 1994               --  $      --    2,550,000  $    2,550  $    856,678  $    (210,528)  $    648,700

  Initial Public Offering                  --         --    2,300,000       2,300     7,541,683             --      7,543,983

  Issuance of Bridge Units                 --         --      175,000         175            --             --            175

  Issuance of Common Stock
    Relating to Acquisitions               --         --      114,285         114        89,886             --         90,000

  Net [Loss]                               --         --           --          --            --     (1,927,834)    (1,927,834)
                                    ---------  ---------  -----------  ----------  ------------  -------------   ------------

BALANCE - SEPTEMBER 30, 1995               --         --    5,139,285       5,139     8,488,247     (2,138,362)     6,355,024

  Net Income                               --         --           --          --            --        710,326        710,326
                                    ---------  ---------  -----------  ----------  ------------  -------------   ------------

BALANCE - SEPTEMBER 30, 1996               --  $      --    5,139,285  $    5,139  $  8,488,247  $  (1,428,036)  $  7,065,350
                                    =========  =========  ===========  ==========  ============  =============   ============
</TABLE>

              The Accompanying Notes are an Integral Part of these
                       Consolidated Financial Statements.


                                       F-6
<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                          Years Ended
                                                                         September 30,
                                                                     1 9 9 6          1 9 9 5
                                                                     -------          -------
<S>                                                             <C>                 <C>             
OPERATING ACTIVITIES:
   Net Income [Loss]                                            $       710,326     $    (1,927,834)
                                                                ---------------     ---------------
   Adjustments to Reconcile Net Income [Loss] to
     Net Cash [Used for] Operating Activities:
     Depreciation and Amortization                                      240,927             148,251
     Provision for Losses on Accounts Receivable                        235,157              62,500
     Deferred Taxes                                                          --             (30,448)
     Amortization of Deferred Financing Costs                                --              60,000
     [Gain] Loss on Disposal of Assets                                     (580)             13,000
     Deferred Credit                                                     52,139               3,679
     Net Realized and Unrealized Gain on Investments                   (137,411)                 --

   Changes in Assets and Liabilities:
     [Increase] Decrease in:
       Accounts Receivable                                           (2,944,843)           (441,608)
       Other Current Assets                                            (120,881)              7,332
       Security Deposits                                                 (7,531)            (45,391)

     Increase [Decrease] in:
       Accounts Payable and Accrued Expenses                          1,260,388              31,069
       Other Current Liabilities                                         62,198              25,004
                                                                ---------------     ---------------

     Total Adjustments                                               (1,360,437)           (166,612)
                                                                ---------------     ---------------

   NET CASH - OPERATING ACTIVITIES                                     (650,111)         (2,094,446)
                                                                ---------------     ---------------

INVESTING ACTIVITIES:
   Purchases of Investments                                          (4,618,641)                 --
   Proceeds from Sales of Investments                                 3,446,508                  --
   Proceeds from Insurance Claim                                         23,799                  --
   Capital Expenditures                                                (302,189)           (520,316)
   Acquisitions of Trade Names                                         (179,601)           (345,000)
   Proceeds from Asset Sales                                                 --               2,000
   Transfer from Restricted Investment                                   90,043             127,682
   Advances to Related Parties                                          (46,888)           (123,541)
   Cash Received from Related Parties                                    19,000                  --
                                                                ---------------     ---------------

   NET CASH - INVESTING ACTIVITIES                                   (1,567,969)           (859,175)
                                                                ---------------     ---------------

FINANCING ACTIVITIES:
   Principal Payments Under Capital Lease Obligations                  (113,525)            (97,873)
   Proceeds from Public Offering                                             --           7,915,067
   Repayment of Bridge Loans                                                 --            (400,000)
   Cash Paid to Related Parties                                              --             (54,201)
                                                                ---------------     ---------------

   NET CASH - FINANCING ACTIVITIES                                     (113,525)          7,362,993
                                                                ---------------     ---------------

   NET [DECREASE] INCREASE IN CASH AND CASH EQUIVALENTS -
     FORWARD                                                    $    (2,331,605)    $     4,409,372
</TABLE>

              The Accompanying Notes are an Integral Part of these
                       Consolidated Financial Statements.


                                       F-7
<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                          YEARS ENDED
                                                                         SEPTEMBER 30,
                                                                    1 9 9 6          1 9 9 5
                                                                    -------          -------
<S>                                                           <C>                 <C>            
   NET [DECREASE] INCREASE IN CASH AND CASH EQUIVALENTS -
     FORWARDED                                                $    (2,331,605)    $     4,409,372

CASH AND CASH EQUIVALENTS - BEGINNING OF YEARS                      4,445,161              35,789
                                                              ---------------     ---------------

   CASH AND CASH EQUIVALENTS - END OF YEARS                   $     2,113,556     $     4,445,161
                                                              ===============     ===============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid during the years for:
     Interest                                                 $        49,215     $        55,733
     Income Taxes                                             $            --     $            --
</TABLE>

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
   During  fiscal 1995,  the Company  acquired  $19,500 of  equipment  utilizing
capital lease obligations.

   During fiscal 1995,  the Company issued 114,285 shares of common stock valued
at $90,000 in connection with the acquisition of a trade name.

              The Accompanying Notes are an Integral Part of these
                       Consolidated Financial Statements.


                                       F-8
<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

[1] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION - The Solomon-Page  Group Ltd. and its subsidiary  provide retained
executive  search  contingency  recruitment  services  in the  fields of capital
markets,  accounting and finance, fashion, human resources,  legal, health care,
publishing,  information systems and technology. Temporary staffing services are
provided  in the fields of  information  systems  and  technology.  The  Company
provides its services  principally in the New York metropolitan area through its
offices located in New York and New Jersey.  The Company also provides  services
in California and Georgia through its offices located in those areas.

PRINCIPLES OF CONSOLIDATION - The consolidated  financial statements include the
accounts of the Company and its subsidiary.  All material  intercompany accounts
and transactions are eliminated.

REVENUE  RECOGNITION  - Search  revenues are  recognized in  contingency  search
engagements  upon the  successful  completion of the  assignment.  In a retained
search engagement,  the non-refundable  retainer is recognized upon execution of
the agreement, with the balance recognized on completion of the search. Reserves
are  established  to estimate  losses due to placed  candidates not remaining in
employment for the Company's  guarantee  period.  Temporary  staffing revenue is
recognized when the temporary personnel provide the service.

FURNITURE,  EQUIPMENT  AND  LEASEHOLD  IMPROVEMENTS  - Furniture,  equipment and
leasehold improvements are recorded at cost.

DEPRECIATION  AND   AMORTIZATION  -  Depreciation  is  computed   utilizing  the
straight-line method based on estimated useful lives ranging from three to seven
years.  Amortization  is computed  utilizing the  straight-line  method over the
remaining  lease term.  Depreciation  expense was  $203,153 and $139,751 for the
years ended September 30, 1996 and 1995, respectively.

DEFERRED  INCOME  TAXES - The Company  accounts  for  deferred  income  taxes in
accordance with Statement of Financial  Accounting  Standards  ["SFAS"] No. 109.
The statement  requires that deferred income taxes reflect the tax  consequences
on future years of differences  between the tax bases of assets and  liabilities
and their financial reporting amounts.

DEFERRED  CREDIT - The  Company's  lease on its  premises  provides for periodic
increases  over the lease term.  Pursuant to Statement  of Financial  Accounting
Standard  ["SFAS"] No. 13, the Company  records rent expense on a  straight-line
basis. The effect of these differences is recorded as a deferred credit.

CASH AND CASH  EQUIVALENTS - Cash  equivalents  are comprised of certain  highly
liquid investments with a maturity of three months or less when purchased.

INCOME  [LOSS] PER SHARE - Income  [Loss] per share of common  stock is based on
the  weighted  average  number  of common  shares  outstanding  for each  period
presented.  Common stock  equivalents  are  included if dilutive.  The number of
weighted  average common shares  outstanding  utilized to compute primary income
[loss] per share was 5,139,285 and 4,916,311 and to compute fully diluted income
[loss] per share was 5,452,595  and 4,916,311 for the years ended  September 30,
1996 and 1995, respectively.

INTANGIBLES  - Trade  names and  customer  lists  are  amortized  utilizing  the
straight-line method over periods of 5 to 15 years. When changing  circumstances
warrant  it,  the  Company  evaluates  the  carrying  value and the  periods  of
amortization based on the current and expected future  non-discounted cash flows
from  operations to determine  whether  revised  estimates of carrying  value or
useful  lives is required.  Amortization  expense was $37,774 and $8,500 for the
years ended September 30, 1996 and 1995, respectively.

DEFERRED  FINANCING  COST - Deferred  financing  cost was amortized  through the
effective  date of the  Company's  initial  public  offering  which  occurred on
October 20, 1994.


                                       F-9
<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #2
--------------------------------------------------------------------------------

[1] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]

CONCENTRATION OF CREDIT RISK - Financial  instruments  that potentially  subject
the Company to  concentration  of credit risk include cash, cash equivalents and
accounts  receivable  arising from its normal business  activities.  The Company
places its cash with high credit  quality  financial  institutions.  The Company
currently has approximately  $506,000 in a financial institution that is subject
to normal credit risk beyond insured amounts.

Regarding accounts receivable,  the Company believes that credit risk is limited
due to the large number of entities  comprising the Company's  customer base and
the diversified industries in which the Company operates. As a consequence,  the
Company believes that its accounts  receivable  credit risk exposure is limited.
The Company has one customer whose sales comprised  approximately  15 percent of
total revenue and whose receivable at September 30, 1996 comprises 21 percent of
total accounts receivable.
The Company does not require collateral on accounts receivable.

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

ADVERTISING  -  The  Company  expenses  advertising  costs  as  incurred.  Total
advertising  costs  charged to expense  amounted to  approximately  $150,000 and
$79,000 for the years ended September 30, 1996 and 1995, respectively.

[2] INVESTMENTS IN DEBT AND EQUITY SECURITIES

The Company adopted  Statement of Financial  Accounting  Standards  ["SFAS"] No.
115,  "Accounting  for Certain  Investments in Debt and Equity  Securities,"  on
October 1,  1994.  In  accordance  with SFAS No.  115,  prior  years'  financial
statements  are not to be restated to reflect the change in  accounting  method.
There was no cumulative  effect  adjustment as a result of adopting SFAS No. 115
at October 1, 1994.

Management determines the appropriate  classification of its investments in debt
and equity securities at the time of purchase and reevaluates such determination
at each balance sheet date.  Debt and equity  securities  which the Company does
not have the intent to hold to maturity are  classified  as trading or available
for sale. Trading securities are carried at fair value with any unrealized gains
or losses  included in earnings.  Securities  available  for sale are carried at
fair value, with any unrealized  holding gains and losses,  net of tax, reported
in a separate component of shareholders' equity until realized. Held to maturity
securities are carried at amortized cost. At September 30, 1996, the Company had
no investments that qualified as available for sale.  Marketable debt and equity
securities  available for current operations are classified in the balance sheet
as current assets while  securities held for non-current  uses are classified as
long-term  assets.  Realized  gains and  losses  are  calculated  utilizing  the
specific identification method.


                                      F-10
<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #3
--------------------------------------------------------------------------------

[2] INVESTMENTS IN DEBT AND EQUITY SECURITIES [CONTINUED]

At September 30, 1996,  the Company's  trading and held to maturity  investments
consisted of certain highly liquid debt  securities.  A summary of the Company's
investments in debt securities is as follows:

<TABLE>
<CAPTION>
                                                                                            Gross            Gross
                                                                                            -----            -----
                                                            September 30, 1996           Unrealized        Unrealized
                                                            ------------------           ----------        ----------
Financial Statement Caption                          Carrying Value      Fair Value         Gains           [Losses]
---------------------------                          --------------      ----------         -----           --------
<S>                                                  <C>               <C>              <C>               <C>         
Trading:
   Cash and Cash Equivalents                         $     793,846                      $       1,306     $         --
                                                     =============                      =============     ============
   Short-Term Investments                            $   1,310,325                      $       5,684     $     (2,658)
                                                     =============                      =============     ============

Held to Maturity:
   Restricted Investment - Noncurrent                $      34,466     $      34,466    $          --     $         --
                                                     =============     =============    =============     ============
</TABLE>

Gross proceeds from sale of available for sale  securities  held at beginning of
the year were  $4,391,642  and $2,677,191 and realized gain or loss on sales was
$-0- and $-0- for the years ended September 30, 1996 and 1995, respectively. Net
unrealized  gains on trading  securities  was $4,332 and is included in earnings
for the year ended September 30, 1996.

Contractual  maturities of debt securities classified as held to maturity are as
follows:

Within 1 year                                        $      34,466

[3] DUE FROM RELATED PARTIES

At September  30, 1996,  the Company had a balance due from various  officers of
the Company aggregating  $176,283 including accrued interest.  The advances bear
interest at 8 percent.  Interest  income on the  advances was $10,401 and $8,451
for the  years  ended  September  30,  1996  and  1995,  respectively.  Interest
receivable on the advances was $11,635 at September 30, 1996.

[4] CREDIT FACILITY

In September 1994, the Company entered into a $500,000 revolving credit facility
with a bank which was collateralized by the Company's accounts  receivable.  The
agreement  provided for borrowings at the prime rate,  required monthly interest
payments and expired on December 15, 1995.

[5] LEASES

CAPITAL  LEASES - The Company is the lessee of  furniture,  fixtures  and office
equipment  under capital  leases  expiring in various  years  through 1999.  The
assets and liabilities under capital leases are recorded at the present value of
the net minimum lease  payments.  The assets are amortized over their  estimated
productive  lives.  Amortization  of assets under capital  leases is included in
depreciation expense.

Following is a summary of property held under capital leases:

Furniture and Fixtures                               $       110,481
Office Equipment                                             360,778
                                                     ---------------

Total - At Cost                                              471,259
Less: Accumulated Amortization                               227,189

   Total                                             $       244,070
   -----                                             ===============


                                      F-11
<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #4
--------------------------------------------------------------------------------

[5] LEASES [CONTINUED]

Minimum  future lease  payments  under capital  leases for each of the next five
years and in the aggregate are:

1997                                                      $       146,702
1998                                                               74,678
1999                                                               37,901
2000                                                                   --
2001                                                                   --
Thereafter                                                             --
                                                          ---------------

Net Minimum Lease Payments                                        259,281
Less: Amount Representing Interest                                (40,160)

Present Value of Net Minimum Lease Payments                       219,121
Less: Current Portion                                             120,918

   Long-Term Portion                                      $        98,203
   -----------------                                      ===============

OPERATING  LEASES - The  Company  leases  office  space under  operating  leases
expiring  through August 2006. In lieu of a cash security  deposit,  the Company
has  delivered to the landlord a letter of credit in the amount of $34,466 as of
June 1, 1996. This letter of credit is  collateralized  by a U.S.  Treasury Bill
and is classified as restricted  investment in the  accompanying  balance sheet.
The Company leases office  equipment  under operating  leases  expiring  through
1999.

Minimum future rental  payments  under  non-cancelable  operating  leases having
remaining  terms in excess of one year as of September  30, 1996 for each of the
next five years and in the aggregate are:

1997                                                  $       406,517
1998                                                          451,001
1999                                                          489,179
2000                                                          484,100
2001                                                          531,100
Subsequent to 2001                                          2,444,000
                                                      ---------------

   Total Minimum Future Rental Payments               $     4,805,897
   ------------------------------------               ===============

In addition,  the Company is liable for its pro-rata  share of increases in real
estate taxes and escalations as provided in the lease agreements.

Rent expense was $593,322  and $422,323 for the years ended  September  30, 1996
and 1995, respectively.


                                      F-12
<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #5
--------------------------------------------------------------------------------

[6] BRIDGE LOAN

On April 1, 1994, the Company borrowed $400,000,  evidenced by promissory notes.
In addition, the Company issued 175,000 bridge units substantially  identical to
the units sold to the public in the Company's initial public offering except for
the  issuance of Class B warrants  in  addition  to the Class A  warrants.  Each
bridge unit  consisted  of an option to purchase one share of common stock at an
exercise  price of $.001 per share as well as the  warrants and was issued after
the  effective  date of the offering.  The bridge loans carried  interest at the
rate of 8 percent per annum and the entire principal amount and accrued interest
was paid upon the closing of the Company's  initial public offering,  on October
20, 1994. The Company has recorded,  and fully  amortized,  $420,000 of deferred
financing cost in connection with these notes.  The loans were recorded at their
face amount which  approximated  their fair market  value.  Interest  expense of
$2,325 was recorded on the bridge loans for the year ended September 30, 1995.

[7] CAPITAL STOCK

During the year ended  September 30, 1995, the Company paid cash of $345,000 and
issued  114,285  shares  of  common  stock  valued  at  $90,000  principally  in
connection with the acquisition of two trade names.

On October 20, 1994,  the Company  completed an initial  public  offering of its
common stock. The Company realized net proceeds of approximately $7,540,000 from
the sale of 2,300,000  units,  each unit consisting of one share of common stock
and one Class A  redeemable  common  stock  purchase  warrant.  The Company also
issued  175,000  shares of common stock upon exercise of the bridge unit options
for $175.

[8] COMMITMENTS AND CONTINGENCIES

EMPLOYMENT  ARRANGEMENTS - On June 14, 1993, the Company entered into employment
agreements  with Mr. Herbert  Solomon,  Mr. Lloyd Solomon and Mr. Scott Page. In
addition,  Mr.  Herbert  Solomon  and Mr.  Scott  Page are  entitled  to receive
commission   payments  based  on  the  revenues  generated  by  their  executive
recruitment  and placement  activities and Mr. Lloyd Solomon will be entitled to
receive  incentive  compensation  for each  fiscal  year  during the term of his
employment  equal to that  percentage of consolidated  pre tax operating  income
that consolidated pre tax operating income bears to total consolidated  revenue.
These  employment  agreements  are for an initial term of five years  commencing
June 14, 1993 and will be extended automatically for additional one-year periods
unless terminated by either party. The employment agreements provide that if the
employee  is  terminated  after the  initial  term  other than for  "cause"  [as
defined], or dies or becomes permanently  disabled,  the Company will pay to the
employee  certain  severance.  These  employment  agreements  also  prohibit the
employee from competing with the Company's  business during the term thereof and
for a period of one year thereafter.

Salaries required to be paid as of September 30, 1996 are as follows:

1997                              $   775,000
1998                              $   549,000


                                      F-13
<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #6
--------------------------------------------------------------------------------

[8] COMMITMENTS AND CONTINGENCIES [CONTINUED]

EMPLOYMENT ARRANGEMENTS [CONTINUED] - For the years ended September 30, 1996 and
1995,  approximately  $615,000  and  $351,000,   respectively,  was  charged  to
operations  under the  commission  portion and  approximately  $34,000 and $-0-,
respectively  under the incentive  compensation  portion of the above  described
executive compensation plans.

On September 18, 1996, the Company  terminated an agreement  relating to 794,136
escrow shares that had been made available for issuance to certain executives of
the  Company.  These  escrow  shares  were to have  been  released  based on the
achievement  by the  Company  of  prescribed  levels  of  pre-tax  earnings.  In
consideration  for terminating the escrow share  agreement,  the Company granted
stock options to purchase 200,000 shares of common stock at fair market value on
date of grant to each of the three  executives  who would have been  eligible to
receive escrow shares.

The Company has agreements with certain  employees whereby bonuses can be earned
based on the  achievement  of divisional  revenue  levels in excess of specified
amounts and the attainment of certain pre-tax profit levels.

LITIGATION - The Company is party to  litigation  arising from the normal course
of business. In managements' opinion, this litigation will not materially affect
the Company's financial position, results of operations or cash flows.

In July 1996, the Company  commenced an action seeking damages for the breach of
contract for failure to pay for services rendered.  Subsequently,  a countersuit
was filed alleging various contract  breaches by the Company and seeking damages
of  $3,050,000.  An  estimate of the loss or range of loss,  if any,  that could
result  cannot  be made at this  time.  The  Company  believes  it has  numerous
defenses  to this action an will  ultimately  prevail,  however,  it is at least
reasonably possible that a change in this estimate could occur in the near term.

ACQUISITIONS - In connection with certain acquisitions,  the Company is required
to pay purchase price  adjustments based on the achievement of various criteria.
These additional  payments are charged to intangibles and are amortized over the
then remaining life of the intangible.  Purchase price  adjustments  amounted to
$116,601 during the period ended September 30, 1996.

[9] OPTIONS AND WARRANTS

On April 1, 1994,  the Company issued 175,000 Class A warrants and 175,000 Class
B warrants in  connection  with  certain  bridge  financing  which was repaid on
October 20,  1994.  The Class A warrants  are  identical  to those issued in the
Company's  initial  public  offering.  The Class B warrants are identical to the
Class A warrants except that the exercise price is $6.00 per share.

On October 20, 1994, in connection  with its initial public offering the Company
has  outstanding  2,300,000 Class A redeemable  common stock purchase  warrants.
Each Class A warrant  entitles  the holder to purchase one share of common stock
exercisable  at $4.50 per share  commencing  October  20,  1995 and  expiring on
October 20, 1999.  The Class A warrants are redeemable at $.05 per warrant based
on the achievement of certain criteria.

On October 20, 1994, in connection with its initial public offering, the Company
granted to its  underwriter  an option to purchase an  aggregate  200,000  units
exercisable at $6.60 per unit commencing  October 20, 1995 and expiring  October
20, 1999.

On August 17, 1995, the Company  adopted the 1995  Director's  Stock Option Plan
[the "Director's  Plan"].  The Director's Plan provides for the grant of options
to  purchase  up to  100,000  shares of common  stock to  Directors  who are not
employees of the Company.  Options  granted  under the  Director's  Plan will be
exercisable commencing a minimum of 6 months from the date of grant for a period
of 10 years from the date of grant at an  exercise  price which is not less than
the fair market value of the common stock on the date of the grant.


                                      F-14
<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #7
--------------------------------------------------------------------------------

[9] OPTIONS AND WARRANTS [CONTINUED]

On August 6, 1993,  the Company  adopted the 1993 Long Term  Incentive Plan [the
"1993 Plan"], which was amended on June 24, 1994. The 1993 Plan provides for the
issuance of  incentive  awards in the form of but not limited to stock  options,
stock appreciation  rights,  restricted stock and performance grants to purchase
up to  1,500,000  shares  of  common  stock and  provides  that all  individuals
performing  services for the Company are eligible to receive  incentive  awards.
The  1993  Plan is  administered  by a  committee  designated  by the  Board  of
Directors. The selection of participants,  allotment of shares, determination of
price and other  conditions of purchase of any awards granted will be determined
by such  committee  at its sole  discretion.  The purpose of the 1993 Plan is to
attract and retain persons instrumental to the success of the Company. Incentive
stock options granted under the 1993 Plan will be exercisable for a period of up
to 10 years from the date of grant at an  exercise  price which is not less than
the fair market value of the common stock on the date of the grant,  except that
the  term  of an  incentive  stock  option  granted  under  the  1993  Plan to a
stockholder  owning more than 10% of the outstanding  shares of the common stock
may not exceed  five years and its  exercise  price may not be less than 110% of
the fair market value of the common stock on the date of the grant.

On September 17, 1996, the Company adopted the 1996 Stock Option Plan [the "1996
Plan"].  The 1996 Plan  provides  for  awards of  incentive  stock  options  and
non-qualified  options to purchase  up to  1,000,000  shares of common  stock to
employees   and   directors  of  the  Company.   The  1996  Plan  provides  that
non-qualified options must be granted at not less than 80 percent of fair market
value on the date  granted.  No options at less than fair market value have been
awarded.

A summary of the activity in the option plans is as follows:

                                              Shares           Price
                                              ------           -----

OUTSTANDING AT SEPTEMBER 30, 1994              445,000    $     2.50 - $2.75

   Granted                                   1,057,000    $     1.25 - $2.00
   Exercised                                        --                    --
   Expired/Canceled                           (130,000)   ($    1.25 - $2.50)
                                         -------------    ------------------

OUTSTANDING AT SEPTEMBER 30, 1995            1,372,000    $     1.25 - $2.75

   Granted                                     758,500    $      .56 - $2.27
   Exercised                                        --                    --
   Expired/Canceled                           (357,000)       ($1.25 - $2.75)
                                         -------------    ------------------

OUTSTANDING AT SEPTEMBER 30, 1996            1,773,500    $      .56 - $2.50
                                         =============    ==================

   Exercisable at September 30, 1996           460,000        $1.375 - $2.00
   ---------------------------------     =============    ==================


                                      F-15
<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #8
--------------------------------------------------------------------------------

[10] INCOME TAXES EXPENSE [BENEFIT]

The provision for income taxes expense [benefit] consists of the following:

                                                             September 30,
                                                             -------------
                                                        1 9 9 6        1 9 9 5
                                                        -------        -------
CURRENT:
   Federal                                            $   379,000    $       --
   Utilization of Net Operating Loss Carryforward        (379,000)           --
   Federal Loss Carryback                                      --            --
   State and City                                         200,000            --
   Utilization of Net Operating Loss Carryforward        (196,000)           --
                                                      -----------    ----------

   TOTAL CURRENT                                            4,000            --
                                                      -----------    ----------

DEFERRED:
   Federal                                                 15,200       (13,802)
   State and City                                              --       (16,646)
                                                      -----------    ----------

   TOTAL DEFERRED                                          15,200       (30,448)
                                                      -----------    ----------

   Total Income Tax Expense [Benefit]                 $    19,200    $  (30,448)
   ----------------------------------                 ===========    ==========

Income tax at the federal  statutory rate reconciled to the Company's  effective
rate is as follows:

                                                              September 30,
                                                              -------------
                                                        1 9 9 6        1 9 9 5
                                                        -------        -------

Federal Statutory Rate                                       34.0%       (34.0)%
Non Deductible Expenses                                      17.4           --
Benefit of Loss Net Operating Loss                          (51.4           --
Loss for which No Benefit was Realized                         --         30.8
State Income Taxes                                             .5           --
Other                                                         2.1          1.6
                                                      -----------    ---------
                                                                    
   Effective Rate                                             2.6%        (1.6)%
   --------------                                     ===========    =========

The Company has net operating loss carryforwards of approximately  $1,300,000 of
which $130,000 will expire in 2009 and $1,170,000 in 2010.


                                      F-16
<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #9
--------------------------------------------------------------------------------

[10] INCOME TAXES EXPENSE [BENEFIT] [CONTINUED]

The major  components  of  deferred  income tax assets  and  liabilities  are as
follows:

                                                      September 30,
                                                      -------------
                                                         1 9 9 6
                                                         -------
Deferred Tax Liabilities:
   Cash Basis Adjustments                             $    (275,188)
   Accelerated Depreciation                                 (76,790)
   Unrealized Gains on Trading Securities                    (3,146)
                                                      -------------

   Total Deferred Tax Liabilities                          (355,124)

Deferred Tax Assets:
   Federal Alternative Minimum Tax Payments                  15,200
   Rent Deferrals                                           119,696
   Net Operating Loss                                       594,835
   Reserves                                                  40,455
   Other                                                      6,855
                                                      -------------

   Total Deferred Tax Assets                                777,041

Net Deferred Tax Asset
   Before Valuation Allowance:                              421,917
   Valuation Allowance                                     (421,917)

   Net Deferred Income Tax Asset                      $          --
   -----------------------------                      =============

The Company  recorded a reduction of $285,186 in its valuation  allowance due to
the achievement of profitable  operations giving rise to a reduced net operating
loss carryforward available in future years.

[11] SIGNIFICANT CUSTOMER

For the year ended September 30, 1996, one customer  accounted for 15 percent of
revenue.

[12] RETIREMENT PLAN

The Company  maintains a 401[k]  savings  plan which  covers  substantially  all
employees.  Under the plan,  employees  may elect to defer up to 15  percent  of
their salary,  subject to the Internal Revenue Code limits. The Company may make
a discretionary match as well as a discretionary  contribution.  The Company did
not make any contributions during the years ended September 30, 1996 and 1995.

[13] FAIR VALUE OF FINANCIAL INSTRUMENTS

Effective October 1, 1995, the Company adopted Statement of Financial Accounting
Standards No. 107, "Disclosure about Fair Value of Financial Instruments," which
requires   disclosing  fair  value  to  the  extent  practicable  for  financial
instruments  which are recognized or unrecognized in the balance sheet. The fair
value  of  the  financial   instruments  disclosed  herein  is  not  necessarily
representative  of the amount that could be  realized  or settled,  nor does the
fair value amount  consider the tax  consequences  of realization or settlement.
Carrying  value  approximates  fair  value for  amounts  classified  as due from
related parties as the receivables  carry market rates of interest.  For certain
instruments,   including  cash,  trade  receivables  and  trade  payables,   and
short-term  debt, it was estimated that the carrying  amount  approximates  fair
value for the majority of these instruments because of their short maturities.


                                      F-17
<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #10
--------------------------------------------------------------------------------

[14] NEW AUTHORITATIVE ACCOUNTING PRONOUNCEMENTS

The Financial  Accounting Standards Board ["FASB"] issued Statement of Financial
Accounting  Standards  ["SFAS"]  No.  121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for  Long-Lived  Assets to Be  Disposed  Of," in March of
1995.  SFAS No. 121  establishes  accounting  standards  for the  impairment  of
long-lived assets,  certain  identifiable  intangibles,  and goodwill related to
those  assets  to be held  and  used,  and for  long-lived  assets  and  certain
identifiable  intangibles  to be  disposed  of.  SFAS No. 121 is  effective  for
financial  statements issued for fiscal years beginning after December 15, 1995.
Adoption  of SFAS No.  121 is not  expected  to have a  material  impact  on the
Company's financial statements.

The  FASB  has  also   issued  SFAS  No.  123,   "Accounting   for   Stock-Based
Compensation,"  in October of 1995.  SFAS No. 123 uses a fair value based method
of accounting for stock options and similar equity  instruments as contrasted to
the  intrinsic  value  based  method  of  accounting  prescribed  by  Accounting
Principles  Board  ["APB"]  Opinion  No.  25,  Accounting  for  Stock  Issued to
Employees.  The  accounting  requirements  of SFAS  No.  123 are  effective  for
transactions  entered into in fiscal  years that begin after  December 15, 1995;
the  disclosure  requirements  of SFAS  No.  123  are  effective  for  financial
statements  for fiscal years  beginning  after  December  15, 1995.  The Company
anticipates  continuing  to  account  for  stock-based  compensation  using  the
intrinsic  value  method.  SFAS No. 123 will not have an impact on the Company's
results of operations or financial position.

The FASB  issued  SFAS No. 125,  "Accounting  for  Transfers  and  Servicing  of
Financial Assets and  Extinguishment of Liabilities." In June 1996, SFAS No. 125
provides  accounting  and  reporting  standards  which are  based on  consistent
application of a "financial-components  approach" that focuses on control. Under
that approach,  after a transfer of financial  assets,  an entity recognizes the
financial and servicing  assets it controls and the liabilities it has incurred,
derecognizes   financial   assets  when  control  has  been   surrendered,   and
derecognizes  liabilities  when  extinguished.  SFAS No.  125 is  effective  for
transfers  and  servicing  of financial  assets  extinguishment  of  liabilities
occurring  after December 31, 1996.  Adoption of SFAS No. 125 is not expected to
have an impact on the Company's financial statements.

[15] SUBSEQUENT EVENT

On December 18,  1996,  the Board of  Directors  of the Company  authorized  the
repurchase of up to 500,000  shares of the  Company's  common stock from time to
time in the open market or in privately negotiated transactions.


                             . . . . . . . . . . . .


                                      F-18