SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                  FORM 10-KSB/A
   
                                (Amendment No. 4)
    

(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, 1997

/ /      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                (IRS Employer Identification
                   jurisdiction of                          Number)
                   incorporation or
                     organization)

              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, 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. /X/


            State the  issuer's  revenues for its most recent  fiscal year:  The
issuer's revenues for the fiscal year ended September 30, 1997 were $28,996,485.

            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 31, 1997 was  approximately  $11,603,400.  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 31,
1997, there were outstanding  5,129,285 shares of the Registrant's Common Stock,
$.001 par value.

            Transitional Small Business Disclosure Format (check one):

            Yes / /     No /X/


<PAGE>
                                     PART I

ITEM 1.     DESCRIPTION OF BUSINESS

GENERAL

      The Company is a specialty niche provider of staffing  services  organized
into two primary operating  divisions:  executive search / full time contingency
recruitment and temporary staffing and consulting. The executive search and full
time  contingency  recruitment  division has eight lines of business,  including
four industry (capital markets, publishing and new media, healthcare and fashion
services),  and  four  functional  (information  technology,  accounting,  human
resources and legal).  The temporary  staffing and consulting  division provides
services  to  companies  seeking   personnel  in  the  information   technology,
accounting  and human  resources  areas.  The  accounting  and  human  resources
temporary staffing and consulting  businesses commenced operations during fiscal
1997.

      In the executive  search and full time contingency  recruitment  division,
fees usually range between 20% and 33% of the placed employee's guaranteed first
year's  compensation.  In the executive  search  sector,  the Company  generally
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. In the full
time  contingency   recruitment  sector,  the  entire  fee  is  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  temporary  staffing  and  consulting  division,  the Company is
compensated  by its clients for services  provided by  temporary  employees on a
time and materials basis. 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  payroll  relating  to
temporary staffing  requirements,  commissions of sales and recruiting personnel
and employee benefits.

      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.  References herein to the "Company"
are references  to  The   Solomon-Page   Group  Ltd.   and  its   wholly-owned
subsidiary, Information Technology Partners, Inc. ("ITP").

INDUSTRY OVERVIEW

      According  to the  Staffing  Industry  Report,  revenues  for the staffing
industry  were  expected  to exceed $86 billion for 1997.  Temporary  help,  the
largest  staffing  services  segment,  was  estimated  to have 1997  revenues of
approximately   $54  billion  and  has  grown  at  an  average  annual  rate  of
approximately  17% over the past five  years.  Technical/Information  technology
services, which is a subset of the temporary help segment, has become one of the
fastest growing


<PAGE>
segments to the staffing services  industry,  as the increased use of technology
has led to a dramatic rise in demand for  technical  project  support,  software
development   and   other   computer-related   services.   Revenues   from   the
Technical/Information    technology   services   segment   were   estimated   at
approximately  $15 billion for 1997,  representing a 27% increase over 1996. The
placement and search sector of the staffing industry consists of three segments,
retained  search,  contingency  recruitment and  temp-to-perm.  Revenues for the
placement and search sector were estimated to exceed $10 billion for 1997.

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.  In addition to its New
York office, the Company also has offices in New Jersey, California and Georgia.
For  the  fiscal  year  ended  September  30,  1997,  approximately  2.6% of the
Company's revenues came from outside the United States and 9.3% of the Company's
revenues came from sources  within the United  States,  but outside of New York.
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 global financial services  institutions
in North  America,  Europe and Asia.  This group places  traders,  institutional
sales  people,  investment  bankers,  research  and  quantitative  analysts  and
portfolio managers, and focuses on middle and senior level positions.

      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.

      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.


                                      -2-
<PAGE>
Contingency Recruitment

      INFORMATION  TECHNOLOGY.  The Company's  information  technology  division
conducts search  assignments  for a diverse client base,  including those in the
investment  banking,  financial  services,   communications,   retail  and  high
technology  industries.   The  division  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 liaisons,
business systems analysts and help desk personnel.

      LEGAL  PROFESSIONALS.  The Company's  legal  professional  division serves
primarily  the New York  metropolitan  area,  providing  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 undertakes search
assignments  for a diverse client base,  from Fortune 1000 companies to mid-size
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.

      ACCOUNTING  AND  FINANCE.  The  Company's  accounting  and  finance  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 management  consulting.
This area  focuses on  addressing  the needs of clients in the areas of business
and strategic planning, corporate development and change management.

      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  fills  positions  at the  middle  to  senior  executive  levels in many
functional areas such as buyers, designers, sales and production.

                                       -3-

<PAGE>
Temporary Staffing and Consulting

      INFORMATION  TECHNOLOGY.  The Company's  information  technology temporary
staffing and consulting business provides services on a time and materials basis
to clients within the financial services, consumer products, telecommunications,
consulting and insurance industries.  The Company supplies skilled professionals
in the areas of Application  Development,  Business Analysis, Help Desk Support,
Networking, Project Management and Quality Assurance.

      ACCOUNTING AND HUMAN  RESOURCES.  During Fiscal 1997, the Company expanded
its  existing  presence  within  its full time  accounting  and human  resources
specialty  niches by providing  temporary  staffing and  consulting  services to
existing as well as new clients through dedicated teams of experienced  staffing
or industry personnel.

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.  In addition,  although the
Company's  divisional  structure causes its employees to concentrate on specific
areas, they are trained and compensated to recognize cross-selling opportunities
when they exist.

      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.

      Two  customers of the Company  accounted  for  approximately  11% and 10%,
respectively,  of the Company's  revenues during the fiscal year ended September
30, 1997.

BUSINESS EXPANSION

      During the next fiscal year, the Company intends to continue to expand its
current  retained  executive  search,   full-time  contingency  recruitment  and
temporary staffing and consulting  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 temporary staffing and
consulting on an ongoing proactive basis.

      The Company intends to focus on blending temporary and full time placement
services by continuing to expand its existing  presence  within the  Information
Technology,  Accounting,  Legal  and  Human  Resources  businesses  in  order to
capitalize on synergies in client  relationships as well as extensive  knowledge
of applicants and consultants in these functional  areas of

                                      -4-
<PAGE>

expertise.  ITP, the Company's  information  technology  temporary  staffing and
consulting  business,  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.  The Company  believes that this  expansion will achieve
operating efficiencies due to its existing  infrastructure.  This expansion will
be facilitated through either internal growth or acquisition.

      This  extension of services would enable the Company to expand its product
mix and  geographic  scope as well as to  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,  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 March 31, 1998, the staff of the Company  consisted of 130 full-time
employees,  including the Company's four executive officers,  90 recruitment and
placement  counselors and 36 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.


                                       -5-

<PAGE>
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, trade name or domain name
in the future.


                                       -6-
<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, 1997 .................   F-3

Consolidated Statements of Operations for the years ended
September 30, 1997 and 1996..........................................   F-5

Consolidated Statements of Stockholders' Equity for the years ended
September 30, 1997 and 1996..........................................   F-6

Consolidated Statements of Cash Flows for the years ended
September 30, 1997 and 1996..........................................   F-7

Notes to Consolidated Financial Statements ..........................   F-8







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





                                       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, 1997,  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, 1997.
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,
1997, and the consolidated  results of their operations and their cash flows for
each of the two  fiscal  years  in the  period  ended  September  30,  1997,  in
conformity with generally accepted accounting principles.






                                          MOORE STEPHENS, P. C.
                                          Certified Public Accountants.

Cranford,  New Jersey
December 18, 1997, except as to
Note 14 for which the date is
December 31, 1997


                                       F-2

<PAGE>

THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1997.
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ASSETS:
CURRENT ASSETS:
<S>                                                                     <C>
  Cash and Cash Equivalents                                             $   409,856
  Investments                                                               899,220
  Accounts Receivable - [Net of Allowances of $125,000]                   7,378,027
  Other Current Assets                                                      297,886
                                                                        -----------

  TOTAL CURRENT ASSETS                                                    8,984,989

PROPERTY AND EQUIPMENT:
  Equipment                                                               1,155,072
  Furniture and Fixtures                                                    406,372
  Leasehold Improvements                                                    578,764
                                                                        -----------

  Total - At Cost                                                         2,140,208
  Less: Accumulated Depreciation                                            682,826

PROPERTY AND EQUIPMENT -NET                                               1,457,382

OTHER ASSETS:
  Investments                                                             1,251,207
  Intangible Assets - [Net of Accumulated Amortization of $110,569]         753,564
  Due from Related Parties                                                  177,920
  Security Deposits                                                         133,172
  Restricted Investment                                                      34,466
  Other Assets                                                               22,756
                                                                        -----------

  TOTAL OTHER ASSETS                                                      2,373,085

  TOTAL ASSETS                                                          $12,815,456
                                                                        ===========
</TABLE>


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, 1997.
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
<S>                                                                     <C>
  Accrued Payroll and Commissions                                       $ 2,494,101
  Accounts Payable and Accrued Expenses                                     967,887
  Income Taxes Payable                                                      267,104
  Current Portion of Obligations Under Capital Leases                        63,325
  Other Current Liabilities                                                 271,238
                                                                        -----------

  TOTAL CURRENT LIABILITIES                                               4,063,655
                                                                        -----------

LONG-TERM LIABILITIES:
  Obligations Under Capital Leases                                           36,473
  Deferred Credit                                                           383,863
                                                                        -----------

  TOTAL LONG-TERM LIABILITIES                                               420,336
                                                                        -----------

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, 5,139,285 Shares
   Issued and 5,129,285 Shares Outstanding                                    5,139

  Additional Paid-in Capital                                              8,488,247

  Treasury Stock; 10,000 Common Shares - At Cost                            (16,250)

  Accumulated Deficit                                                      (145,671)
                                                                        -----------

  TOTAL STOCKHOLDERS' EQUITY                                              8,331,465
                                                                        -----------

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            $12,815,456
                                                                        ===========
</TABLE>

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 7      1 9 9 6
                                                              -------      -------

<S>                                                        <C>          <C>
REVENUE                                                    $28,996,485  $17,165,836
                                                           -----------  -----------

OPERATING EXPENSES:
  Selling Expenses                                         22,412,747    12,762,977
  General and Administrative                                4,555,081     3,652,619
  Depreciation and Amortization                               337,158       240,927
                                                           ----------   -----------

  TOTAL OPERATING EXPENSES                                 27,304,986    16,656,523
                                                           ----------   -----------

  INCOME FROM OPERATIONS                                    1,691,499       509,313
                                                           ----------   -----------

OTHER INCOME [EXPENSES]:
  Interest and Dividend Income                                133,077       130,937
  Interest Expense                                            (26,820)      (49,215)
  Net Realized and Unrealized Gain on Investments              37,140       137,411
  Other Income                                                     --         1,080
                                                           ----------   -----------

  TOTAL OTHER INCOME                                          143,397       220,213
                                                           ----------   -----------

  INCOME BEFORE INCOME TAX EXPENSE                          1,834,896       729,526

INCOME TAX EXPENSE                                            552,531        19,200
                                                           ----------   -----------

  NET INCOME                                               $1,282,365   $   710,326
                                                           ==========   ===========

PRIMARY INCOME PER COMMON SHARE                            $      .20   $       .14
                                                           ==========   ===========

FULLY DILUTED INCOME PER COMMON SHARE                      $      .20   $       .13
                                                           ==========   ===========
</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       TREASURY STOCK     ACCUMULATED STOCKHOLDERS'
                           SHARES    AMOUNT   SHARES      AMOUNT    CAPITAL      SHARES    AMOUNT      DEFICIT       EQUITY
                           ------    ------   ------      ------    -------      ------    ------      -------       ------


BALANCE - OCTOBER 1,
<S>                            <C>   <C>      <C>          <C>       <C>          <C>      <C>        <C>           <C>       
  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

  Treasury Shares
   Purchased                   --        --          --        --           --    10,000    (16,250)           --      (16,250)

  Net Income                   --        --          --        --           --        --         --     1,282,365    1,282,365
                           ------    ------   ---------    ------    ---------    ------   --------  ------------    ---------

BALANCE - SEPTEMBER 30,
  1997                         --    $   --   5,139,285    $5,139    $8,488,247   10,000   $(16,250)  $  (145,671)  $8,331,465
                           ======    ======   =========    ======    ==========   ======   ========   ============  ==========
</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 7      1 9 9 6
                                                              -------      -------
OPERATING ACTIVITIES:
<S>                                                        <C>          <C>        
  Net Income                                               $1,282,365   $   710,326
                                                           ----------   -----------
  Adjustments to Reconcile Net Income to
   Net Cash  Provided  by [Used  for]
   Operating Activities:
   Depreciation and Amortization                              337,158       240,927
   Provision for Losses on Accounts Receivable                 35,100       235,157
   [Gain] on Disposal of Assets                                    --          (580)
   Deferred Credit                                            117,871        52,139
   Net Realized and Unrealized Gain on Investments            (37,140)     (137,411)

  Changes in Assets and Liabilities:
   [Increase] Decrease in:
     Accounts Receivable                                   (3,253,036)   (2,944,843)
     Other Current Assets                                     (79,613)     (120,881)
     Security Deposits                                        (47,894)       (7,531)
   Increase [Decrease] in:
     Accounts Payable and Accrued Expenses                  1,491,840     1,260,388
     Income Tax Payable                                       290,104            --
     Other Current Liabilities                                155,676        62,198
                                                           ----------   -----------
   Total Adjustments                                         (989,934)   (1,360,437)
                                                           ----------   -----------
  NET CASH - OPERATING ACTIVITIES                             292,431      (650,111)
                                                           ----------   -----------
INVESTING ACTIVITIES:
  Capital Expenditures                                       (791,427)     (302,189)
  Purchases of Investments                                 (2,183,043)   (4,618,641)
  Proceeds from Sales of Investments                        1,380,081     3,446,508
  Acquisitions of Trade Names                                (264,532)     (179,601)
  Proceeds from Insurance Claim                                    --        23,799
  Advances to Related Parties                                 (11,637)      (46,888)
  Cash Received from Related Parties                           10,000        19,000
  Transfer from Restricted Investment                              --        90,043
                                                           ----------   -----------
  NET CASH - INVESTING ACTIVITIES                          (1,860,558)   (1,567,969)
                                                           ----------   -----------

FINANCING ACTIVITIES:
  Principal Payments Under Capital Lease Obligations         (119,323)     (113,525)
  Purchase of Treasury Stock                                  (16,250)           --
  NET CASH - FINANCING ACTIVITIES                            (135,573)     (113,525)
                                                           ----------   -----------
  NET [DECREASE] IN CASH AND CASH EQUIVALENTS              (1,703,700)   (2,331,605)

CASH AND CASH EQUIVALENTS - BEGINNING OF YEARS              2,113,556     4,445,161
                                                           ----------   -----------

  CASH AND CASH EQUIVALENTS - END OF YEARS                 $  409,856   $ 2,113,556
                                                           ==========   ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the years for:
   Interest                                                $   26,820   $    49,215
   Income Taxes                                            $  422,402   $        --
</TABLE>

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

                                       F-7
<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 wholly-owned  subsidiary [the
"Company"]   provide  retained   executive  search  and  full-time   contingency
recruitment  services  in the fields of capital  markets,  accounting,  fashion,
human resources, legal, health care, publishing and
information technology.
Temporary  staffing  and  consulting  services  are  provided  in the  fields of
information technology, accounting and human resources. 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 full-time  contingency
search  engagements  upon the  successful  completion  of the  assignment.  In a
retained search engagement,  the non-refundable retainer is recognized according
to the terms of the search contract, with the balance recognized upon successful
completion of the search.  Reserves are  established  to estimate  losses due to
placed candidates not remaining in employment for the Company's guarantee period
which  generally  ranges from 30 to 90 days.  Temporary  staffing and consulting
revenue is recognized when the temporary personnel provide the service.
    

RECEIVABLE   ALLOWANCES  -  The  Company  records  allowances  against  accounts
receivable,  based on historical experience,  for its estimated exposure to loss
from bad debts and from search  candidates  that do not  fulfill  the  Company's
guarantee  period.  Losses  from bad debts are  charged  to  expense  and losses
related to the guarantee period are charged to revenue.

INVESTMENTS - The Company  accounts for investments in accordance with Statement
of Financial  Accounting  Standards  ["SFAS"] No. 115,  "Accounting  for Certain
Investments  in  Debt  and  Equity   Securities."   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. Equity securities, and debt securities which the Company does not have the
intent to hold to maturity,  are  classified  as trading or available  for sale.
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.  Trading  securities  are carried at fair
value with any unrealized gains or losses included in earnings. Held to maturity
securities are carried at amortized cost.  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 [See Note 2].

PROPERTY AND EQUIPMENT - Equipment,  furniture 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  $272,863 and $203,153 for the
years ended September 30, 1997 and 1996, respectively.

DEFERRED  INCOME  TAXES - The Company  accounts  for  deferred  income  taxes in
accordance  with SFAS No. 109,  "Accounting  for Income  Taxes."  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 SFAS No. 13, "Accounting for Leases,"
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.


                                       F-8
<PAGE>
THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #2
------------------------------------------------------------------------------

[1] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]

START-UP COSTS - The Company expenses the startup cost of new business groups as
incurred.

INCOME  PER SHARE - Income  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 per share was
9,091,644  and  5,139,285  and to  compute  fully  diluted  income per share was
9,091,644  and  5,452,595  for the  years  ended  September  30,  1997 and 1996,
respectively.  For the year  ended  September  30,  1997,  income  per share was
computed using the modified treasury stock method [See Note 13].

INTANGIBLES  - Intangibles  which consist of trade names and customer  lists are
amortized  utilizing the straight-line  method over periods ranging from 5 to 15
years. When changing  circumstances  warrant, 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 $64,295
and $37,774 for the years ended September 30, 1997 and 1996,  respectively  [See
Note 7].

CONCENTRATIONS OF CREDIT RISK - Financial  instruments that potentially  subject
the Company to  concentrations of credit risk include cash, cash equivalents and
accounts  receivable  arising from its normal business  activities.  The Company
places  its  cash  and cash  equivalents  with  high  credit  quality  financial
institutions. At September 30, 1997, the Company has approximately $580,000 in a
financial  institution  that is subject to normal  credit  risk  beyond  insured
amounts.

The Company believes that credit risk related to accounts  receivable is limited
due to the large  number of Fortune  1000  companies  comprising  the  Company's
customer base and the diversified  industries in which the Company operates. The
Company has two customers whose sales comprise approximately 21 percent of total
revenue and whose receivables at September 30, 1997 comprise 14 percent of total
accounts  receivable.  The  Company  does not  require  collateral  on  accounts
receivable or other financial instruments.

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  $207,000 and
$150,000 for the years ended September 30, 1997 and
1996, respectively.

STOCK  BASED  COMPENSATION  - The  Company  accounts  for  employee  stock-based
compensation  under the intrinsic value based method as prescribed by Accounting
Principles  Board ["APB"]  Opinion No. 25. The Company applies the provisions of
SFAS No.  123,  "Accounting  for Stock  Based  Compensation,"  to non-  employee
stock-based  compensation  and  the  pro  forma  disclosure  provisions  of that
statement to employee stock-based compensation.



                                       F-9

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

[2] INVESTMENTS IN DEBT AND EQUITY SECURITIES

At September 30, 1997, the Company's securities were classified as available for
sale and held to maturity while at September 30, 1996, the Company's  securities
were  classified as trading and held to maturity.  At September  30, 1997,  cost
approximates fair value for the Company's available for sale securities.

At September  30, 1997,  the  Company's  available for sale and held to maturity
securities consisted of certain highly liquid debt securities.  A summary of the
Company's investments in debt securities is as follows:

                                     SEPTEMBER 30, 1997
FINANCIAL STATEMENT CAPTION       CARRYING VALUE  FAIR VALUE
---------------------------       --------------  ----------

Available for Sale:
  Cash and Cash Equivalents         $    9,188    $    9,188
                                    ==========    ==========

  Investments                       $2,150,427    $2,150,427
                                    ==========    ==========

Held to Maturity:
  Restricted Investment - Noncurrent$   34,466    $  34,466
                                    ==========    =========

Gross proceeds from sale of available for sale securities was $2,041,991 and net
realized gain on sales was $28,990 for the year ended  September  30, 1997.  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 available for sale and
held to maturity are as follows:

                                 AVAILABLE FOR SALE HELD TO MATURITY

Within 1 year                       $ 899,220         $  34,466
Between 1 and 5 years               $1,251,207        $      --

[3] DUE FROM RELATED PARTIES

At September  30, 1997,  the Company had a balance due from various  officers of
the Company aggregating  $177,920 including accrued interest.  The advances bear
interest at 8 percent.  Interest  income on the advances was $11,637 and $10,401
for the  years  ended  September  30,  1997  and  1996,  respectively.  Interest
receivable on the advances was $23,272 at September 30, 1997.

[4] CREDIT FACILITY

On February 24, 1997, the Company entered into a $4,000,000 line of credit which
expires on February 28, 1998. The line carries  interest at the banks  reference
rate plus one percent [9.5% at September 30, 1997]. Borrowings are limited to 80
percent  of  eligible   receivables   as  defined  in  the   agreement   and  is
collateralized  by all the assets of the Company.  There were no  borrowings  at
September 30, 1997 [See Note 14].


                                      F-10

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


[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 future  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                                315,127
                                                           ----------

  TOTAL                                                    $  156,132
  -----                                                    ==========

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

1998                                                       $   75,090
1999                                                           38,497
2000                                                               --
2001                                                               --
2002                                                               --
Thereafter                                                         --
                                                           ----------

Net Minimum Lease Payments                                    113,587
Less: Amount Representing Interest                            (13,789)
                                                           ----------

Present Value of Net Minimum Lease Payments                    99,798
Less: Current Portion                                          63,325
                                                           ----------
  LONG-TERM PORTION                                        $   36,473
  -----------------                                        ==========

OPERATING  LEASES - The  Company  leases  office  space under  operating  leases
expiring through September 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 which
expires June 15, 1998. This letter of credit is
collateralized by a U.S.
Treasury Bill which is classified as a restricted investment in the accompanying
balance  sheet.  The Company  leases office  equipment  under  operating  leases
expiring through 1999.

Minimum  future rental  payments  under  noncancelable  operating  leases having
remaining  terms in excess of one year as of September  30, 1997 for each of the
next five years and in the aggregate are:

YEAR ENDING
SEPTEMBER 30,
  1998                                                     $  771,094
  1999                                                        769,519
  2000                                                        846,742
  2001                                                        874,331
  2002                                                        905,324
Subsequent to 2002                                          3,294,700
                                                           ----------

  TOTAL MINIMUM FUTURE RENTAL PAYMENTS                     $7,461,710
                                                           ==========

                                      F-11

<PAGE>

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

[5] LEASES [CONTINUED]

OPERATING  LEASES  [CONTINUED]  - 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 $616,778 and $593,322 for the years ended September 30, 1997
and 1996,
respectively.

[6] CAPITAL STOCK

On December 18, 1996, the Company's Board of Directors 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.  The Company  repurchased
10,000 shares during the year ended September 30, 1997 [See Note 14].

[7] 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 is  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. 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.  At  September  30,  1997,  the  Company's
obligation for salaries under these  employment  agreements  amounts to $549,000
which is to be paid during the year ending September 30, 1998.

For the years ended  September  30, 1997 and 1996,  approximately  $727,345  and
$615,000,  respectively,  was charged to operations under the commission portion
and  approximately  $200,000  and  $34,000,  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.  Concurrent
with the  termination,  the Company  retired the shares.  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 the date of
grant to each of the three  executives  who would have been  eligible to receive
escrow shares.

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.

ACQUISITIONS  - In  connection  with certain  acquisitions,  the Company will be
required to pay  purchase  price  adjustments  through July 6, 2000 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 $264,532 during the year ended September
30, 1997.


                                      F-12

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

[8] 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
issued 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 [See Note 14].

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
consisting  of one  share of  common  stock  and one  Class A  redeemable  stock
purchase warrant  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. Options vest
at a rate of 50% after one year and 50% after two years.

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.
Non-executive  officer  options vest at a rate of 33 1/3% after three years,  33
1/3% after four years and 33 1/3% after five years.  Options to purchase 450,000
shares of common  stock have been  granted to  executive  officers and vest at a
rate of 33 1/3% upon grant,  33 1/3% after six months and 33 1/3% after thirteen
months.

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.  Options  principally vest at a rate of 33 1/3% after one year, 33 1/3%
after two years and 33 1/3% after three years.


                                      F-13

<PAGE>
THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #7
------------------------------------------------------------------------------
[8] OPTIONS AND WARRANTS [CONTINUED]

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

                                                               WEIGHTED AVERAGE
                                                     SHARES     EXERCISE PRICE

OUTSTANDING AT SEPTEMBER 30, 1995                  1,372,000      $       1.46

  Granted                                            758,500              2.06
  Exercised                                               --
  Expired/Canceled                                  (357,000)             1.49
                                                   ---------

OUTSTANDING AT SEPTEMBER 30, 1996                  1,773,500              1.71

  Granted                                            246,750              2.33
  Exercised                                               --
  Expired/Canceled                                   (55,000)             1.43
                                                   ---------

  OUTSTANDING AT SEPTEMBER 30, 1997                1,965,250              1.80
                                                   =========

  EXERCISABLE AT SEPTEMBER 30, 1997                  709,666              1.68
                                                   =========

If compensation cost for the stock option plans had been determined based on the
fair value at the grant dates for awards  under the plans,  consistent  with the
alternative  method set forth under SFAS No. 123, the  Company's  net income and
net income per share would have been  reduced on a pro forma basis as  indicated
below:

                                                   1 9 9 7          1 9 9 6
                                                   -------          -------
Year ended September 30:

Net Income:
  As Reported                                    $1,282,365       $ 710,326
  Pro Forma                                      $  952,889       $ 307,459

Primary Income Per Share:
  As Reported                                    $      .20       $     .14
  Pro Forma                                      $      .17       $     .06

Fully Diluted Income Per Share:
  As Reported                                    $      .20       $     .13
  Pro Forma                                      $      .16       $     .06

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option-  pricing  model  with  the  following   weighted-average
assumptions used for the grants awarded in 1997 and 1996, respectively:

                                                        SEPTEMBER 30,
                                                   1 9 9 7          1 9 9 6

Dividend Yields                                       0.00%           0.00%
Expected Volatility                                 105.29%         122.66%
Risk-Free Interest Rate                               5.99%           6.41%
Expected Lifes                                      4 Years       4.79 Years

The  weighted-average  fair value of options granted was $1.73 and $1.74 for the
years ended September 30, 1997 and 1996, respectively.


                                      F-14

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

[8] OPTIONS AND WARRANTS [CONTINUED]

The following table summarizes  information about stock options at September 30,
1997:

<TABLE>
<CAPTION>

                               OUTSTANDING                      EXERCISABLE
                                WEIGHTED      WEIGHTED                WEIGHTED
   RANGE OF                     REMAINING      AVERAGE                 AVERAGE
EXERCISE PRICES    SHARES  CONTRACTUAL LIFE EXERCISE PRICE SHARES  EXERCISE PRICE
---------------    ------  ---------------- -------------- ------  --------------

<S>               <C>         <C>            <C>           <C>        <C>
$ .01 to $2.00    1,089,250   7.6 Years      $    1.40     473,000    $   1.40
$2.01 to $3.00      876,000   6.6 Years      $    2.29     236,666    $   2.25
                  ---------                              ---------

                  1,965,250   7.2 Years      $    1.80     709,666    $   1.68
                  =========                              =========
</TABLE>

[9] INCOME TAXES EXPENSE

The provision for income tax expense consists of the following:
<TABLE>
<CAPTION>

                                                                 SEPTEMBER 30,
                                                              1 9 9 7    1 9 9 6
                                                              -------    -------
Current:
<S>                                                         <C>        <C>      
  Federal                                                   $ 835,681  $ 379,000
  Utilization of Net Operating Loss Carryforward             (423,131)  (379,000)
  State and City                                              453,680    200,000
  Utilization of Net Operating Loss Carryforward             (229,504)  (196,000)
                                                            ---------  ---------
  Total Current                                               636,726      4,000
                                                            ---------  ---------
Deferred [Benefit]:
  Federal                                                     (60,923)    15,200
  State and City                                              (23,272)        --
                                                            ---------  ---------
  Total Deferred                                              (84,195)    15,200
                                                            ---------  ---------
  TOTAL INCOME TAX EXPENSE                                  $ 552,531  $  19,200
  ------------------------                                  =========  =========
</TABLE>

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

                                                               SEPTEMBER 30,
                                                           1 9 9 7      1 9 9 6

Federal Statutory Rate                                        34.0%      34.0%
Non Deductible Expenses                                        4.4        5.9
Benefit of Net Operating Loss Carryforward                   (23.1)     (39.9)
Change in Deferred Tax Asset Valuation Allowance               7.8         --
State Income Taxes [Net of Federal Tax Benefit]                8.1         .5
Other                                                         (1.1)       2.1
                                                         ---------   --------

  EFFECTIVE RATE                                              30.1%       2.6%
  --------------                                         =========   ========

The Company has net operating loss carryforwards of approximately  $54,000 which
will expire in 2009.


                                      F-15
<PAGE>
THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #9
--------------------------------------------------------------------------------

[9] INCOME TAXES EXPENSE [CONTINUED]

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

                                                        SEPTEMBER 30,
                                                           1 9 9 7
Deferred Tax Liabilities:
  Cash Basis Adjustments                                 $(159,279)
  Accelerated Depreciation                                 (91,332)
                                                         ---------

  Total Deferred Tax Liabilities                          (250,611)
                                                         ---------

Deferred Tax Assets:
  Rent Deferrals                                           149,972
  Net Operating Loss                                        18,419
  Reserves                                                 156,099
  Other                                                     10,316
                                                         ---------

  Total Deferred Tax Assets                                334,806
                                                         ---------

Net Deferred Tax Asset:
  Before Valuation Allowance:                               84,195
  Valuation Allowance                                           --
                                                         ---------

  NET DEFERRED INCOME TAX ASSET                          $  84,195
  -----------------------------                          =========

The net  deferred  income tax asset is included in other  current  assets in the
accompanying balance sheet.

The Company  recorded a reduction of $421,917 in its  valuation  allowance  from
September  30,  1996  due to the  achievement,  and  expected  continuation,  of
profitable operations.

[10] SIGNIFICANT CUSTOMERS

For the year ended  September 30, 1997,  two  customers  accounted for 11 and 10
percent of revenue.

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

[11] 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
recorded pension expense of $2,641 and $-0- during the years ended September 30,
1997 and 1996, respectively.

[12] FAIR VALUE OF FINANCIAL INSTRUMENTS

Effective  October 1, 1995, the Company adopted SFAS 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 and cash
equivalents,  trade  receivables and trade  payables,  it was estimated that the
carrying amount  approximates  fair value for the majority of these  instruments
because of their short maturities.

                                      F-16
<PAGE>
THE SOLOMON-PAGE GROUP LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SHEET #10
--------------------------------------------------------------------------------

[13] NEW AUTHORITATIVE ACCOUNTING PRONOUNCEMENTS

The  Financial  Accounting  Standards  Board  ["FASB"]  has issued  Statement of
Financial  Accounting Standards ["SFAS"] No. 128, "Earnings per Share," and SFAS
No. 129, "Disclosure of Information about Capital Structure," in February 1997.

SFAS No. 128 simplifies the earnings per share ["EPS"] calculations  required by
Accounting Principles Board ["APB"] Opinion No. 15, and related interpretations,
by replacing the  presentation  of primary EPS with a presentation of basic EPS.
SFAS No. 128  requires  dual  presentation  of basic and diluted EPS by entities
with complex capital structures.  Basic EPS includes no dilution and is computed
by dividing  income  available to common  stockholders  by the  weighted-average
number of common  shares  outstanding  for the period.  Diluted EPS reflects the
potential  dilution of securities that could share in the earnings of an entity,
similar  to the  fully  diluted  EPS of APB  Opinion  No.  15.  SFAS No.  128 is
effective for financial  statements issued for periods ending after December 15,
1997,  including  interim periods;  earlier  application is not permitted.  When
adopted,  SFAS No. 128 will require  restatement  of all  prior-period  EPS data
presented.  The Company's basic EPS as calculated  under SFAS No. 128 would have
been  $.25  and  $.14  for  the  years  ended   September  30,  1997  and  1996,
respectively.  The Company  diluted EPS as  calculated  under SFAS No. 128 would
have  been  $.23 and $.14 for the  years  ended  September  30,  1997 and  1996,
respectively.

SFAS No. 129 does not change any previous  disclosure  requirements,  but rather
consolidates existing disclosure requirements for ease of retrieval.

The Financial  Accounting Standards Board ["FASB"] issued Statement of Financial
Accounting  Standards ["SFAS"] No. 130, "Reporting  Comprehensive  Income." SFAS
No. 130 is effective for fiscal years beginning after December 15, 1997. Earlier
application is permitted.  Reclassification of financial  statements for earlier
periods  provided for  comparative  purposes is required.  The Company is in the
process of determining its preferred  format.  The adoption of SFAS No. 130 will
have no impact on the Company's  consolidated  results of operations,  financial
position or cash flows.

The FASB has issued SFAS No. 131,  "Disclosures  About Segments of an Enterprise
and  Related  Information."  SFAS No. 131  changes how  operating  segments  are
reported in annual  financial  statements and requires the reporting of selected
information  about  operating  segments in interim  financial  reports issued to
shareholders. SFAS No. 131 is effective for periods beginning after December 15,
1997, and comparative  information for earlier years is to be restated. SFAS No.
131 need not be applied to interim  financial  statements in the initial year of
its  application.  The Company is in the process of  evaluating  the  disclosure
requirements. The adoption of SFAS No. 131 will have not impact on the Company's
consolidated results of operations, financial position or cash flows.

[14] SUBSEQUENT EVENT

On October 31, 1997, the Company's Board of Directors  authorized the repurchase
of up to 1,000,000 of the  Company's  Class A redeemable  common stock  purchase
warrants in open market or privately negotiated  transactions.  Through December
31, 1997, the Company has repurchased  962,562  warrants at a cost of $1,018,303
which was financed  through  borrowings  on the  Company's  line of credit.  The
Company also terminated its common stock repurchase plan which was authorized on
December 31, 1996.

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

                                      F-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:   May 29, 1998                       By: /S/  LLOYD SOLOMON
                                                --------------------------------
                                                Lloyd Solomon
                                                Vice Chairman and
                                                Chief Executive Officer
    



                                     -7-

<PAGE>
      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 Director     May 29, 1998
-----------------------
Herbert Solomon



  /S/ LLOYD SOLOMON        Vice Chairman of the Board, Chief      May 29, 1998
-----------------------    Executive Officer and Director
Lloyd Solomon              (Principal Executive Officer)



  /S/ SCOTT PAGE           President and Director                 May 29, 1998
-----------------------
Scott Page



  /S/ ERIC M. DAVIS        Vice President - Finance, Chief        May 29, 1998
-----------------------    Financial Officer and Director
Eric M. Davis              (Principal Financial and Accounting
                           Officer)


* /S/ EDWARD EHRENBERG     Director                               May 29, 1998
-----------------------
Edward Ehrenberg



* /S/ JOEL A. KLARREICH    Director                               May 29, 1998
-----------------------
Joel A. Klarreich



         *  /S/ ERIC M. DAVIS
          ------------------
          By:  Eric M. Davis
          Attorney-in-Fact


                                       -8-