SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

 Annual Report under Section 13 or 15(d) Of the Securities Exchange Act of 1934
    For the Fiscal Year Ended: September 30, 1997 Commission File No. 0-18222

                          COSTA RICA INTERNATIONAL, INC
                                Formerly known as
                         Quantum Learning Systems, Inc.
         ---------------------------------------------------------------
        (Exact Name of Small Business Issuer as specified in its charter)

              Nevada                                      87-0432572
  ---------------------------               ---------------------------------- 
 (State or other jurisdiction              (IRS Employer Identification Number)
   of incorporation)
                       2525 SW 3rd Ave, Suite 303
                             Miami, Florida               33129
                --------------------------------------   --------
               (Address of principal executive offices) (zip code)

                                 (305) 250-9938
               --------------------------------------------------
              (Registrant's telephone number, including area code)

        Securities Registered Pursuant to Section 12(b) of the Act: None
           Securities Registered Pursuant to Section 12(g) of the Act:

                          Common Stock $.001 par value
                          ----------------------------
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for,  such shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                              Yes:  X   No:
                                   ---      ---

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B contained in this form and no disclosure  will be contained,  to
the  best  of  Registrant's   knowledge,  in  definitive  proxy  or  information
statements incorporated by reference in Part III of this Form 10-KSB.

                              Yes:  X   No:
                                   ---      ---

Registrant's revenues for its most recent fiscal year: $70,018,094.

The  aggregate  market  value  of the  voting  stock of the  Registrant  held by
non-affiliates as of December 15, 1997 was approximately $13,742,663. A total of
13,329,451  shares were owned by  non-affiliates as of December 15,  1997. 

The number of shares  outstanding of the  Registrant's  common stock,  as of the
latest practicable date, December 15, 1997 was 19,809,396.

DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Documents  incorporated by reference are found in Item 13. All documents related
to the reverse acquisition agreement disclosed in Part I, Item 1 (a) hereof have
been previously filled.



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PART I

ITEM 1.    DESCRIPTION OF BUSINESS.

General Development of Business
-------------------------------

COSTA RICA INTERNATIONAL, INC., formerly known as Quantum Learning Systems, Inc.
(the "Registrant"),  is a Nevada  corporation.  The main business address during
the reporting  period was 2525 SW 3rd Ave. Suite 303, Miami,  Florida 33129. Its
telephone  numbers at this  address  were (305)  250-9938  and  250-9939.  As of
December,  1997,  the new main  business  address is 95 Merrick Way,  Suite 507,
Coral Gables, Fl, 33134. The new telephone number is (305) 476-1757,  telecopier
number is (305) 476-1760, email address info@costaricaint.com.

The Company was incorporated  under the laws of the State of Utah on February 6,
1986 under the name CCR,  Inc. for the purpose of investing in any and all types
of assets,  properties,  and businesses. The Company completed a public offering
in 1987.

In April,  1996,  the Company  entered into a reverse  acquisition  agreement to
acquire at least 65% of the issued and outstanding shares of Corporacion Pipasa,
S.A. ("Pipasa"). This transaction was structured such that Pipasa would become a
partially owned subsidiary of the Company and the former  shareholders of Pipasa
would become the owners of  approximately  82.4% of the Company,  if 100% of the
shares  of  Pipasa  were  acquired.   This   transaction  was  approved  by  the
shareholders  of the Company on August 5, 1996 and  concluded on  September  30,
1996.  The Company owns 59.56% of the issued and  outstanding  common  shares of
Pipasa.  As a part of the  transaction  and at the same time as shares of Pipasa
were  exchanged  for shares of the Company,  the Company  disposed of all of its
subsidiaries  and assets by transferring  them to InterCoast  Financial,  Inc.,a
shareholder  of the Company and a company  controlled by Mr. James K.  Isenhour,
the  Company's  former  President,  in exchange for 50,000  common shares of the
Company,  plus an  indemnification  from Mr. Isenhour and InterCoast  Financial,
Inc. to  indemnify  and hold the Company  harmless  from and against any and all
actions or  liabilities  resulting  from the Company's  past  ownership of these
subsidiaries and assets.

On August 5, 1996,  the Company  changed  its name to Costa Rica  International,
Inc.  In March,  1997 the  Registrant  hired KPMG Peat  Marwick in Costa Rica as
its  external auditors and independent public accountants,  for itself and  for
Pipasa, substituting for  T. Allan  Walls and  Associates, the former  auditors
and accountant for the Company.

In March,  1997, the Company,  with  the assistance of KPMG Peat Marwick,  first
detected and communicated via a press release that the September 30, 1996 10-KSB
filing was in error and that KPMG Peat Marwick was  conducting a  re-examination
of fiscal years 1994,  1995 and 1996 and  corrected  those errors in  September,
1997.  The  nature of the  errors  could be traced to the  financial  statements
certified by Registrant's predecessor auditor for fiscal 1996 for the Registrant
and for Pipasa.  Those financial statements had to be restated by the Company to
properly account for the following:


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1)   The  business  combination  of the  Company  and Pipasa was first  recorded
     according to the purchase  method of accounting.  As a result,  the Company
     recorded the assets of Pipasa at fair market  value.  The  combination  was
     actually a reverse acquisition,  whereby Pipasa should have been treated as
     the  accounting  acquirer,  and  the  Company  as the  legal  acquirer.  In
     accordance with Generally Accepted Accounting  Principles ("GAAP"),  Pipasa
     (the  accounting  acquirer) must account for its acquisition of the Company
     as a reverse merger.

2)   The  Company,  following  the advice of its prior  accountants,  previously
     reflected  the  results of  operations  of the  Company  as the  historical
     financial  statements of the Company  through the date of the merger.  GAAP
     requires that the historical  financial  statements of the entity after the
     reverse  merger be those of Pipasa,  the  accounting  acquirer.  Historical
     financial statements of the Company have been restated accordingly.

3)   The  Company,  under  the  advice  of  its  prior  accountants,  mistakenly
     accounted  for a transfer of goodwill.  A business  combination  between an
     operating enterprise and a shell company, in which the shell company is the
     issuer of securities  and the operating  enterprise is determined to be the
     acquiring  enterprise for financial reporting purposes,  should be treated,
     for  financial  reporting  purposes,  as an issuance of  securities  by the
     operating enterprise.  The company  was in essence a shell company  because
     all of its assets were divested simultaneously with the merger. No goodwill
     or intangible assets would be recognized in this transaction. The financial
     statements of the Company were revised so as not to reflect any transfer of
     goodwill.

4)   The  non-monetary   assets  and  liabilities   included  in  the  financial
     statements  of Pipasa were  translated  from Costa  Rican  currency to U.S.
     Dollars at historical  exchange rates. As of December 31, 1984,  Costa Rica
     is no longer  considered to be a highly  inflationary  country according to
     the  Statement of Financial  Accounting  Standards No. 52  parameters,  and
     consequently,  the functional  currency of Pipasa is the Costa Rican Colon.
     These items should have been  translated  into U.S.  Dollars using year-end
     exchange  rates.  This  error  has been  corrected  and the  balance  sheet
     adjusted to reflect a reduction in asset value of  $24,142,964,  due to the
     currency  translation  error  and use of the  improper  accounting  methods
     described  above.  The audit conducted by KPMG Peat Marwick resulted in the
     following  restated  amounts, as reported in 1996 10-KSB:

     Previously  reported:
     ---------------------
     Assets                                              $62,351,671
     Liabilities                                         $18,919,347
     Stockholders Equity and Minority Interest           $43,432,324

     As restated:
     ------------
     Assets                                              $38,208,707
     Liabilities                                         $22,690,396
     Stockholders Equity and Minority Interest           $15,518,311

Except as otherwise  disclosed  herein,  the Company has not been subject to any
bankruptcy, receivership or similar proceeding.

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Operations.
-----------
GENERAL

At the end of fiscal year 1997, the Company conducted business in the poultry
industry. The previous operations of the Company were sold in September, 1996.

It is the  intention  of the Company in the  foreseeable  future to focus on the
Pipasa core  business.  In its new  configuration,  the Company will continue to
look at new  acquisitions  in  Costa  Rica,  but  also in  other  locations  and
industries, which the Company believes are profitable.

The  original  operations  of Pipasa  began in 1969.  Pipasa was  founded by Mr.
Calixto Chaves. The operations were in several Costa Rican corporations:  Akron,
S.A., Industrias Derivados de Pollo, S.A.(Idepo,  S.A.), Retisa, S.A., Servicios
Multiples Pipasa (Semupi,  S.A.),  Avicola Chacara,  S.A.,  Concentrados  Belen,
S.A.,  Empolladora Belen, S.A., Granja Avicola Monica,  S.A., Planta Procesadora
de Aves, S.A., Grupo Pipasa,  S.A.,  Productores de Huevo Fertil, S.A. (Prohufe,
S.A.),  and El Polluelo,  S.A. In 1991,  all of these  entities were merged into
Akron,  S.A., a Costa Rican  corporation,  which changed its name to Corporacion
Pipasa,  S.A.  Pipasa has not been subject to any  bankruptcy,  receivership  or
similar proceeding.

COMPANY OVERVIEW.

Pipasa is the largest  poultry  company in Costa Rica with a 50% market share of
the chicken meat market.  The main  activities of Pipasa are the production  and
sales of broiler chickens, poultry meat, processed chicken products,  commercial
eggs,  and premixed feed and  concentrate  for  livestock and domestic  animals.
Pipasa has been in the poultry business for more than 27 years with more than 11
years of  experience in exports.  It owns 38 urban and rural outlets  throughout
Costa Rica. Today, Pipasa enjoys a vertically integrated operation, which begins
with the fertilized egg and ends with the preparation and  distribution of fresh
whole chickens to fast-frozen and cooked chicken patties and sausages.

HISTORY OF COSTA RICA INTERNATIONAL, INC. AND CORPORACION PIPASA, S.A.

The  Company,  formerly  known  as  QLS  (Quantum  Learning  Systems  Inc.)  was
incorporated under the laws of the State of Utah on February 6, 1986 and filed a
public offering in 1987. The Company's current jurisdiction is Nevada. In April,
1996, the Company entered into an acquisition  agreement to acquire the majority
of the stock of Pipasa. With the Pipasa acquisition, the Company divested itself
of all other  subsidiaries  and focused solely on the operations of Pipasa.  The
Company  serves as the  holding  Company  for Pipasa and will from time to time,
make strategic investments  in Costa Rica and Central  America which the Company
expects will bring value added to Pipasa's core business.








                                       4

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RECENT ACQUISITIONS:

In April of this year,  Pipasa completed the acquisition of the poultry division
and animal feed concentrate business of Coopemontecillos  R.L. for approximately
$2,700,000. Pipasa  acquired the assets,  including  plant,  equipment,  vehicle
fleet,  inventory,  hens  and  raw  materials  and  some  accounts   receivable.
Coopemontecillos had a  6%  market  share  of the Costa Rican poultry market but
was not a significant factor in the animal feed market.

CUSTOMERS:

Even  with  its  strong  market  position,  Pipasa  is  constantly  striving  to
strengthen it. It promotes its brand names through  advertisements and marketing
events. Pipasa considers itself to be among the most recognized Central American
chicken producers  securing agreements to supply chicken in Costa Rica to Burger
King,  Pizza Hut,  Subway,  KFC,  Gerber  Products  and to  McDonalds in Central
America. Within the last two years, Pipasa has invested approximately $4,300,000
in assets  that have  increased  efficiency  and  output,  such as an  automatic
de-boning machine, a new incubation plant (regarded as one of the most modern in
Central  America), a  nipple-type  drinking system  to  feed  birds  and  a  new
distribution fleet.

STRONG DISTRIBUTION NETWORK:

Pipasa has a distribution  fleet consisting of approximately 156 delivery trucks
specially  designed to deliver poultry products.  These trucks play an important
role in Pipasa's export  business,  as they give Pipasa the necessary fleet size
to export to other  countries.  These trucks deliver fresh products daily,  thus
maintaining  Pipasa's  reputation  for fresh  quality  products.  Through its 38
outlets,  Pipasa is able to  distribute  its  products to customers in urban and
rural areas who may not have easy access to supermarkets.  The majority of these
outlets are owned by Pipasa and are located in the urban areas.

EXCHANGE RATE RISK:

Pipasa makes U.S.  Dollar  payments for its raw materials  and bank  facilities.
This U.S.  Dollar  expense  component  is not unique to Pipasa,  as all  poultry
producers in Central America must rely on U.S.  companies for raw materials like
corn,  soybean meal and  reproduction  birds.  Given its U.S.  Dollar  exposure,
Pipasa  actively  manages its exchange rate risk.  It uses a financial  model to
determine the best strategy to mitigate against Colones  devaluation against the
U.S. Dollar. Pipasa  systematically  increases its yearly sales prices by a rate
that runs in pace with Colon devaluation against the Dollar. For the fiscal year
1997,  the  national  devaluation rate  was 11.60%  and  correspondingly, Pipasa
increased  its  prices  12.6%.  Management  believes  that the  Company's strong
market  will allow for this type of price increase  without  sacrificing  demand
and  market share.  The Company has  successfully  passed  along such  increases
for the last five years.








                                       5

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Management plans to increase its export operations in order to increase its U.S.
Dollar revenue,  as all export sales are made in U.S.  Dollars.  In 1997, Pipasa
generated $2,300,000 in export revenue, which represents 3.22% of total sales.

COMMODITY RISK:

Pipasa imports all of its corn, the primary ingredient in chicken feed, from the
United States. Movements in the price of corn can significantly  affect Pipasa's
net profit margin. Pipasa has a department  exclusively dedicated to hedging its
corn and  soybean  meal  exposure  and has been doing so for the last six years.
Pipasa is not  involved in  speculation  and only  hedges  known  exposure.  The
department works closely with its broker dealers FIMAT and Prudential Securities
and confers  with its  internal  hedging  committee  in order to employ the best
strategy to hedge corn exposure. Pipasa sets a conservative target price for its
corn, which is based on worst case assumption (i.e. adverse weather  conditions,
thus high prices).  The prices Pipasa paid for its corn and soybean meal in 1997
have consistently  fallen below budgeted prices by 3.4% and 4.90%, respectively.

FOREIGN COMPETITION:

Pipasa's  local  market  share  could   potentially  be  threatened  by  foreign
competition.  Pipasa believes that this  likelihood is low for several  reasons.
Pipasa  has a  strong  reputation  for  producing  high  quality  products  at a
reasonable price. Secondly,  Costa Ricans prefer fresh chicken to frozen chicken
and due to transportation  constraints and distance,  foreign  competitors would
have to sell frozen chicken if they were to sell it in Costa Rica.

The  Agriculture  Ministry in Costa Rica  monitors all the chicken  entering the
country, as it wants to prevent Newcastle Disease from entering the country. The
Costa Rican market is also  protected by tariff  agreements.  Chicken  importers
must pay duties as dictated by GATT  agreements.  These  agreements were reached
during the GATT and Uruguay  Round and are due to expire in 2004.  They  provide
that only 887 MT (metric tons) of whole chicken parts or chicken derivatives can
be imported to Costa Rica from countries  outside of the Central American Common
Market.  The Central American Common Market "MCCA" which originated in 1963, was
the integration of the political and economic system of the countries in Central
America. The purpose for the integration was to create a market large enough for
industries  to benefit  from  greater  economies  of scale.  Members of the MCCA
include Costa Rica, Guatemala,  Nicaragua,  El Salvador and Honduras. This quota
is taxed 39% and amounts in excess of this quota are  subject to a 200%  tariff.
This tax rate was based on the  additional  cost of  producing  poultry in Costa
Rica compared to cost of production in the U.S.












                                       6

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COMMODITY RISK MANAGEMENT:

Pipasa's  greatest cost components are corn and soybean meal, which are imported
from the United States. Pipasa purchased  approximately  $1,000,000 per month in
corn  through  the  Chicago  Board of Trade  ("CBOT").  Corn  and  soybean  meal
purchases represent approximately 50% of total cost of goods sold and 70% of raw
material costs. The price of corn and soybean meal, like most grain commodities,
is  fairly  volatile  and  requires  consistent  and daily  hedging  in order to
minimize  the  effect of price  increases  on its  profit  margin.  The  minimum
contract size for corn purchased  through the CBOT is 5,000 bushels per contract
(delivery dates are September,  December, March, May and July) and the tick size
for corn is $0.0025.  The tick size indicates the  volatility of a contract.  In
the case of corn, a tick size of $0.0025  means that for each  one-quarter  cent
move on a contract, the price of corn on one contract, moves $12.50.

Pipasa has been  actively  hedging its  exposure  to corn since  1991.  It has a
dedicated department whose sole responsibility is to evaluate, on a daily basis,
the price of corn and soybean  meal.  All hedging  activities  are headed by the
financial  department, which  has  been trained  at the CBOT and attends regular
seminars on commodities hedging strategies.

Hedging strategies must go through a hedging  committee.  The committee consists
of two  analysts,  as well as the  Financial  Director,  Financial  Manager  and
General Vice  President.  The committee  meets at least once a month to evaluate
Pipasa's  exposure  in corn and  soybean  meal.  Pipasa's  strategy  is to hedge
against  price  increases  in corn  and  soybean  meal.  It is not  involved  in
speculative trading.  Contracts range from one month to six months.  Pipasa will
buy directly from the spot market if market  conditions are favorable,  but as a
general rule, it purchases at least 50% of its corn through contracts.  Pipasa's
hedging strategy is set by its yearly budget, which determines how much corn and
soybean  meal it will  need and the  price  it must pay in order to meet  budget
forecasts.  It uses an internal pricing model to run sensitivity models.  Pipasa
bases its target  prices on the worst case price  assumptions  (i.e.   high corn
prices).  On a  historical  basis,  Pipasa's  current  prices paid for corn have
fallen 3.4% below its budgeted prices.

Pipasa has a $250,000  credit line with FIMAT and draws upon this credit line in
order to cover its initial margin  deposit.  The interest rate paid on this line
of credit is less than 10% on drawn amounts.  Pipasa is in constant contact with
its brokers (at least  three to four times a day) and  receives  advice from the
broker  dealer's corn experts.  Pipasa also  installed a satellite  dish in 1991
which  enables  it to  receive  real time  information  on the price of corn and
soybean meal via the Future  Source  Technical  Services  and the Futures  World
News.








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Pipasa's  soybean  meal  purchases  total  approximately  $600,000 a month.  The
hedging  strategies  for soybean meal  purchases  are  identical to that of corn
purchases,  except that Pipasa  purchases its soybean meal through a Costa Rican
company,  Inolasa,  in  which  Pipasa  holds a  10%  equity  ownership  of  the
outstanding stock.  In Costa  Rica,  there  exists a 5%  tax  for  soybean  meal
imports,  which is not levied if purchased  through  Inolasa.  If for any reason
Inolasa  cannot  deliver the soybean meal to Pipasa,  Pipasa can buy its soybean
meal  directly from the CBOT.  Thus far,  Pipasa has never had to go directly to
the CBOT to purchase  soybean  meal.  On a historical  basis,  Pipasa's  current
prices paid for soybean meal have been close to 5.0% below its budgeted prices.


EXCHANGE RATE RISK MANAGEMENT:

In addition to movements in the price of corn and soybean  meal,  due to weather
conditions or demand  levels,  Pipasa has exposure to  fluctuations  in exchange
rates,  as payments for corn,  soybean meal and  reproduction  birds are in U.S.
Dollars. Pipasa has an internal Economic Studies Division whose sole function is
to follow economic and industrial trends that influence foreign exchange levels.
This  division  examines  areas such as poultry  gross  national  product,  GNP,
inflation,  devaluation,  export and import growth rates,  growth in real wages,
unemployment and population rates.

The raw material  purchases have an average  payment  period of 120 days,  hence
exchange rate risk is for four months.  During this time,  accounts are paid and
costs are  updated  to  reflect  new  exchange  rates.  In the event of a severe
devaluation of the Colon, or increases in international  prices, the Company can
increase sales prices to recuperate its foreign  exchange  losses.  In addition,
all of Pipasa's  exports are  denominated  in U.S.  Dollars (even exports within
Central  America). Management  expects  that  the  strategy  to increase exports
will increase  Pipasa's U.S. Dollar  revenues.  Currently,  Pipasa has financial
liabilities  of  $6,000,000.  Pipasa  uses a  model  to  determine  the  maximum
devaluation  possible before it considers taking on Colon-based debt. In effect,
Pipasa borrows in U.S. Dollars when the economies  prove it to be less expensive
than borrowing in Colones.

PRICING:

In Costa Rica,  there are no laws against  monopolies,  however,  there are laws
against monopolistic practices. Companies, which have a dominant market share in
Costa Rica, cannot arbitrarily increase prices in order to take advantage of its
market position.  Companies are also forbidden to work in conjunction with their
competitors in order to create price collusion. Given these guidelines, Pipasa's
pricing strategies are influenced by two main factors:  industry  conditions and
currency  devaluation.  As previously  mentioned,  Pipasa will use its financial
model to increase  prices  accordingly  in order to mitigate  devaluation of the
Colon.  During the last 10 years,  the Costa Rican Colon has devalued an average
of 13.5% per year, which Pipasa has mitigated by increasing prices on average by
14.0% per year for its chicken,  meat  by-products and animal feed segments. 








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In terms of consumer  reaction  to price  increases  within the chicken  broiler
segment,  there is little  differentiation  for customers between one competitor
and another. Instead,  customers are driven by price set by the leader, which in
the Costa Rican market is Pipasa. As the market and price leader, Pipasa has the
flexibility  to increase its prices  without  losing  significant  market share.
Given the consistent  increase in chicken prices over the past 12 years,  Pipasa
believes it has excellent data on consumer reactions to price increases.  It has
been  Pipasa's  experience  that a  significant  increase  in prices  leads to a
temporary decrease in demand that lasts  approximately two months.

MAIN BUSINESS SEGMENTS:

Poultry is a popular  food item in Costa Rica  because of its easy  preparation,
nutritional value and low price when compared to other meats in the country. Per
capita  consumption  of poultry has increased from 16.2 kilos (35.6 lb.) in 1994
to 18.0 kilos (39.6 lb.) in 1996, an 11.11% increase during the two year period.
Poultry  is  consumed  in all social  levels  and is not  defined by  geographic
markets.   The  popularity  of  poultry in Costa  Rica  extends  beyond  broiler
chicken (whole chicken) and  includes chicken by-products like sausages and cold
cuts.

The following is a brief description of the main business segments of Pipasa:

BROILER CHICKEN:

Sales of broiler chicken  represented  approximately 63% of Pipasa's total sales
during  fiscal 1997.  Gross  margins for locally  sold  broilers as a percent of
total broiler chicken sales was 26.20%.

CHICKEN BY-PRODUCTS:

Meat by-products include sausages,  bologna,  chicken nuggets,  chicken patties,
frankfurters, salami and pate. Meat by-products represented a little over 11% of
Pipasa's  total sales for fiscal 1997.  It is a very  profitable  segment of the
business,  with gross margins as a percent of total by-products sales of roughly
38%.

ANIMAL FEED:

Animal feed is made with imported raw  materials  such as corn and soybean meal,
along with the unused portions of chicken and other vitamins and minerals. It is
marketed for consumption by cows, pigs, birds,  horses and domestic pets. Animal
feed represented approximately 17% of Pipasa's total sales during 1997.

OTHERS:

This segment  includes sales of commercial eggs,  fertile eggs,  animal feed and
baby chicks to integrated producers, as well as raw materials and baby chicks to
third parties.









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POULTRY RAISING PROCESS, PROCESSING FACILITIES AND HEALTH GUIDELINES

POULTRY RAISING PROCESS:

The poultry  raising  process  starts with the import of one-day old parent hens
from the United States.  Once these hens reach their laying period,  which takes
20 weeks,  they  produce  fertile  eggs,  which are then  incubated  in order to
produce baby chicks. The hatching period lasts 21 days, which is divided into 19
days in hatching machines and two days in birth chambers.  These baby chicks are
inoculated  to prevent  diseases.  The chicks are then  brought to Pipasa's  own
raising house or to  independent  integrated  producers who raise the chicken to
full size  (typically a seven week  process)  providing  basic  elements such as
vitamins, formula, and a balanced ration of feed. The integrated producers are a
group of 72 farmers who own their own land and facilities. They have a long-term
contract  with  Pipasa to raise the baby  chicks to adult  birds with an average
weight of 1.87 kilograms (4.1lb.).  Integrated producers supply 30% of the total
chicken needed by Pipasa and are paid according to the weight and quality of the
chicken  produced and the mortality rate of the lot of chickens  raised.  Pipasa
provides free  veterinary  services and offers  vaccines and chicken feed to the
farmers at wholesale prices.  Regardless of whether Pipasa raises the chicken or
integrated  producers  do,  the  chickens  are  regularly  inspected  for immune
deficiencies,  vitamin  levels and general  diseases.  By working in conjunction
with these integrated  producers,  Pipasa has greater flexibility to increase or
decrease the number of chickens raised depending on Pipasa's growth objectives.

PROCESSING FACILITIES AND HEALTH GUIDELINES:

Once  the  chickens  reach  the  desired  weight,  they  are  then  taken to the
processing plant.  Pipasa's processing house is among the most sophisticated and
largest in the country.  The plant size is approximately 6,205 square meters and
has the capacity to process 7,000  broilers per hour.  The  processing  plant is
where the chicken is  slaughtered  and the meat  packaged or  processed  to make
chicken by-products.  As with all animal processing  facilities,  the processing
plant must be kept clean in order to prevent  the spread of  bacteria.  For this
reason,  Pipasa's  employees are required to wear protective masks, caps, boots,
gloves  and  coats at all  times  while in the  processing  plant.  Each time an
employee enters or leaves the processing plant,  boots must be soaked and rinsed
with bleach.  All bathroom  facilities are located  outside of the plant and are
equipped  with foot  operated  faucets.  All new employees are trained as to the
proper procedures required in handling and preparing food.













                                       10

<PAGE>
<PAGE>

A government  health  inspector is at  the plant 24 hours a day.  The government
representatives  inspect every step of the processing procedure and send samples
of the meat to government labs for analysis for bacteria and other organisms. In
addition to government  inspectors,  Pipasa has its own staff of inspectors  who
also take  samples  of the meat at each step of the  production  process.  These
samples are then sent to Pipasa's own labs for analysis.  Because Costa Rica has
been declared free of Newcastle Disease,  the Animal and Plant Health Inspection
Service  (APHIS)  surveys work in Pipasa's  facilities to ensure that Costa Rica
continues  to  be  free  of  Newcastle  Disease.  Pipasa  recently  adopted  the
guidelines of Hazard Analysis Critical Control Points (HACCP) which are expected
to  be fully  implemented  in  the future.  HACCP  is  a  prevention  based food
safety  system  used  widely  throughout  the food  industry  in  Total  Quality
Management.  It is a tool used to assess hazards and to establish controls based
on the  prevention  of food  contamination.  For  example,  temperature  must be
carefully  controlled  as microbial  growth is  encouraged  between 4-60 degrees
Celsius or 40-160  degrees  Fahrenheit.  HACCP  encourages  employees to gain an
in-depth  understanding  of total food  production.  The employees  thus take an
active role in ensuring food quality and safety. By identifying  critical points
in the  process  flow that  could lead to  contamination  of food  products  and
applying  control measures at each point, the likelihood of a food borne illness
is reduced.

BROILER CHICKENS CUSTOMERS:

The main brand name is Pipasa,  which sells  mostly  broiler  chickens,  chicken
parts,  mixed cuts and  breasts.  Broiler  chicken is a generic  product that is
directed to customers of all social and economic  levels.  It is estimated  that
Costa Ricans eat chicken at least once a week.  Chicken is sold to institutional
clients,  schools,  hospitals,  restaurants  and small  grocery  stores.  Pipasa
currently supplies Burger King, Subway, Pizza Hut, Gerber Products,  Rostipollos
and KFC in Costa  Rica.  Pipasa was  recently  selected by  McDonalds  to be its
poultry products supplier for all of Central America.

CHICKEN BY-PRODUCTS CUSTOMERS:

Pipasa's meat  by-products are sold through the Kimby brand name and are sold to
all social and economic  classes.  The Kimby brand name is the leading seller in
chicken  meat  by-products  in Costa  Rica.  These  products  are sold mainly in
supermarkets and sales of these products are predominantly  driven by price. The
Kimby brand name is one of the leading  sellers of chicken  by-products  and the
leading seller of chicken sausages in Costa Rica.

ANIMAL FEED CUSTOMERS:

Pipasa's  animal feed products are sold through the Nutribel  brand name.  These
clients are mainly big wholesalers and high scale breeders. This customers group
is focused on quality and price.  Products  marketed  through the Mimados  brand
name,  a  division  within  Nutribel,  targets  veterinarians,  pet  stores  and
supermarkets.  These  clients are  typically  among the medium to higher  income
levels.  The leader in this market is Dos Pinos (33% market  share)  which sells
animal  feed  exclusively  to  co-operatives.  The rest of this  market  is very
fragmented.



                                       11

<PAGE>
<PAGE>

"OTHERS" CUSTOMERS:

Customers of this segment are mainly  integrated  producers,  small  farmers and
commercial egg distributors.

MARKETING:

Pipasa has a  dedicated  division  for  marketing.  The  marketing  department's
responsibility  is to disseminate  Pipasa's various products and brand names. In
addition  to  television  and  radio  advertisements,   Pipasa  works  with  its
distribution  centers to give away  posters,  T-shirts and hats that promote the
Pipasa  product  brand  names.  In Costa Rica,  the Pipasa  brand name  commonly
appears on major billboards and bus stops.  There are more marketing  techniques
available for use in meat by-products,  as these items can be packaged in a more
effective manner in order to draw customers.

DISTRIBUTION:

Pipasa's  distribution  fleet consists of  approximately  156 trucks.  The fleet
delivers to over 11,200 clients.  These trucks are specially designed to deliver
poultry and are equipped with refrigeration  chambers.  These vehicles typically
have a  useful  life of 5 years.  Pipasa's  products  are sold not only  through
supermarkets, but  also  through rural and urban retail outlets.  A majority of
total  distribution is  conducted  through  its  urban retail outlets, a smaller
portion  through   rural outlets and  the  remaining  distribution  is  serviced
through  the Company's processing plants. These retail outlets  are dedicated to
the  sale  of Pipasa products exclusively.  Prices  for  products  sold in these
retail outlets are identical to prices quoted in supermarkets. The products sold
are  fresh  as  these  retail  outlets  are  typically  situated  near  Pipasa's
processing facilities which enables trucks to make  deliveries on a daily basis.
Products   may   be   sold   by  the  unit or wholesale. Pipasa currently has 29
urban distribution  outlets  and 9 rural  outlets.   The   rural   outlets   are
strategically  located  near major roadways, and are equipped with refrigeration
chambers  that  allow  for  storage of chicken.  Pipasa  plans to  increase  the
capacity  of  these  cold room  storage  facilities  in  order to meet increased
production plans (specifically for chicken by-products). The increased  capacity
will enable  distribution  trucks to make more deliveries,  as trucks can simply
return to the nearest  agency to reload their trucks, as opposed to returning to
the main plant in order to reload.

EMPLOYEES, COMPENSATION AND INCENTIVES:

The top management  level at Pipasa has on average almost 15 years of experience
with Pipasa and has been able to grow  Pipasa's  market share to 50% by creating
efficient operations,  making strategic  acquisitions and producing high quality
products.









                                       12

<PAGE>
<PAGE>

The success of the Employee's  Solidarity  Association  (ASEPIPASA) and the fact
that  there has never  been a strike at  Pipasa,  reflects  the  quality  of the
management  team and its  ability  to keep its  employees  satisfied.  ASEPIPASA
provides  recreational  facilities,  healthcare and pension  benefits as well as
financial  services to its employees,  Pipasa encourages its employees to make a
career at Pipasa.

As of September 30, 1997, Pipasa had approximately 1,990 full-time employees, of
whom 55 were in management  and 247 were in  administration.  Private  companies
typically support their own workers'  associations  instead of organized unions,
which  provide  certain  services  such  as  credit,   recreational  facilities,
subsidized housing, as well as healthcare  benefits.  Pipasa's employees created
ASEPIPASA in 1985. This association sits  on  land  donated  by Mr.  Chaves  and
is  among  the  largest  solidarity associations in Costa Rica. The  association
has a  swimming  pool,  soccer  field,  outdoor  sports,  sauna and a 1,000 seat
gymnasium facility. At Pipasa, all the employees participate in the association.
This level of  participation is a direct  reflection  of the quality of services
and benefits available to Pipasa employees.

Salaries in Costa Rica are increased  twice a year as dictated by the government
in order to  counterbalance  the effect of inflation and the cost of living.  By
law, each year,  companies are required  to pay to the  employees,  8.33%  of an
employee's  yearly gross salary as severance which must be paid upon termination
of a labor contract without  just cause to a maximum of eight years.  At Pipasa,
employees  have  the  option  to have  the 8.33% paid to  ASEPIPASA as part of a
savings  incentive  program  for  as long as they work for the Company, not just
8 years.  Few other  companies in Costa  Rica  offer  this  option.  The savings
incentive program works as follows:  Pipasa pays at each pay period to ASEPIPASA
5% of the  employee's  wage for  that pay period.  5% is  then  matched  by  the
employee.  Then, in February,  Pipasa makes the final  payment equal to 3.33% of
the employee's  total yearly gross salary.  Employees have the option to deposit
the remaining  3.33% due  from  Pipasa  into  pension  fund  Provida.  ASEPIPASA
manages all the cash generated by the savings incentive  program.  It invests in
low  risk  vehicles  like  certificates of deposit  and other AA rated or better
investment  vehicles.  Employees can  borrow against the amount in their savings
at a local  interest  rate  of  18% - 30%.  Once  an employee leaves Pipasa, the
employee  is entitled  to the total amount  accumulated  in  their severance and
savings incentive account.

All employees are protected by obligatory  insurance with the Caja Costarricense
de Seguro Social ("CCSS") and  the  Instituto  Nacional de Seguros ("INS") which
are  the  government's  social security and insurance programs. All companies in
Costa Rica must pay the CCSS 21% and  the INS 1.74%  of  each employee's monthly
salary.  These  contributions serve  as a policy for  healthcare  and   employee
accidents.  This policy has  unlimited coverage.  For  example,  if an  employee
were  to  suffer serious  injury   while   at  work,   the  CCSS  and  INS  will
provide hospitalization,  rehabilitation  and  medicine.  The  CCSS pays 70%  of
the employee's normal  salary  during  the periods in which  he or she is unable
to work.  In addition  to these  benefits,  employees  must pay a total of 9% of
their monthly salary  to  the  CCSS  in order to receive healthcare, pension and
maternity care benefits.







                                       13

<PAGE>
<PAGE>

Employees are provided with a profit sharing program. If Pipasa has a successful
year and generates profits in excess of budgeted levels,  Pipasa will distribute
a percentage of its net income to its  employees.  This  incentive is calculated
monthly  and  distributed   every  two  months. 

In conjunction with a local university,  Pipasa offers a business administration
program  for its  employees.  The main goal of the  program is  directed  toward
developing  Pipasa's  future  management  team.  Classes  are  held at  Pipasa's
facilities.

BACKLOG:

At September 30, 1997, Pipasa had no backlogs.

PROPRIETARY INFORMATION:

Pipasa  uses  no  material  proprietary   information  in  connection  with  its
operations.

ENVIRONMENTAL COMPLIANCE:

Pipasa  is  not  subject  to  any  material  costs  for   compliance   with  any
environmental  laws in any  jurisdiction in which it operates.  However,  in the
future,   Pipasa  could  become   subject  to  material  costs  to  comply  with
environmental laws in jurisdictions in which it does not now do business. At the
present time,  Pipasa cannot assess the potential  impact of any such  potential
environmental  regulation.  The Company has been and is  practicing  for several
years sustainable  environmental policies such as reforesting  approximately 500
hectares  with  hardwood trees,  processing and recycling its wastes,  producing
organic fertilizer, and building oxidation lagoons and sewage treatment plants.

GOVERNMENT REGULATION:

The poultry  hatcheries  and processing  plants are subject to regulation  under
Costa Rican law regarding cleanliness and health standards.    Exports of Pipasa
poultry  products are  regulated  in the  countries in which Pipasa makes sales.
Such  regulation  is  not considered  to  be  a  burden  on  Pipasa or to have a
material effect on Pipasa's ability to make a profit.  Otherwise,  Pipasa is not
subject to any material governmental regulation or approvals.

YEAR 2000 ISSUE

The  Company  established  a  formal Year 2000 oversight  committee in December,
1997.   The members of this committee are  the  Information System Manager,  the
Corporate  Auditor, the Administrative Director, an Information Systems Auditor,
and  the  Company's  External  Information  Systems  Adviser.  Along  with  this
committee, the Company  has a  written certificate that its Information  Systems
tools  that are  developed  by  Oracle are "FULLY COMPLIANT"  with the Year 2000
changes. As follows, a list of tools that have been certified:  RDBMS, Developer
2000,  Developer 2000-Forms,  Developer 2000-Reports,  Developer  2000-Graphics,
SQL*Plus, Oracle*Bood Runtime, Oracle Data Browser.

                                       14

<PAGE>
<PAGE>

The Company  has  begun  the conversion,  testing and implementation  stages of
the entity's  Year  2000  plan.  This  plan  includes  vendors,  customers  and
intermediaries.  Management  expects  to complete  its  Year 2000  plan  during
fiscal 1998 AND FISCAL 1999. To the extent that the Company could not implement
effectively the plan, adverse results could arise.

ITEM 2.   DESCRIPTION OF PROPERTY:

PRODUCTION AREA:

This area has the following divisions: Reproduction, Incubation, Broiler Chicken
and  Reproduction  Hen,  Processing  Plant,  Further  Processing and Animal Feed
Plant.

REPRODUCTION DIVISION:

o     Present  capacity of  production  installed :  26,208,000  of fertile eggs

o     Location: The installations are located in Sardinal de Puntarenas.

INCUBATION DIVISION:

o     Present capacity of production installed: 24,401,520 youngsterschicks/year
                                                469,260 youngsters chicks/week

o     Location:  The plant is located in Aranjuez de Puntarenas.

This plant is one of the most modern incubation plants in Central America, which
allows for an expansion of its halls of  incubation and  hatching,  to  increase
production, and fulfill future needs of customers for many years.

ANIMAL FEED DIVISION:

o     Location:   (1) San Rafael de Alajuela
                  (2) Sardinal de Puntarenas

o     Present capacity installed:  (1)  33 tons of animal feed per hour
                                   (2)  13 tons of animal feed per hour

The plants  perform the  activities  such as:  Ground  grains,  flour mixing and
packing of different types of balanced food.

                                       15

<PAGE>
<PAGE>

BROILER DIVISION:

o     Present capacity:             20,500,000 youngsters/year

o     Location  of the  farms:  63  farms owned and located in the central
      area of the country.

o     Youngsters  are  received  of one day after  birth.  During  this time the
      chicks receive three  types  of  diet according  to  growth  requirements.
      This growing stage lasts 43 days.

PROCESS DIVISION:

o     Present capacity of process:  26,038,195 kilograms per year

o     Location of the farms:   The plant is located in San Rafael de Alajuela.

o     The process is divided into  slaughter and pluck,  coolers and  retailers,
      packing and cuts, subproducts.

FURTHER PROCESSING:

o     Present capacity: 2,900 ton/year

o     Location: The plant is located in San Rafael de Alajuela

o     The process is divided into  sausage,  formed,  packing and hot zone (oven
      and cooking tanks) areas.

MARKETING AREA:

o     The chicken and further  process  products  are  distributed  through nine
      retail  outlets  using  the  vehicle  fleet  in rural  zones  and 27 owned
      retailers in the central  provinces of the country that carries all of our
      products to more than 8,500 different clients.  These include the majority
      of the recognized supermarkets, suppliers, meat markets and other clients.

ADMINISTRATIVE AREA:

o     Headquarters of Pipasa are located in La Ribera de Belen, Heredia.






                                       16

<PAGE>
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS:

       No legal proceedings of a material nature to which the Company is a party
       were pending  during the  reporting  period,  and the Company knows of no
       legal proceedings of a material nature pending or threatened or judgments
       entered against any director or officer of the Company in his capacity as
       such.

       The Costa  Rican  income tax returns of Pipasa for 1993, 1994,  and  1995
       were were assessed for $39,354, $131,222, and $76,976, respectively.  Due
       to the disallowance  by the Costa Rican tax authorities of  approximately
       26.03% in the aggregate of the deductions taken by Pipasa for 1993, 1994,
       and 1995, the assessments have been contested by the Company.  Management
       does not believe  this matter  will be  resolved in the next fiscal year.
       No  accrual  has  been  made  for  any  losses  that  may result from the
       resolution of this uncertainty.

       The Company is involved in various other claims and legal actions arising
       in the ordinary  course of business.  In the opinion of  Management,  the
       ultimate  disposition  of these matters will not have a material  adverse
       effect on the  Company's  consolidated  financial  position,  results  of
       operations or liquidity.

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

The following  matters were submitted to a vote of the  shareholders  during the
fiscal  year 1997.  On March 23, 1997 the  Company  held an Annual  Shareholders
Meeting to submit to the  stockholders  of the Company the  ratification of KPMG
Peat Marwick as its external  auditors and  accountants,  and the replacement of
James Kirk Isenhour as a Director of the Company, by electing The Honorable Luis
G. Guinot, Jr.












                                       17

<PAGE>
<PAGE>

PART II

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


(A)  Main Market or Markets
     ----------------------

The Company's Common Stock has been listed on NASDAQ since May 25, 1990.  Market
makers and other dealers provide bid and ask quotations of the Company's  common
stock under the symbol "RICA".

The  table  below  represents  the range of high and low bid  quotations  of the
Common Stock of the Company as reported by NASDAQ  during the  reporting  period
herein  and  the  two  prior years.  The  following bid price market  quotations
represent  prices  between dealers and  do  not include retail markup, markdown,
or  commissions;  hence, they may not represent actual transactions.

Fiscal Year 1997
----------------
                                   High              Low
                                   ----              ---
First Quarter
Common Shares                    $ 2.250           $ 2.125

Second Quarter
Common Shares                    $ 1.625           $ 1.500

Third Quarter
Common Shares                    $ 1.688           $ 1.500

Fourth Quarter
Common Shares                    $ 1.500           $ 1.375

Fiscal Year 1996
----------------
                                   High              Low
                                   ----              ---
First Quarter
Common Shares                    $ 0.469           $ 0.125

Second Quarter
Common Shares                    $ 0.781           $ 0.219

Third Quarter
Common Shares                    $ 2.188           $ 0.375

Fourth Quarter
Common Shares                    $ 4.40            $ 1.04




                                       18

<PAGE>
<PAGE>

Fiscal Year 1995
----------------
                                   High              Low
                                   ----              ---
First Quarter
Common Shares                    $ 0.4375          $ 0.25

Second Quarter
Common Shares                    $ 0.3125          $ 0.25

Third Quarter
Common Shares                    $ 0.6875          $ 0.1875

Fourth Quarter
Common Shares                    $ 0.6875          $ 0.344


(b)    Approximate Number of Holders of Common Stock
       ---------------------------------------------
As of December 15, 1997, a total of 19,809,396  shares of the  Company's  common
stock were  outstanding  and the  number of  holders of record of the  Company's
common stock at that date was approximately 500. However,  the Company estimates
that it has a significantly greater number of shareholders because a substantial
number of the Company's shares are held in nominee names by the Company's market
makers and brokerage houses.

(c)    Dividends
       ---------
The  Company's  stockholders  of  common  stock are  entitled  to  receive  such
dividends as may be declared by the Company's  Board of  Directors.  The Company
paid no dividends on the common  stock  during the periods  reported  herein nor
does the Company anticipate paying dividends in the foreseeable  future.  Pipasa
has  declared and  distributed  dividends  to its  stockholders  over the years.
Fiscal 1997 is the first year that the Company is entitled to receive  dividends
from its subsidiary.  On December 20, 1996, a dividend of $1,226,447 was paid by
Pipasa  which  was equivalent  to  the retained earnings through the date of the
reverse merger.  In  accordance  with a standing  agreement,  such  dividend was
paid to existing stockholders of record of Pipasa as of the date of the  reverse
merger. Pipasa's payments of dividend are based on profit as determined by Costa
Rican statutory financial statements (Costa Rican accounting principles).  As of
September  30,  1997 Pipasa has  retained  earnings  of  $1,957,970  that can be
distributed to current  stockholders,  computed by applying the exchange rate as
of that date to retained earnings balance expressed in Costa Rican currency.





                                       19<PAGE>
<PAGE>
ITEM 6.

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
                      CONDITION AND RESULTS OF OPERATIONS

GENERAL:

Management is responsible for preparing the Company's financial statements and
related information that appears in this report.  Management believes that the
financial statements fairly reflect the form and substance of transactions and
reasonably present the Company's financial condition and results of operations
in  conformity  with  Generally  Accepted  Accounting Principles in the United
States.   Management has included in the Company's financial statement amounts
that  are  based on estimates and judgements, which it believes are reasonable
under  the  circumstances.    The  Company  maintains  a  system  of  internal
accounting  policies,  procedures  and controls intended to provide reasonable
assurance,  at  appropriate cost, that transactions are executed in accordance
with  Company  authorization  and  are  properly  recorded and reported in the
financial statements, and that assets are adequately safeguarded.

Results  of  operations for the period ended September 30, 1997, reveal a year
of  a  strong  growth  in  sales and strategic acquisitions, and a decrease in
international prices for corn and in interest rates.  Among these economic and
financial  issues  that  directly  affect the Company's profitability, through
Pipasa  and  in general the whole poultry industry in the area, is the weather
phenomenon    El  Nino    which  had  a  negative  effect  in  the breeding of
reproduction  hens.    This effect, among others of minor relevance, increased
Pipasa's cost  of sales, due to a decrease in incubation rates and an increase
in the mortality rates in broiler chicken and reproduction hens.
  
Total sales for the fiscal 1997 increased 13.80% when compared to fiscal 1996.
Exports  increased  by  94.60% during this fiscal year when compared to fiscal
1996,  due  to  a  96.21%  increase  in tonnage offset by a 1.61% decrease for
exchange  rate variances.  Among the export activities, was a temporary export
sales  to  Honduras,  which  was  announced  in  a  press  release,  and  that
represented steady sales of dressed pounds of chicken through July, 1997.

To offset the negative effects of  EL Nino  on yields, Pipasa's management has
taken  immediate  measures  and  is in the process of installing a "Controlled
Environment"  in  the  Broiler  and  Reproduction  Divisions.   This technique
involves  creating regulated and controlled temperatures among the farms where
the  reproduction and broiler birds are kept.   The effect on cost of sales of
the  weather-related  technical  problems  has been mitigated by a decrease in
average  CBOT prices of corn, the main ingredient in the birds' diet, combined
with a decrease in the amount of corn used in our feed formulation.
<PAGE>
<PAGE>

Cost  of  imported grains (corn and soybean meal) for the year ended September
30, 1997, represented 40.45% of the total cost of sales of broiler chicken and
by-products, compared to 45.09% of cost of sales in fiscal year 1996.  

During  the  fiscal  year 1997, the USDA declared Costa Rica free of Newcastle
Disease,  an  honor shared only with Chile, in Latin America.  The declaration
means that Costa Rican chicken products meet the same stringent USDA standards
relative  to  this  disease  which are also imposed on U.S. poultry producers.
The  Company  is  in  the  process of fulfilling the necessary requirements to
obtain  permits  to  export to USDA regulated markets, such as compliance with
the HACCP standards and USDA certification of the Company's facilities.
     
The following table presents information related to the Company's operation:

<TABLE>
<CAPTION>
                                    YEAR ENDED
                              1997             1996
----------------------------------------------------
<S>                    <C>              <C>
 Net Sales             $70,018,094      $61,535,457
 Operational
  Profit                $3,961,761       $5,167,302
----------------------------------------------------
</TABLE>

The  following  table  presents certain items as a percentage of net sales for
the period indicated:

<TABLE>

<CAPTION>    
                                           YEAR ENDED
                                      1997           1996
---------------------------------------------------------
 <S>                              <C>            <C>     
 Net Sales                            100%           100%
 Cost of Sales                      75.99%         73.85%
 Gross Profit                       24.01%         26.15%
 Sales Expenses                      9.71%         10.57%
 General and Adm.                    8.64%          7.18%
 Operational  Profit                 5.66%          8.40%
---------------------------------------------------------
</TABLE>

<PAGE>
<PAGE>
                  YEAR ENDED SEPTEMBER 30, 1997 COMPARED TO
                      THE YEAR ENDED SEPTEMBER 30, 1996.

NET SALES:

General.    Net  sales generated by the company's operation for the year ended
September  30,  1997  were  $70,018,094,  an  increase of $8,482,637 or 13.78%
compared with fiscal 1996.  The following table shows sales amounts by segment
for the fiscal years ending September 30, 1997 and 1996.

<TABLE>
<CAPTION>
                Millions of dollars      % Increase 
----------------------------------------------------
PRODUCTS            1997       1996         96/97
----------------------------------------------------
<S>                  <C>        <C>          <C>
Chicken              44.28     41.24         7.38%
By Products           7.92      7.07        12.02%
Animal Feed           6.95      5.00        39.11%
Exports               2.30      1.19        94.61%
Others                9.00      7.03        21.38%
----------------------------------------------------
                     70.02     61.54        13.78%
</TABLE>

Broiler  chicken  sales  for  fiscal  1997 grew from $41,239,331 during fiscal
1996,  to $44,284,164 for the same period of 1997, an increase of 7.38%.  This
increase  is due to a 4.72% increase in tonnage and the remaining 2.66% is due
to sales price increases.

By-products  are  the most profitable products of the Company.  Total sales of
this segment were of $7,923,545 during fiscal 1997, an increase of $849,930 or
12.02%  when  compared  with  sales of fiscal 1996.  This increase is due to a
3.66%  increase  in  tonnage and the remaining 8.36% is due to price increases
among  the  products within this segment (patties, sausages, further-processed
products and maquila).
     
Animal  Feed:  Sales for commercial animal feed were $6,950,523 in fiscal 1997
and  $4,996,541  during  fiscal  1996.    An  increase  of 39.11%.  This sales
increase  corresponds  to  a  27.80%  increase  in tonnage, with the remaining
11.31%  due  to  price  increases.   Also,  Kanin  and  Mimados , our pet food
brands  gained  market  share.  Management has committed promotional and other
resources to these products, which are among the Company's most profitable.

Exports:    The  Company's  exports  were  $2,325,043  during  fiscal 1997, an
increase  of    $1,130,300  or  94.60%,  when  compared  to fiscal 1996.  This
increase  in  exports  was  primarily due to the combined result of: an 11.88%
increase in net sales of chicken by products due to a 13.44% increase in total
dressed  pounds,  offset  by  an  exchange  rate effect on prices of -1.56%; a
154.42% increase in broiler chicken and chicken parts due to a 121.3% increase
in  tonnage  with  the  remaining  33.12%  due  to  price  increase;  and  the
introduction of the pet food  MIMADOS during the fourth quarter of the year.
<PAGE>
<PAGE>

A  significant  contributor  to the increase in exports was a transaction with
Honduras,  which  represented  a one-time export sale to that country, running
through  July  1997.  Management expects that the success in 1997 will lead to
future  opportunities  in  this market, and an increase through its exports to
Central  America.  The  Company has opened its own distribution facility in El
Salvador,  which  includes  cold  storage, offering sausage, pate, bologna and
other chicken and turkey products  under  the  Company's  popular  Pipasa(TM),
Kimby(TM)  and  Supremo(TM),  brands.  Pipasa  has  been  fortunate  to  serve
McDonalds  restaurants  as  a  supplier  in  Costa  Rica  for  several  years.
Thanks  to  the  excellent  service  that  the  Company  has  given  to   this
important  client,  during  fiscal  year  1997,  Pipasa  has  been selected by
McDonalds as  its supplier  for  poultry  products for all of Central America.
Management  expects  that  this relationship  will  increase  exports to these
markets.

Others:    Sales  of  Others  were of  $8,534,817 and $7,031,226 during fiscal
1997 and fiscal 1996 respectively.  An increase of $1,503,591 or 21.40%.  This
increase  is  due  to  a  13.29%  increase in tonnage and an 8.11% increase in
prices.

The  following  table shows the Company's sales distribution, for fiscal years
1997 and 1996:

<TABLE>
<CAPTION>

SEGMENT               1997          1996
---------------------------------------------
<S>               <C>           <C>
Chicken              63.25%          67.02%
By products          11.32%          11.50%
Animal feed           9.93%           8.12%
Exports               3.32%           1.94%
Other                12.18%          11.42%
---------------------------------------------
Total               100.00%         100.00%

</TABLE>

COST OF SALES:

General.    Fiscal  1997  cost  of  sales  were  $53,206,620,  an  increase of
$7,760,438  or 17.08% when compared to cost of sales during fiscal 1996.  This
increase  in  cost  of  sales is due primarily to a 14.58% increase in tonnage
combined  with  the  effect  of  a  higher  cost  of  raw materials and higher
production cost of broiler chicken and by-products segments.   As a percentage
of  sales,  cost  of  sales  was  75.99% for fiscal 1997 compared to 73.85% in
fiscal  1996, for an increase of 2.14%.   The most significant variations were
in  raw  materials  and  indirect  costs.    Labor  costs  remained relatively
constant.

<PAGE>
<PAGE>

El Nino  Effects:  El Nino  directly affected the  percentage of cost of sales
over  net  sales  for  fiscal  1997.    When  mortality rates increased in the
Reproduction  and Broiler Divisions, the company's fertile egg incubation rate
goal only reached 92% of hatchery capacity, consequently, the available amount
of  baby  chicks for growing and processing was less than projected, causing a
shortage of chicken pounds for sale.   

To  satisfy demand, it was necessary to import baby chicks for the broiler (or
growth)  phase, leading to higher costs.  This situation increased unit prices
and  also  affected  the  incubation  rates.   The goal for fiscal 1997 was an
86.25%  incubation  rate,  and  the Company achieved 84%.  The ideal mortality
rate  standard  for  birds  in  their  growing  phase is 3.5%, and the Company
experienced  average  4.60% mortality during fiscal 1997. As the new regulated
and  controlled  environments  are  implemented  among  the  different  farms,
management expects   the  mortality rates to decrease almost immediately. When
implemented  in  the  Company's  experimental farms, mortality in the growing
phase  (broiler  chicken)  decreased from 5.15% to 4.69%, or a 9% improvement.
In  the  Reproduction  phase, the  results  were a decrease in mortality  from
5.35%  to  1.68%  in  August 1997, a 68.6%  improvement.    Management expects
to be able to offset the effects of   EL Nino  throughout fiscal year 1998.

Management decided to change the breeding of its reproduction hens in order to
have  breeds  with  more weight with fewer weeks of feeding and growing.  This
change  in  breeding temporarily affected the incubation rates.  Although this
breeding  process requires an adjustment period, it has fulfilled expectations
concerning  weight.    Nevertheless,  management estimates that the adjustment
will be completed during the next fiscal year.
   
Other  relevant  facts  that  explain  the  increase  in  cost  of  sales as a
percentage of net sales are:

o   Average  soybean meal prices for 1997 increased by 28.70% when compared to
    average prices in 1996.

o   Inventory  reconversion:  Broiler chicken stored in freezing chambers that
    had  to  be  reconverted  to  other  cuts such as breast, thighs and other
    chicken  parts.    This  was necessary to satisfy the demand increase from
    exports, as well as in the domestic market for chicken and by-products;

o   Import  of  6,100  boxes  of  fertile eggs, which represent 8.90% of total
    produced  eggs.    These  eggs had an incubation rate of 76.70%, versus an
    average 84.25% that the Company produces locally.

o   Changes  in diet formulation for the birds, with the purpose of increasing
    weight. 

Broiler  Chicken:  Cost  of  sales  for  broiler  chicken  for fiscal 1997 was
$32,554,735,  an   increase  of  $3,738,587 or 12.97% compared to fiscal 1996.
This  difference  is  due  to  a 4.72% increase in dressed pounds sold and the
remaining  was  due  to an increase in unit production costs in the incubation
and growing phases explained above.
<PAGE>
<PAGE>


By-Products:    Cost  of  sales  for chicken by-products was $4,870,400 during
fiscal 1997, an increase of $232,938 or 5.02% compared with fiscal 1996.  This
is  due  to  an  increase of 3.66% in tonnage and increases in cost production
explained above.

Animal  Feed: Cost of sales for animal feed was of $5,767,286 for fiscal 1997,
an  increase  of  $1,325,361  or  29.84% when compared with fiscal 1996.  This
difference  is due to a 27.80% increase in tonnage and the higher soybean meal
prices.

Exports:    Cost of sales for exports for fiscal 1997 was $1,719,261, $831,185
or  93.59%  higher  than  cost  of sales when compared with fiscal 1996.  This
increase  is  due  to  a  94.60%  increase  in  dressed pounds sold and higher
production  costs of the products that were exported during the present fiscal
year.

Others:  Cost  of  sales  for    Others  was $8,294,938 during fiscal 1997, an
increase of $1,632,367 or 24.5% when compared with fiscal 1996.  This increase
is due to a 13.29% increase in tonnage and increases in raw material costs.
     
GROSS PROFIT:

Gross  profit for fiscal year 1997 was $16,811,474 or 4.49% higher than fiscal
1996.    As a percentage of net sales, gross profit decreased to 24.01% during
fiscal  1997  from  26.15%  in fiscal 1996, due to the issues discussed above.
The  following  table  shows gross profit for each segment for the years ended
September 30, 1997 and 1996:

<TABLE>
<CAPTION>
                            YEARS ENDED

SEGMENT                 1997        1996
----------------------------------------------
<S>                     <C>        <C>      
Chicken                  26.20%      30.12%
By-products              38.53%      34.44%
Animal feed              17.02%      11.10%
Exports                  26.05%      25.67%
Others                   2.81%        5.24%
----------------------------------------------
</TABLE>

GENERAL AND ADMINISTRATIVE EXPENSES:  

General  and Administrative expenses increased by $1,633,496, or 36.99% during
fiscal 1997, compared to fiscal 1996.  As a percentage of net sales, this item
increased from 7.18% during fiscal 1996 to 8.64% during fiscal 1997. Among the
most  significant increases were the amortization of the Company's information
system,  which  was  internally developed, operating expenses and professional
external services such as legal and auditing fees.

<PAGE>
<PAGE>

SALES EXPENSES 

Sales  expenses  increased by $294,244 or 4.52% for fiscal 1997, compared with
fiscal 1996.   When the Coopemontecillos R.L. market portion was absorbed, the
Company  was  able to maintain its selling expense structure, and as a result,
this  item  as  a  percentage of net sales decreased from 10.57% during fiscal
1996 to 9.71% during 1997.
     
OTHER INCOME / EXPENSES (NET)

Other income and expenses (net) decreased by  $572,106 or 26.59% during fiscal
1997,  compared with fiscal 1996. The Company's interest revenues increased by
$387,049  or  88%  during  fiscal 1997, compared with fiscal 1996, income from
"miscellaneous  net"  increased  by $111,846 or 56.73% during fiscal 1997 when
compared to fiscal 1996.  Along with this increase, interest expense decreased
by  $177,670  or  6.61%  and  exchange losses (gains) increased by $104,459 or
102.89% respectively during fiscal 1997, compared with fiscal 1996.
<PAGE>
<PAGE>

                   MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE PERIOD
                         ENDING SEPTEMBER 30, 1996

RESULTS OF OPERATIONS

The  Company's  revenues  increased  from  $57,138,759 in fiscal year 1995 to
$61,535,457  in  fiscal  year  1996,  an increase of approximately 7% over the
previous  year.    Pipasa  experienced increased revenues in its latest fiscal
year  over  the  comparable previous year period as a result of its successful
efforts to increase the volume of sales of its poultry products.

Pipasa's operating expenses increased to $10,921,973 for the fiscal year 1996,
f r om  $10,702,149  for  the  comparable  fiscal  year  1995.    General  and
administrative  expenses  increased  slightly  as  a  percentage  of  revenue,
relative  to  the  previous  fiscal year as a result of extraordinary expenses
related  to  the  Company, such as professional fees and travel expenses which
were advanced to the Company.

Pipasa  generated  net  income before income tax of $3,015,940 for fiscal year
1996,  when  compared  to a net income before income tax of $3,754,349 for the
comparable fiscal year 1995.  The reduction in net income resulted from rising
grain  prices  during  the early part of fiscal year 1996.  This rise in grain
prices  affected  the  cost  of  sales  and  consequently  reduced net income.
Management  decided  not  to  pass  to its customers this increase in the sale
prices  of  its  products, because it considered the increase in prices of the
raw  material  a typical market fluctuation and cost of doing business and did
not want to negatively impact its customers.

Management  expects  continued  growth  of  revenues  from  its  core business
activities.   Management  is continuing to expand its market operations and to
cut costs to maximize future profit potential.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity:    The  Company's  liquidity  is  dependent  upon  cash  flows from
operations  and  the  ability  to  obtain  additional  financing from external
sources. 

The  Company's   cash  and  cash  equivalents totaled $1,388,290 at the end of
fiscal  year  1997,  a  $3,741,022  decrease  from  the  end of fiscal 1996 (a
$3,015,717  increase in 1996 compared to 1995).  The decrease in cash and cash
equivalents  in  1997  was  primarily  a  result  from   additional   capital
expenditures  and  investments.    In  1996,  the  increase  in  cash and cash
equivalents  was primarily due to external financing and a decrease in capital
expenditures.
<PAGE>
<PAGE>

OPERATING ACTIVITIES:

Cash   provided  by  operating  activities  was  $4,587,448,  $2,039,457   and
$2,989,323  for  1997, 1996 and 1995. The increase in 1997 is explained mainly
by  the increase in accounts payable compared to 1996 and 1995.  This increase
is  mainly  due to important  renegotiations in payment terms that the Company
made  with  significant suppliers and increase in purchases of raw materials. 
During  1996,  the  Company presented a decrease in cash provided by operating
activities  due  to  higher  levels  of  finished goods at the end of 1996 and
higher  costs  of  raw  materials incurred in the production of those finished
goods. 
 
INVESTMENT ACTIVITIES:

Cash  used  in  investing activities was $9,515,111, $1,799,347 and $3,244,892
for  1997,  1996  and  1995  respectively.    The Company has made investments
amounting  to  $3,973,736,  $1,672,706  and  $3,343,685 in property, plant and
equipment   during the last 3 years and is constantly improving its facilities
and  investing  in  new  technology.  Among  the  investments in 1997 were the
strategic   acquisition   of   the   assets  of  the  poultry   division   of
Coopemontecillos R.L, which included plant and equipment. The poultry division
of Coopemontecillos was one of Costa Rica s six largest poultry supplier, with
a  6%  market  share.   As a result of this transaction, Management expects as
much  as  a  15%  sales  increase (volume) during the next period, while still
allowing  to  realize efficiencies.  The assets acquired, which include plant,
equipment  and vehicle fleet are intended to be re-located with the purpose of
expanding  the  Company's  operations  in  the Central American region in the
future.      Other  important  investments included the Company's Reproduction
Module  Number  8,  built with the most advanced technology and that increased
incubation  capacity,  as  well as vehicles used by the sales division, modern
computer systems and incubation equipment.  

The  Company invested $3,708,805 in long- term investments during 1997, mainly
for  the  acquisition  of 10% equity in Inolasa - Adecsa.  This company is the
only  Costa  Rican  supplier  of  soybean meal.  This investment is considered
strategic  to assure continuous supply of this important raw material.  

FINANCING ACTIVITIES:

During the three years under analysis, the Company obtained external financing
in  order to carry out part of its operating and investing activities.  During
fiscal  1996, the Company received more cash from external sources compared to
fiscal  1995.    This  situation  explains  the  increase in funds provided by
financing  activities.  Cash  provided by financing activities was $1,351,926,
$3,099,113 and $1,085,785 for the years 1997, 1996 and 1995 respectively.  The
decrease  in  1997 is mainly  due to an increase in debt amortization, as well
as  the  repurchase of common stock. Management expects to continue to finance
operations with its normal operating activities and external sources, and that
there  will  be  sufficient  resources  available  to  meet the Company's cash
requirements through the next year.

<PAGE>
Working  Capital:  As  of September 30, 1997, working capital was ($2,288,838)
compared  to  working  capital  at  the end of fiscal 1996, $(1,491,547) for a

<PAGE>

$797,291  decrease.      At  the  end  of  fiscal  1995,  working  capital was
($1,336,514).   The current ratios were 0.88, 0.92,  and 0.96  as of September
30, 1997, 1996 and 1995 respectively.  

As  previously  mentioned in the investing activities, during 1997 the Company
incurred an extensive use of cash in capital expenditures which are related to
the  normal investing activities of the Company, the acquisition of 10% equity
in     Inolasa-Adecsa,  purchase  of  assets  from  Coopemontecillos  and  the
repurchase  of  common  stock.  This caused the indebtedness to increase 6% in
1997  when compared to 1996. Indebtedness increased 10% when comparing 1995 to
1996.    Management  is  currently  working  on re-financing of Pipasa s debt.
Management  believes that the Company's liquidity position will improve during
fiscal 1998.

Leverage  ratio:     Leverage as of September 30, 1997 was  3.29, compared to
2.53   at the end of fiscal 1996.  This ratio increased due to the increase in
liabilities  and  a  decrease  in  Stockholders   Equity from $8,983,919 as of
September  30,  1996,  to  $7,289,434 at the end of fiscal 1997 resulting in a
decrease  of  $1,694,485  or 18.86%.  This decrease in Stockholders' Equity is
due mainly to a 64% decrease for exchange rate adjustments in conversion to US
Dollars, explained in notes to financial statements, and a 50.04% decrease for
shares  acquired  by the Company which are held as treasury stock, offset by a
10.89% decrease in Due from Stockholders.

This  management discussion and analysis of financial condition and results of
operations  may include certain forward-looking statements, within the meaning
of Section 27E of the Securities Exchange Act of 1933, as amended, and Section
21E  of  the  Securities  Exchange Act of 1934, as amended, including (without
limitations)  statements  with  respect  to  anticipated future operations and
financial  performance,  growth  and acquisition opportunity and other similar
forecast    and   statements  of  expectation.    Words  such   as    expects,
anticipates,     intends,     plans,   believes,   seeks,   estimates   and
should  and  various  of  those  words and similar expressions are intended to
identify  these forward-looking statements. Forward-looking statements made by
the  Company  and  its management are based on estimates, projections, beliefs
and  assumptions  of  management  at  the  time of such statements and are not
guarantees  of  future  performance.  The Company disclaims any obligations to
update  or review any forward-looking statements based on occurrence of future
events, the receipt of new information or otherwise.

Actual  future  performance  outcomes  and  results may differ materially from
those  expressed  in  forward-looking  statements  made by the Company and its
management  as  a  result  of numbers of risks, uncertainties and assumptions.
Representatives  examples  of  these  factors  include  (without  limitations)
general  industrial  and  economic  conditions, interest rates trends; cost of
capital  and  capital  requirements;    availability  of  real state property;
Compensation from National hospitality companies;  shifts in customer demands;
changes in operating expenses, including employee wages, benefits and training
and  governmental  and public policy; Changes in the continued availability of
financial  amounts  and at the terns necessary to support the Company's future
business 


<PAGE>
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS.

The following financial information is filed as part of this report:

(1)   Financial Statements
(2)   Schedules:  The financial  statements listed in the accompanying  index to
      financial statements are files as a part of this annual report.
(3)   Exhibits:  The  exhibits  listed on the  accompanying  index to  financial
      statements.


<PAGE>
<PAGE> 


                           COSTA RICA INTERNATIONAL, INC. 
                                    AND SUBSIDIARY 



                          Consolidated Financial Statements 


                             September 30, 1997 and  1996 


                     (With Independent Auditors' Report Thereon)
<PAGE>
<PAGE> 



                    INDEPENDENT AUDITORS' REPORT
                    ---------------------------- 



The Board of Directors and Stockholders,
Costa Rica International, Inc.:  



We have  audited  the accompanying  consolidated  balance  sheets  of  Costa
  Rica International, Inc.  and  Subsidiary  as  of  September  30, 1997 and
  1996,  and the  related consolidated  statements  of  income, stockholders'
  equity, and cash flows for each  of the  years  in  the  three-year 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 auditing  standards  generally
  accepted in  the  United  States of America.  Those standards require that
  we plan and perform the audit to obtain reasonable assurance about whether
  the financial  statements  are  free  of material  misstatement.  An audit
  includes examining, on a test  basis, evidence  supporting the amounts and
  disclosures in the financial statements.  An audit also includes assessing
  the   accounting   principles   used   and  significant estimates  made by
  management,  as  well  as  evaluating  the  overall  financial   statement
  presentation.  We believe that our audits  provide a reasonable  basis for
  our opinion.

In  our  opinion,  the  consolidated  financial statements referred to above
  present  fairly,  in  all   material   respects,  the  financial  position
  of  Costa   Rica  International,  Inc.  and  Subsidiary  as  of  September
  30, 1997 and 1996, and the  results of their  operations  and  their  cash
  flows for each of the years in the three-year  period ended September  30,
  1997,  in  conformity  with  generally accepted  accounting principles.   


San Jose, Costa Rica
December 5, 1997
<PAGE>
<PAGE> 


                    COSTA RICA INTERNATIONAL, INC. AND SUBSIDIARY
                             Consolidated Balance Sheets
                             September 30, 1997 and 1996 

 <TABLE>
<CAPTION>
        Assets                                    1997                  1996
       --------                                ------------        ------------
<S>                                            <C>                 <C>
  Current assets:
  Cash and cash equivalents                    $1,388,290             5,129,312
  Short-term investments                        1,935,671               260,339
  Notes and accounts receivable, net
   (note 2)                                     5,818,760             4,613,762
  Due from related parties (note 3)                76,243               199,510
  Inventories, net (note 4)                     7,106,214             7,148,797
  Prepaid expenses                                130,088               157,889
                                               ------------        ------------
  Total current assets                         16,455,266            17,509,609
  Long-term receivable-trade                      176,520               211,362
  Property, plant and equipment, net
   (note 6)                                    14,350,427            13,604,108
  Long-term investments (note 7)                4,385,197             4,894,146
  Other assets                                  1,187,128               884,492
                                               ----------          ------------
  Total assets                                $36,554,538            37,103,717
                                               ==========          ============
Liabilities and Stockholders' Equity
  Current liabilities:                                           
     Notes payable (note 8)                   $10,126,947             9,411,340
     Due to stockholders (note 3)                  36,870             3,924,114
     Current  installments  of long-            1,251,127             1,461,118
        term debt (note 9)
     Accounts payable                           5,191,923             2,562,129
     Accrued expenses                           2,137,237             1,642,455
                                               ------------        ------------
  Total current liabilities                    18,744,104            19,001,156
     Long-term debt, excluding
        current installments (note
        9)                                      5,252,149             3,593,601
     Due to stockholders (note 3)                  20,489             -
        Other liabilities                            -                   95,639
                                               ------------        ------------
     Total liabilities                         24,016,742            22,690,396
                                               ------------        ------------
  Minority interest                             5,248,362             5,429,402
  Stockholders' equity (note 10):
     Common stock                                  19,810                19,560
     Preferred stock                            2,216,072             2,216,072
  Additional paid-in capital                    9,375,002             9,350,252
        Cumulative translation                           
         adjustment                            (4,675,549)           (3,596,253)
        Retained earnings                       2,122,542             2,099,278
                                               ------------        ------------
                                                9,057,877            10,088,909
<PAGE>
        Less:
         Due from stockholders
         (note 3)                               (920,476)           (1,104,990)
        Less treasury stock, at
         cost                                   (847,967)                 -    
                                               ----------          ------------
           Stockholders' equity                 7,289,434             8,983,919
                                               ----------          ------------
  Total liabilities and
        stockholders' equity                  $36,554,538            37,103,717
                                               ==========          ============
</TABLE>
         See accompanying notes to consolidated financial statements.
<PAGE>
<PAGE> 


                    COSTA RICA INTERNATIONAL, INC. AND SUBSIDIARY 

                          Consolidated Statements of Income  

                    Years ended September 30, 1997,1996, and 1995 


<TABLE>
<CAPTION>
                                                 1997               1996               1995
                                            -------------     -------------      -------------
<S>                                         <C>               <C>                <C>          
 Sales                                      $  70,018,094        61,535,457         57,138,759
 Cost of sales                                 53,206,620        45,446,182         40,635,032
                                            -------------     -------------      -------------
 Gross profit                                  16,811,474        16,089,275         16,503,727
 Operating expenses:
 General and administrative                     6,049,338         4,415,842          4,180,417
 Selling                                        6,800,375         6,506,131          6,521,732
                                            -------------     -------------      -------------
 Total operating expenses                      12,849,713        10,921,973         10,702,149
                                            -------------     -------------      -------------
 Income from operations                         3,961,761         5,167,302          5,801,578
                                            -------------     -------------      -------------
 Other expenses (income):
 Interest expense                               2,509,131         2,686,801          2,638,497
 Interest income                                 (826,870)         (439,821)          (299,858)
 Currency exchange losses, net                    205,988           101,529            207,814
 Miscellaneous, net                              (308,993)         (197,147)          (499,224)
                                            -------------     -------------      -------------
 Other expenses, net                            1,579,256         2,151,362          2,047,229
                                            -------------     -------------      -------------
 Income before income taxes and
  minority interest                             2,382,505         3,015,940          3,754,349
 Income taxes (note 12)                           291,396           244,431            250,802
                                            -------------     -------------      -------------
 Income before minority interest                2,091,109         2,771,509          3,503,547
 Minority interest                              1,164,877         1,121,630          1,417,885
                                            -------------     -------------      -------------
 Net income                                 $     926,232         1,649,879          2,085,662
 Preferred stock dividends                        172,496           211,750            291,256
                                            -------------     -------------      -------------
 Net income applicable to common stock      $     753,736         1,438,129          1,794,406
                                            =============     =============      =============
 Earnings per share:
       Net income per common share          $        0.04               -                  -
                                            -------------     -------------      -------------
 Pro-forma earnings per share:
 Net income per common share                $         -               0.09               0.12
                                            -------------     -------------      -------------
 Weighted average number of common
      shares outstanding                       19,776,063        15,573,571         15,573,571
                                            =============     =============      =============
</TABLE>
         See accompanying notes to consolidated financial statements.
<PAGE>
PAGE>
                    COSTA RICA INTERNATIONAL, INC. AND SUBSIDIARY 

                        Consolidated Statements of Cash Flows 

                    Years ended September 30, 1997, 1996, and 1995 


<TABLE>
<CAPTION>
                                               1997              1996              1995
                                          ------------      -------------      -------------
<S>                                       <C>               <C>                <C>          
 Cash flows from operating activities:
 Net income                              $    926,232           1,649,879         2,085,662
 Adjustment to reconcile net income to
  net cash provided by operating
  activities:
 Minority interest                         1,164,877             1,121,630         1,417,885
 Depreciation                              1,384,910             1,232,269         1,306,617
 Loss (gain) on sale of productive           (76,519)               77,461           (37,603)
  assets
 Increase in allowance for doubtful          213,000               154,868                 -
  receivables
 Cash provided by (used for) changes in:
 Notes and accounts receivable             (1,989,098)           (1,193,383)      (1,171,739)
 Due from related parties                     108,143               496,513         (878,839)
 Inventories                                 (739,269)           (2,074,586)        (541,709)
 Prepaid expenses                              13,479               (20,165)          53,788
 Accounts payable                           2,956,628               468,898          129,844
 Accrued expenses                             611,497               168,059          463,078
 Long-term receivable-trade                    13,568               (36,986)         162,339
                                          ------------        --------------    -------------
 Cash provided by operating activities      4,587,448             2,039,457        2,989,323
                                          ------------        --------------    -------------
 Investing activities:
 Short-term investments                    (1,795,778)              (44,594)        (193,322)
 Additions to property, plant and          (3,973,736)           (1,672,706)      (3,343,685)
  equipment
 Proceeds from sale of productive assets      90,597               1,013,574         211,953
  and long-term investments
 Increase in long-term investments         (3,708,805)                                    -
 Decrease (increase) in other assets         (127,389)           (1,095,621)           80,162
                                          ------------        --------------    -------------
 Cash used for investing activities        (9,515,111)            (1,799,347)      (3,244,892)
                                          ------------        --------------    -------------
 Financing activities:
 Short-term financing-increase in notes     1,783,467              1,745,986       2,748,535
  payable
 Cash dividends paid by Pipasa              (902,968)              (380,349)        (724,852)
 Cash dividends paid by Pipasa to
  minority interest                         (613,097)              (255,779)        (505,178)
 Long-term financing:
 Repayments                               (2,134,580)            (1,344,403)       (1,545,203)
 New loans                                 3,134,004              3,415,700         1,255,269
 Capital returns                                   -              (110,745)          (19,796)
 Increase in due to stockholders              60,424                     -                 -
 Decrease in due from stockholders           150,265                     -                 -
 Exercise of warrants                         25,000                     -                 -
 Common stock acquired for treasury         (150,589)                    -                 -
  Increase (decrease) in other
    liabilities                                    -                 28,703         (122,990)
                                          ------------        --------------    -------------
 Cash provided by financing activities     1,351,926             3,099,113         1,085,785
                                          ------------        --------------    -------------
 Effect of exchange rate changes on
   cash and cash equivalents                (165,285)             (323,506)          (24,296)
                                          ------------        --------------    -------------
 Increase (decrease) in cash and cash               
  equivalents                             (3,741,022)            3,015,717           805,920
 Cash and cash equivalents at                       
  beginning of year                        5,129,312             2,113,595         1,307,675
                                          ------------        --------------    -------------
 Cash and cash equivalents at end
  of year                                 $  1,388,290           5,129,312         2,113,595
                                          ============        ==============    =============
</TABLE>
<PAGE>
<PAGE>
                    COSTA RICA INTERNATIONAL, INC. AND SUBSIDIARY 

                   Consolidated Statements of Cash Flows, Continued 

                    Years ended September 30, 1997, 1996, and 1995 


<TABLE>
<CAPTION> 


<S>                              <C>                     <C>                   <C>
 Supplementary disclosures of
  cash flow information:
 Cash paid during year for:
 Interest                        $    2,493,716            2,411,604          2,600,003
 Income taxes                    $       61,030              189,054            160,592
 Non-cash activities:
 Acquisition of treasury        
  stock through financing
  agreement                      $      697,378                -                -       


</TABLE>
      See accompanying notes to consolidated financial statements.

<PAGE>

                               COSTA RICA INTERNATIONAL, INC. AND SUBSIDIARY
                              Consolidated Statements of  Stockholders' Equity
                               Years ended September 30, 1997, 1996, and 1995

<TABLE>
<CAPTION>



                                       Treasury              Additional    Cumulative                                    Total
                            Common      Stock,    Preferred   Paid-In     Translation     Retained      Due from     Stockholders'
                             Stock     at cost      Stock      Capital     Adjustment     Earnings     Stockholders      Equity
                            ---------  ---------  ---------  ----------   -----------   ------------   ------------  -------------
<S>                         <C>         <C>      <C>         <C>          <C>          <C>            <C>           <C>         
Balance at September 30,
 1994                        $ 15,574          -  1,760,061   7,139,459    (1,115,392)   2,085,720       (1,044,666)     8,840,756
Return of capital
 contributions                      -          -          -     (19,796)            -            -                -        (19,796)
Issue of preferred stock
 to existing stockholders           -          -    456,011    (271,462)            -            -                -        184,549
Capitalization of retained
 earnings                           -          -          -     417,927             -     (417,927)               -              -
Cash dividends on
 common stock of Pipasa             -          -          -           -             -     (433,596)               -       (433,596)
Cash dividends on
 preferred stock of Pipasa          -          -          -           -             -     (291,256)               -       (291,256)
Net income                          -          -          -           -             -    2,085,662                -      2,085,662
Increase in due from
 stockhholders                      -          -          -           -             -            -         (894,714)      (894,714)
Translation adjustment              -          -          -           -    (1,288,624)           -                -     (1,288,624)
                            ---------  ---------  ---------  ----------   -----------   ----------     ------------  -------------
Balance at September 30,
  1995                         15,574          -  2,216,072   7,266,128    (2,404,016)   3,028,603       (1,939,380)     8,182,981
Issuance of 4,152,694
 common shares                  4,153          -          -           -             -            -                -          4,153
Agreement and Plan of
 Reorganization dated
 April 30, 1996:
 116,869 common shares
 returned and cancelled          (117)         -          -           -             -              -              -           (117)
 Divestiture of assets-
   50,000 common shares           (50)         -          -    (117,614)            -              -              -       (117,664)
Capital contributions               -          -          -       2,883             -              -              -          2,883
Capitalization of retained
 earnings                           -          -          -   2,198,855             -     (2,198,855)             -              -
Cash dividends on common
 stock of Pipasa                    -          -          -           -             -       (168,599)             -       (168,599)
Cash dividends on preferred
 stock of Pipasa                    -          -          -           -             -       (211,750)             -       (211,750)
Net income                          -          -          -           -             -      1,649,879              -      1,649,879
Decrease in due from
 stockholders                       -          -          -           -             -              -        834,390        834,390
Translation adjustment              -          -          -           -    (1,192,237)             -              -     (1,192,237)
                            ---------  ---------  ---------  ----------   -----------   ------------   ------------  -------------
Balance at September 30,
 1996                          19,560          -  2,216,072   9,350,252    (3,596,253)     2,099,278     (1,104,990)     8,983,919
Exercise of 250,000 issued
  warrants                        250          -          -      24,750             -             -              -         25,000
Cash dividends on common
 stock of Pipasa                    -          -          -           -             -      (730,472)             -       (730,472)
Cash dividends on preferred
 stock of Pipasa                    -          -          -           -             -      (172,496)             -       (172,496)
Purchase of 564,986
  common shares                     -   (847,967)         -           -             -             -              -       (847,967)
Net income                          -          -          -           -             -       926,232              -        926,232
Decrease in due from
  stockholders                      -          -          -           -             -             -        184,514        184,514
Translation adjustment              -          -          -           -   (1,079,296)             -              -     (1,079,296)
                            ---------  ---------  ---------  ----------   -----------    ----------   ------------  -------------
Balance at September 30,
 1997                        $ 19,810   (847,967) 2,216,072   9,375,002   (4,675,549)     2,122,542      (920,476)      7,289,434
                            =========  ========= ==========  ==========  ============    ==========    ===========  =============

See accompanying  notes to consolidated financial statements
</TABLE>
<PAGE>
<PAGE>


 (1)     Business and Summary of Significant Accounting Policies
         ------------------------------------------------------- 


  (a)   Corporate Activity
        ------------------
             
  Costa  Rica  International,  Inc. (the  "Company"), formerly Quantum Learning
        Systems,  Inc.  was incorporated under the laws of the State of Utah on
        February  6,  1986 and filed a public offering in 1987.  In April 1994,
        the  Company  changed its legal domicile from Utah to Nevada.  In April
        1996,  the Company entered into an acquisition agreement to acquire the
        majority  of  the  stock  of  Corporacion  Pipasa, S.A. (Pipasa).  This
        transaction  was  approved by the shareholders of the Company on August
        5, 1996 and consummated on September 30, 1996.  Simultaneously with the
        acquisition  of  Pipasa,  the  Company  divested  itself  of  all other
        subsidiaries. 
          
  (b)   Agreement and Plan of Reorganization
        -------------------------------------
          
  On April  30,  1996,  the  Company  entered  into  an  Agreement  and Plan of
        Reorganization (the "Agreement") for the acquisition of Pipasa, and the
        divestiture  of all current subsidiaries and activities of the Company.
        The shareholders approved the plan of reorganization on August 5, 1996.
         
  Prior  to the reorganization, the Company had three educational subsidiaries:
        Cambridge  Academy, Inc., Sentient, Inc., and Current Concept Seminars,
        Inc.,  and  a  real estate development division.  As a condition to the
        Agreement  and the underlying acquisition, the acquirer was required to
        divest  itself of all other operations, including the former subsidiary
        corporations  and the real estate division, by the delivery date of the
        common shares. 


  Also, on  April  30,  1996,  the  Company  entered  into  an  agreement  with
        InterCoast   Financial  Corporation  (IFC)  to  sell  the   educational
        subsidiaries  to  IFC. Control of the Company changed on August 5, 1996
        by  shareholder  approval.    The  final documentation was completed on
        September  30,  1996.    Pursuant  to  the  Agreement, IFC acquired the
        subsidiaries  in  exchange  for  50,000 shares of common stock of Costa
        Rica International, Inc. and indemnification by IFC to the Company from
        any  liability,  damage or deficiency, all actions, suits, proceedings,
        demands,  assessments,  judgments,  costs  and  expenses,  including
        attorney's  fees, incident to the subsidiaries.  The acquisition of the
        shares was accounted at fair value. 
<PAGE>
<PAGE>
             
  Pursuant  to  the  Agreement, as of September 30, 1996, the Company exchanged
        15,573,571  shares  of  its  common  stock  for approximately 59.56% of
        Pipasa's  common shares. The remaining 40.44% of Pipasa's common shares
        were  pledged  by its majority shareholder for a personal loan and were
        not  available for transfer under the Agreement.  The 15,573,571 shares
        represent approximately 79% of the issued and outstanding shares of the
        Company.    The  40.44% interest not acquired in the merger transaction
        has been accounted for as minority interest for all years presented. 
         
  (c)   Operations of Corporacion Pipasa, S.A.
        --------------------------------------
            
  On January 7, 1991, Industrias Derivados de Pollo, S.A. (Idepo, S.A.), Retisa
        S.A., Servicios Multiples Pipasa, S.A.(Semupi, S.A.), Avicola  Chacara,
        S.A., Concentrados Belen, S.A., Empolladora Belen, S.A., Granja Avicola
        Monica,  S.A.,  Planta  Procesadora  de  Aves, S.A., Grupo Pipasa, S.A,
        Productores  Huevo  Fertil, S.A. (Prohufe, S.A.) and El Polluelo, S.A.,
        merged  into  the  surviving  entity,  Akron,  S.A.    The  articles of
        incorporation  were simultaneously amended to reflect the Company's new
        name,  Corporacion  Pipasa, S.A.  In January 1996, Rincon de los Toros,
        S.A.  merged  with  Corporacion  Pipasa,  S.A.   Since the mergers were
        between companies under common control, the net assets were recorded at
        net carrying value.
  
  Pipasa produces  and markets poultry products on 33 farms and in 2 processing
        plants  located  throughout Costa Rica.  Pipasa's main market is within
        Costa  Rica  and  to  a  lesser extent in the countries of El Salvador,
        Honduras, Nicaragua, and Colombia. 

           
  (d)   Consolidation Principles 
        ------------------------
                             
  The  consolidated financial  statements  include  the  accounts of Costa Rica
        International,  Inc.  and  its  59.56%  owned  subsidiary,  Corporacion
        Pipasa, S.A.
        
  The consolidated  financial  statements  as  of  September  30, 1997 and 1996
        reflect  the  acquisition  of  Pipasa as a reverse acquisition, whereby
        Pipasa  is  treated  as  the accounting acquirer and the Company as the
        legal  acquirer.    Accordingly,  for financial reporting purposes, the
        issuance  of  stock  in  the acquisition is treated as an issue made by
        Pipasa  and  historical  financial  statements  presented  are those of
        Pipasa.
        
  All  significant  intercompany  balances and transactions have been eliminated
        in consolidation.

<PAGE> 


 (e)    Accounting Principles
       ---------------------
             
  The consolidated  financial  statements have been prepared in accordance with
        accounting  principles  generally  accepted  in  the  United  States of
        America  (USGAAP).   Accounting records of Pipasa are kept according to
        generally  accepted  accounting  principles in Costa Rica and have been
        converted to USGAAP in consolidation. 

 (f)   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  amounts  reported  in  the consolidated
        financial statements.  Actual results may differ from those estimates. 


 (g)    Foreign Currency Translation
        ----------------------------
             
  Most business  transactions  of  Pipasa  take  place in the Republic of Costa
        Rica, where the local  currency  is  the  colon (colones).   The parity
        of the colon  to  the  US  dollar  is  determined  in  a  free exchange
        market,  supervised  by  the  Central  Bank  of  Costa  Rica.    As  of
        September   30,  1997,   1996,   and  1995,  commercial  exchange rates
        were (colones)238.77, (colones)213.94, and (colones)187.62 to  US$1.00,
        respectively.
      
 The financial statements of Corporacion Pipasa, S.A. have been translated into
        US  dollars  on  the  basis  of  the  colon  (colones)as the functional
        currency,  as  follows:  assets  and liabilities denominated in dollars
        have  been  stated  at  nominal  dollar amounts; assets and liabilities
        denominated  in  Costa  Rican  colones  have  been  translated  at  the
        commercial  exchange  rates  in  effect on September 30, 1997 and 1996;
        Stockholders' equity accounts have been translated at exchange rates in
        effect  when  incurred  or realized (historical exchange rates); income
        and  expenses  have been translated at average exchange rates in effect
        during  each  of the years in the three-year period ended September 30,
        1997.    Translation  adjustments  have  been  recorded  as  a separate
        component of stockholders' equity. 


 (h)   Cash Equivalents
       ----------------
             
  Highly liquid  investments  with  original maturities of 3 months or less are
        treated as cash equivalents. 
<PAGE>
<PAGE> 


  (i)  Investments
       -----------
        
  The Company  has  investments  in  short-term debt securities which have been
        classified  under  the  provisions of Statement of Financial Accounting
        Standards ("SFAS") No. 115 as held to maturity.

  Short-term investments  consist  primarily  of commercial paper with original
        maturities between 3 and 12 months, which bear interest ranging from 7%
        to 9%, and are carried at cost, which approximates fair market value.
           
  Long-term investments  consist  of  nonmarketable  equity  securities and are
        carried  at cost, which management believes does not exceed fair market
        value.
             
  (j)   Inventories and Allowance for Renewal of Production Poultry
        -----------------------------------------------------------
          
  Inventories are  stated  at  the  lower of cost or market. Cost is determined
        using  the  weighted-average  method, except for inventories in transit
        which are valued at specific cost.  
           
  Allowance for  renewal  of  production  poultry  is  determined  based on the
        estimated poultry reproductive period.
            
  (k)   Property, Plant and Equipment
        -----------------------------
             
  Property, plant  and  equipment are stated at cost.  Improvements to property
        and   equipment  which  extend  their  useful  lives  are  capitalized.
        Disbursements  for  maintenance, repairs and minor renewals are charged
        to expense when incurred.
            
  (l)   Costs of Software Developed for Internal Use
        --------------------------------------------
        
  The Company capitalizes direct salaries and related costs as cost of computer
        software  developed  for  internal use.  These costs are amortized over
        three  years  using  the  straight-line  method.  During 1996 and 1995,
        costs amounting to $148,678 and $126,550 respectively were capitalized.
        No  costs  were capitalized during 1997. Software maintenance costs are
        expensed as incurred.
             
  (m)   Depreciation and Amortization
        -----------------------------
         
  Depreciation is  provided  by  the  straight-line  method, for both financial
        reporting  and  tax  purposes,  over estimated useful lives as follows:
        buildings-50  years;  vehicles,  machinery and equipment, furniture and
        fixtures-between 5 and 20 years.
          
  Cost  of leasehold  improvements  on  leased  properties,  accounted  for  as
        operating  leases,  are  amortized  over 5 years (lease term) using the
        straight-line method.  
             
<PAGE>
  (n)   Advertising Costs
        -----------------
             
  Advertising  costs are  expensed  as incurred.  Advertising costs amounted to
        $295,768, $445,466, and $386,135 in 1997, 1996, and 1995, respectively. 

<PAGE> 

  (o)   Income Taxes
         ------------
      
  The  Company  accounts for  income  taxes  in  accordance  with  statement of
        financial  accounting  standards  No. 109, Accounting for Income Taxes.
        Under  the  asset  and  liability method of Statement 109, deferred tax
        assets  and  liabilities are recognized for the future tax consequences
        attributable  to  differences  between the financial statement carrying
        amounts  of  existing  assets  and liabilities and their respective tax
        bases.   Deferred tax assets and liabilities are measured using enacted
        rates  expected  to apply to taxable income in the years in which those
        temporary  differences  are expected to be recovered or settled.  Under
        Statement  109,  the effect on deferred tax assets and liabilities of a
        change in tax rates is recognized as income in the period that includes
        the enactment date. 


  (p)   Earnings per Share and Proforma Earnings per Share
        --------------------------------------------------
             
  Earnings per  share  for  the  year  ended  September  30,  1997 and proforma
        earnings per share for the years ended September 30, 1996 and 1995 have
        been  computed  on  the  basis of the weighted-average number of common
        shares   outstanding,  amounting  to  19,776,063  for  the  year  ended
        September  30,  1997  and  15,573,571 for the years ended September 30,
        1996 and 1995.  The shares used in computing earnings per share for the
        periods  prior  to  the  reverse  merger are those shares issued by the
        Company  to  effect the business combination.  The minority interest in
        the  earnings  of  Pipasa  and  dividends  on preferred stock have been
        excluded from earnings available to common stockholders.
        
  (q)   Impairment of Long-Lived Assets and
        Long-Lived Assets to Be Disposed Of
        ------------------------------------
          
  In  March 1995,  the Financial Accounting Standards Board issued SFAS No. 121
        Accounting  for  the Impairment of Long-Lived Assets and for Long-Lived
        Assets  to  be  Disposed  of,  which  became effective for fiscal years
        beginning  after December 15, 1995.  This Statement requires that long-
        lived  assets  and  certain  identifiable  intangibles  be reviewed for
        impairment  whenever  events  or changes in circumstances indicate that
        the carrying amount of an asset may not be recoverable.  Recoverability
        of  assets  to  be  held  and  used  is measured by a comparison of the
        carrying  amount  of  an  asset to future net cash flows expected to be
        generated  by the asset.  If such assets are considered to be impaired,
        the  impairment to be recognized is measured by the amount by which the
        carrying  amount  of  the  assets  exceed the fair value of the assets.
        Assets  to  be  disposed  of  are reported at the lower of the carrying
        amount  or  fair  value  less  costs  to sell. The Company adopted SFAS
        No.121  as  of  October  1, 1996. The adoption of this standard did not
        have  a material effect on the Company's financial position, results of
        operations or liquidity. 

<PAGE>
            
  (r)   Transfers and Servicing of Financial
        Assets and Extinguishments of Liabilities
        -----------------------------------------
             
  In  June  1996,  the Financial Accounting Standards Board issued SFAS No. 125,
        Accounting   for  Transfers  and  Servicing  of  Financial  Assets  and
        Extinguishments  of  Liabilities.    SFAS  No.  125  is  effective  for
        transfers  and  servicing  of  financial  assets and extinguishments of
        liabilities  occurring  after  December  31,  1996. It is to be applied
        prospectively.    This  Statement  provides  accounting  and  reporting
        standards  based  on  consistent  application of a financial-components
        approach  that  focuses on control.  It distinguishes between transfers
        of  financial  assets  that  are  sales  and transfers that are secured
        borrowings.  The Company adopted SFAS No.125 for transactions occurring
        after  December 31, 1996.  The adoption of this standard did not have a
        material  effect  on  the  Company's  financial  position,  results  of
        operations or liquidity.
             
  (s)   New Accounting Pronouncements Earnings per Share
        ------------------------------------------------
       
  In  February 1997,  the  Financial  Accounting  Standards  Board  issued SFAS
        No.  128,   Earnings  per  Share,  which  gives  instructions  for  the
        computation,  presentation, and disclosure of earnings per share and is
        effective for both interim and annual periods ending after December 15,
        1997. Management of the Company is currently evaluating the impact SFAS
        No. 128 will have on its financial statements, if any. 


<PAGE>
<PAGE> 


DISCLOSURE OF INFORMATION ABOUT CAPITAL STRUCTURE
-------------------------------------------------
  
In February  1997,  the  Financial  Accounting  Standards  Board  issued
  SFAS No.129,   Disclosure  about  Capital  Structure,  which   
  requires  companies  to present additional  information about
  securities, preferred stock and redeemable stock and  is  effective
  for  fiscal  years  beginning  after  December  15,  1997.

Management of the Company does not expect that adoption of SFAS No. 129 will
  have a material  impact  on  the  Company's  financial  position, results of
  operations, or liquidity. 


REPORTING COMPREHENSIVE INCOME
------------------------------
       
In  June  1997,  the  Financial  Accounting  Standards  Board  issued  SFAS
  No. 130, Reporting  Comprehensive  Income.  SFAS   No.  130   establishes
  standards for reporting  and  display of comprehensive income  and  its
  components in a full  set of general-purpose financial statements and is
  effective  for  fiscal  years   beginning  after  December  15, 1997.
  Management of the Company believes that   adoption  of  SFAS  No.  130
  will result primarily in including the difference   between  net  income
  and  the  annual  changes  in  cumulative  translation   adjustment in
  the statement of comprehensive income. 


DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION
-------------------------------------------------------------------
       
In June 1997, the Financial  Accounting  Standards  Board  issued  SFAS No. 131,
  Disclosures  about Segments of an Enterprise and Related Information. SFAS No.
  131  requires  that  public  businesses  report  certain  information  in  the
  financial  statements  about  their  products,  services,  geographic areas in
  which  they  operate,  and  their  major  customers,  related to the operating
  segments  of a company.  The statement is effective for fiscal years beginning
  after  December  15,  1997.    Management  of the Company does not expect that
  adoption  of  SFAS  No.  131  will  have  a  material  impact on the Company's
  financial position, results of operations, or liquidity.
       
       (t)   Reclassifications
             -----------------
           
  Certain  balances  in the 1996 and 1995 consolidated financial statements have
        been reclassified to conform to the 1997 presentation.
<PAGE>
        
  (2)   Notes and Accounts Receivable
        -----------------------------
        Notes and accounts receivable consist of the following: 


 <TABLE>
<CAPTION>
                                                1997                  1996
                                           ---------------         -------------
                                            <C>                    <C>          
Accounts receivable:
   Trade                                   $    4,838,313              3,802,023
   Other                                        1,212,879                845,917
                                           ---------------         -------------
                                                6,051,192              4,647,940
   Less  allowance for doubtful accounts          380,791                212,872
                                           ---------------         -------------
                                                5,670,401              4,435,068
        Short-term notes-trade:                   148,359                178,694
                                           ---------------         -------------
                                           $    5,818,760              4,613,762
                                           ===============         =============
</TABLE>     


 (3) Accounts and Transactions with Related Parties
     ----------------------------------------------
 
 Balances and transactions with related parties consist of the following: 


 <TABLE>
<CAPTION>
                                             1997                    1996
                                     -----------------         -------------
<S>                                  <C>                        <C>          
      Due from stockholders           $        920,476             1,104,990
                                      =================         =============
      Due from related parties        $         76,243               199,510
                                      =================         =============
      Due to stockholders             $         36,870             3,924,114
                                      =================         =============
      Due to stockholders-long-
      term                            $         20,489                   -
                                      =================         =============
</TABLE>    
        
  The balance due to stockholders  in  1996 originated from the agreement to
        acquire equity ownership rights equivalent to 10% of the outstanding
        common  stock of Inolasa Group,  which  was  owned by Inversiones La
        Ribera, S. A., Pipasa's main stockholders.
        
  Balance  due  from  stockholders  originates  from non-interest bearing
        loans  made when the Company was still privately owned, mainly to
        Inversiones  La  Ribera,  S. A. and the Company's Chief Executive
        Officer  and  shareholder; starting on October 1, 1996 such loans
        bear interest at 24.5% per annum.
  
  During  the  years  ended  September  30,  1997,  1996,  and  1995, the
        Company's  purchase  of  soybean meal from Grupo Inolasa amounted
        to $7,357,018, $6,324,883, and $5,436,278, respectively.
        
  On  June  30, 1996, Pipasa sold its 9% ownership in Cerveceria Americana, S.A.
        to  Inversiones La Ribera for $848,402, which was the carrying value as
        of that date.
<PAGE>
<PAGE> 



        
  (4)   Inventories, Net
        ----------------
        Inventories, net consist of the following:
<TABLE>
<CAPTION>
                                            1997                     1996
                                     ---------------           --------------
<S>                                  <C>                       <C>           
          Finished products          $       686,423                  2,176,876
          Poultry                          2,269,993                  1,770,714
          Production poultry               1,708,071                  1,452,607
          Materials and supplies           1,134,115                  1,361,296
          Raw materials                    1,639,527                    786,848
          In transit                         131,188                    19,929
                                     ---------------             --------------
                                           7,569,317                  7,568,270
          Allowance for renewal of
            production poultry              (463,103)                  (419,473)
                                     ---------------             --------------
            Inventories, net         $     7,106,214                  7,148,797
                                     ===============             ==============
</TABLE>
      
(5)      Fair Value of Financial Instruments
         -----------------------------------
                      
         The following  table  presents the carrying amounts and estimated
                 fair  values of the Company's financial instruments as of
                 September  30,  1997  and  1996.    The  fair  value of a
                 financial   instrument  is   the   amount  at  which  the
                 instrument  may  be  exchanged  in  a current transaction
                 between willing parties. 


 <TABLE>
<CAPTION>
                                                  1997                              1996
                                      -----------------------------    -----------------------------
                                        Carrying           Fair           Carrying          Fair
                                         Amount           Value            Amount          Value
                                      -----------------------------    -----------------------------
<S>                                        <C>               <C>              <C>              <C>  
    Current assets:
    ---------------
 Cash and cash equivalents            $  1,388,290       1,388,290        5,129,312        5,129,312
 Short-term investments                  1,935,671       1,935,671         260,339           260,339
 Notes and accounts receivable,
  net                                    5,895,003       5,895,003        4,813,272        4,813,272
 Long-term receivable-trade                176,520         176,520          211,362          211,362
    Current liabilities:
 Notes payable                          10,163,817      10,163,817       13,335,454       13,335,454
 Current installments of
  long-term debt                         1,251,127       1,251,127        1,461,118        1,461,118
 Accounts payable                        5,191,923       5,191,923        2,562,129        2,562,129
 Long-term debt                       $  5,252,149       5,252,149        3,593,601        3,593,601
                                      =============    ============    ============      ===========
</TABLE>
   
  The  data  presented  above  represent  Management's best estimates based on a
        range of methodologies and assumptions, including the following:
<PAGE>
<PAGE> 



  o       For  cash  and  cash  equivalents,  short-term  investments, accounts
          payable,  notes  and  accounts  receivable  and long-term receivable-
          trade,  the  carrying  amounts  approximate fair value because of the
          short maturity of those instruments. 


  o       For  notes  payable, current installments of long-term debt and long-
          term  debt,  the  carrying  amount  approximates  fair  value because
          interest rates are adjustable based on market interest rates.
        
  Futures contracts  for  less  than one year are used to hedge fluctuations in
        corn  and  soybean  meal  prices.    The  Company  does  not enter into
        derivative  transactions  for speculative purposes.  Gain and losses on
        commodity futures transactions are deferred until the futures contracts
        are  liquidated.  As of September 30, 1997, the Company has hedged such
        commodities for $1,924,962 with a fair value of $1,893,375. 

        
  (6)   Property, Plant and Equipment, net
        ----------------------------------
                  
        Property, plant and equipment, net are summarized as follows: 


<TABLE>
<CAPTION>
                                                  1997         1996
                                                ----------  -----------
<S>                                             <C>        <C> 


              Land                              $2,253,591    2,444,323
              Buildings and facilities           5,955,582    6,394,134
              Machinery and equipment            7,576,726    6,687,936
              Vehicles                           2,406,672    1,685,967
              Advertising signs and display        319,232      381,039
              Machinery in transit                     -          5,380
              Construction in process              782,812      441,130
                                                ----------  -----------
                                                19,294,615   18,039,909
              Less accumulated depreciation      4,944,188    4,435,801
                                                ----------  -----------
              Property, plant and
                    equipment, net             $14,350,427   13,604,108
                                                ----------  -----------
             
</TABLE>               
     Most  of  the  above  assets  have been pledged in guarantee of certain
       long-term debt (see note 9).  
        
  Depreciation   expense  in  1997,  1996,  and  1995  amounted  to  $1,384,910,
        $1,232,269, and $1,306,617,  respectively.
<PAGE>
PAGE>
       
  (7)   Long-Term Investments
        ---------------------
        
  Long-term investments consist of the following: 


<TABLE>
<CAPTION>
                                      1997          1996
                                   ----------    -----------
<S>                                     <C>           <C>
         Equity investments
         Grupo Inolasa              $ 4,353,667      4,858,956
         Other                           31,530         35,190
                                     ----------    -----------              
                                    $ 4,385,197      4,894,146
                                     ----------    -----------
</TABLE>    
    
  Investments  in  stock  of  Grupo  Inolasa  (a  significant  supplier  of  raw
        materials for Pipasa), represent 10% ownership therein.
  
  (8)   Notes Payable 
        -------------
  Notes payable consist of the following: 


<PAGE>
 <TABLE>
<CAPTION>
             
       
                                                     1997                1996
                                                --------------       -------------
<S>                                             <C>                     <C>
       Loans payable                            $   6,188,036          5,232,010
       Bank overdrafts                                371,193            545,118
       Commercial paper                             3,562,721          3,498,193
       Other                                            4,997            136,019
                                                --------------       -------------
                                                 $ 10,126,947          9,411,340
                                                ==============       =============
</TABLE>
       
<PAGE>
  Loans payable  include lines  of  credit  and  letters  of credit to support
        commercial operations with suppliers of raw materials.
       
  As  of September  30,  1997,  the  Company has line of credit agreements with
        banks for a maximum of $8.8 million, of which $4.4 million have already
        been  used  ($8.9  million  and $5.2  million,  respectively for 1996).
        Agreements  may be renewed annually, and bear interest at rates ranging
        between  9.25%  and  12%  per annum (9.75% and 10.75% for 1996).  Those
        agreements are secured by property.
       
  Commercial paper represents unsecured debt certificates in colones registered
        with  the  Costa Rican Securities Commission, with a maximum authorized
        amount  of  $4.1 million (colones 1 billion).    Commercial paper bears
        annual  interest  rates  ranging  from 17.25% to 19.25% (from 20.25% to
        39.75% in 1996).
<PAGE>
<PAGE>
        
  (9)   Long-Term Debt
        --------------
        
  Long-term debt is as follows:
<TABLE>
<CAPTION>
                                               1997                 1996
                                            -----------          ---------
<S>                                       <C>                  <C>      
  Colones-denominated:
     Bank loans                             $ 1,936,108         3,027,335
     Commercial paper-unsecured                  46,698            43,470
     Other                                      396,426            25,780
                                            -----------          ---------
                                              2,379,232         3,096,585
                                            -----------          ---------
     US Dollar-denominated:
     Bank loans                               3,459,044         1,953,489
     Other                                      665,000             4,645
                                            -----------          ---------
                                              4,124,044          1,958,134
                                            -----------          ---------
                                              6,503,276          5,054,719
     Less current installments                1,251,127          1,461,118
                                            -----------          ---------
                                            $ 5,252,149          3,593,601
                                            ===========          =========
</TABLE>     


  Banks loans  are  secured  by most of the Company's land, building, machinery
        and equipment and vehicles, and are due from January 1998 through April
        2003. 
        
  Interest rates for long-term debt are as follows: 


 <TABLE>
<CAPTION>
                                                 1997                1996   
                                             ------------       ------------
  <S>                                       <C>                 <C>
    US dollar loans                           8.25% - 10%          8%-10.75%
    Costa Rican colones loans                   19% - 27%         23%-30.25%
    Commercial paper-unsecured                     18.56%            20%-34%
</TABLE>    
        
  Future payments on long-term debt as of September 30, 1997  are as follows: 


 <TABLE>
<CAPTION>
             Fiscal Year                  Amount    
             ----------               --------------
            <S>                       <C>
                 1998                  $   1,251,127
                 1999                      3,657,713
                 2000                        628,129
                 2001                        461,350
                 2002                        339,623
                 Thereafter                  165,334
                                       -------------
                                       $   6,503,276
                                       =============
</TABLE>   


<PAGE>
        
  (10)  Stockholders' Equity
        --------------------
        
  COSTA RICA INTERNATIONAL, INC. ("CRI")
        
  COMMON STOCK
        
  As of  September  30,  1997  and 1996, 60,000,000 common shares at $0.001 par
        value  had been authorized. As of September 30, 1997, 19,809,396 shares
        had been issued (19,559,396 in 1996).
        
  PREFERRED STOCK
        
  As of  September  30,  1997  and 1996, 5,000,000 preferred shares of CRI were
        authorized and no shares had been issued. 


  TREASURY STOCK
        
  During  1997, CRI  repurchased  564,986 common shares of which 475,000 shares
        were acquired at $1.47 per share under a long-term financing agreement,
        which matures in August 1999 and bears annual interest at prime rate.
        
  The  Company's repurchases  of  common stock are recorded as "Treasury Stock"
        and result in a reduction of Stockholders' equity.
        
  PIPASA 


  PREFERRED STOCK
        
  As  of September  30,  1997  and 1996, 82,169 Class "C" preferred shares were
        authorized  but not issued. No price in US dollars can be set for these
        shares that are authorized but not issued.  The price in US dollars for
        these  shares  will  depend on the prevailing exchange rate at the time
        the shares are actually issued. 


        o         A  total  of  317,831 Class "C" preferred shares amounting to
                  $2,216,072   were  authorized  and  outstanding.    The  main
                  characteristics of Class "C" preferred shares are as follows: 

        o         The  53,034 Class "C-A" shares, 60,702 Class "C-B" shares and
                  72,695  Class  "C-D"  shares  receive  a  10% annual dividend
                  payable   monthly   which  is  adjustable  by  the  Board  of
                  Directors. 

<PAGE> 
        o         The  131,400  Class  "C-C" shares receive a dividend equal to
                  the prime rate set by the Central Bank of Costa Rica plus two
                  points, payable monthly.
        
  As  of  September  30, 1997 and 1996, 200,000 Class "D" shares were authorized
        but not issued.
        
  RETAINED EARNINGS
        
  Costa  Rican legislation  requires  that  5%  of  annual net income (in local
        currency)  up  to  an  amount  equivalent to 20% of outstanding capital
        stock  be  allocated  to a legal reserve.  As of September 30, 1997 and
        1996,  the  Company  has  assigned  earnings of  $605,887 and $498,540,
        respectively, for the creation of a legal reserve.
        
  On December  20,  1996 a dividend of $1,226,447 was paid by Pipasa, which was
        equivalent  to  the  retained  earnings through the date of the reverse
        merger.    In  accordance  with a standing agreement, such dividend was
        paid to existing stockholders of record of Pipasa as of the date of the
        reverse merger.  

  Pipasa's payment of dividends is based on profit as determined by Costa Rican
         statutory financial statements (Costa Rican accounting principles). 


  As  of  September 30, 1997, Pipasa has retained earnings of $1,957,970  which
        may  be  distributed  to current stockholders, computed by applying the
        exchange rate as of that date to retained earnings balance expressed in
        Costa Rican currency.
        
  (11)  Operating Leases
        ---------------- 

  The Company  has operating leases for vehicles and cooling equipment.  At the
        end  of  lease  terms,  the  Company  has  the  option of returning the
        equipment or buying the equipment at a depreciated price.  A portion of
        payments  made  during  the  lease  terms  will be applied against this
        reduced purchase price.   


<PAGE>
PAGE>
        
  Under the  lease  terms, the Company is required to maintain a self-insurance
        trust  with  the Lessor bank.  An initial deposit is made with the bank
        at the inception of the lease to create the self-insurance fund.  After
        an  initial  six  month  period, during which time the Company does not
        need  to  make  payments  to  the fund, the Company is required to make
        monthly  payments  to the fund for the remainder of the lease term.  In
        case  of  accidents  or  major repairs to vehicles under the lease, the
        Company  submits  to  the  Fund  a  request  for  reimbursement, less a
        deductible.    The  life of each trust is equivalent to the duration of
        the  respective  lease.    At  the end of the lease term, any remaining
        funds  will  be returned to the Company.  The Company established three
        funds in May, July and August 1995, and no claims have been filed.  The
        balance of the self-insurance fund amounted to $148,970 and  $80,736 as
        of September 30, 1997 and 1996, respectively.
        
  Future minimum lease payments for the year ended  September 30, 1998 amounted
        to $213,495.
        
  Rent expense  under  operating  leases  amounted  to  $307,734, $276,740, and
        $252,143, in 1997, 1996, and 1995, respectively.
        
  (12)  Income Taxes
        ------------
        
  Income tax  expense attributable to income from continuing operations for the
        years ended September 30, 1997, 1996, and 1995 consists of: 


<TABLE>
<CAPTION>
                                       Current           Deferred        Total
                                      ----------         --------      --------
<S>                                        <C>                <C>           <C>     
     Year ended September 30, 1997:   $  291,396             -          291,396
     Year ended September 30, 1996:   $  244,431             -          244,431
     Year ended September 30, 1995:   $  250,802             -          250,802
</TABLE>
        
  Income tax  expense attributable to income from continuing operations differs
        from  the  amounts  computed  by applying the Costa Rican corporate tax
        rate  of 30% to pretax income from continuing operations as a result of
        the following:
<PAGE>
<PAGE> 


 <TABLE>
<CAPTION>
                                                      1997            1996           1995
                                                  -----------      ----------     ----------- 
<S>                                               <C>              <C>            <C>         
Computed "expected" income tax expense             $  714,752        904,782       1,125,704
  Increase (reduction) in income taxes resulting
from:
Interest earned outside Costa Rica and other
income not subject to taxation                       (121,390)      (106,994)        (87,619)
Tax benefit under Costa Rica Income Tax Law
Article 8, Section T for Agricultural
Companies and Article 8, Section F                   (250,225)      (356,136)       (483,277)
Deduction for reinvestment of prior year earnings
in machinery and equipment under Costa Rica
Income Tax Law Article 8, Section T for
Agricultural Companies                               (127,232)      (250,284)       (302,332)
Non-deductible depreciation expense                   109,647         57,792          40,432
Export incentives granted under Costa Rica Income
Tax Law Article 66                                     (2,298)        (4,729)         (2,258)
Other items                                           (31,858)             -         (39,848)
                                                  -----------      ----------     ----------      
                                                   $  291,396        244,431         250,802
                                                  ===========      ==========     ========== 
</TABLE>
  
<PAGE>
The tax effects of temporary differences that give rise to significant
  portions of the deferred tax assets and deferred tax liabilities  as
  of September 30, 1997, 1996, and 1995 are presented below: 

 <TABLE>
<CAPTION>
                                           1997              1996           1995
                                       -------------     -----------     ----------
<S>                                    <C>               <C>             <C>       
 Deferred tax assets:
   
Allowance for doubtful accounts          $ 114,237           44,230           23,104
   Revaluation of property, plant
   and equipment, depreciable
   for Costa Rican tax purposes          2,485,775        2,547,293        2,614,635
                                      -------------     -----------     ------------        
    Total gross deferred tax assets:     2,600,012        2,591,523        2,637,739
 Less valuation allowance               (2,600,012)      (2,591,523)      (2,637,739)
                                      -------------     -----------     ------------
 Net deferred tax assets                $        -           -                -
                                       =============     ===========     ============
</TABLE>       
<PAGE>
<PAGE>
       
    The Company has not recognized a deferred tax asset for the current year or
        prior  years.   The valuation allowance has been established at 100% of
        the  deferred  tax asset balance.  Under Costa Rica Income Tax Law, the
        Company  is  subject  to  a  1% asset tax which may be credited against
        current  income tax liability.  However, if the income tax is less than
        the asset tax in the same tax year, the asset tax must still be paid in
        full;  any excess not off set can be carried forward for one year.  The
        deferred  tax asset results primarily from the revaluation of the fixed
        assets.   The Company historically has reported a slightly higher asset
        tax  liability  compared to the income tax liability.  In addition, the
        Company  has  significant  tax  incentives  available  in Costa Rica to
        reduce future taxable income, thereby reducing the potential benefit of
        the  additional  depreciation resulting from the tax asset revaluation.
        Based  on  the  above, Company's management does not believe that it is
        more  likely  than  not that the deferred tax asset will be realized in
        the  foreseeable  future and thereby justify not recognizing a deferred
        tax asset on the consolidated financial statements.
        
  In  accordance with Costa Rican income tax regulations, Pipasa is required to
        file  annual  income  tax  returns  for  the twelve-month periods ended
        September 30 of each year.
        
  The  income  tax returns  of  Pipasa  for the years ended September 30, 1997,
        1996,  1995,  and  1994  are  open to inspection by the Costa Rican tax
        authorities.
        
  (13)  Stock Warrants
        --------------
       
  On January 21, 1994, the Company entered into an investment banking agreement
        with  M. H. Meyerson & Co.  The agreement required the Company to issue
        warrants  to  purchase  300,000 shares of common stock with an exercise
        price  of  $1.85  per  warrant,  with demand and piggyback registration
        rights.    The  registration  rights  may not be demanded during the 18
        months  immediately  following  the  date of the agreement.  The rights
        become exercisable 19 to 48 months after the date of the agreement.
        
  On June  1, 1994, Management of the Company approved the issue of warrants to
        purchase 200,000 shares of common stock at $.75 per share to an outside
        consultant  in exchange for services to be rendered to the Company.
<PAGE>
<PAGE>
        
  On August 1, 1995, Management of the Company approved the sale of warrants to
        two  members  of its Board of Directors and one independent consultant,
        for  the  purchase price of $100 per warrant.  The warrants are for the
        purchase  of  a  total of 250,000 shares of the Company's $0.001 common
        stock  at  an  exercise  price  of $0.10 per share. The warrants may be
        exercised  anytime  from  August  1,  1995  to August 1, 2000.  Between
        November  and  December  1996, 250,000 warrants were exercised and both
        Directors and the independent consultant received 250,000 shares.
        
  (14)  Acquisition of Poultry Division and Animal
        Feed Concentrate of Coopemontecillos, R.L.
        ------------------------------------------
  On April  21,  1997,  Pipasa  acquired the assets of the poultry division and
        animal  feed concentrate business of Costa Rica-based Coopemontecillos,
        R.L.,  for approximately $2.6 million in cash and financing.  Under the
        agreement,  Pipasa acquired all the division's assets, including plant,
        equipment,  vehicle  fleet, receivables, inventory, laying hens and raw
        materials.  Such assets were recorded at fair market value.
        
  (15)  Concentration of Risk
        ---------------------
        
  Financial instruments which potentially subject the Company to concentrations
        of  credit  risk  consist  primarily  of  cash  equivalents, short-term
        investments, and trade receivables.
        
  The  Company places its cash equivalents and short-term investments with high
        credit quality financial institutions.  
        
  The  majority of the Company's customers are located in Costa Rica. No single
        customer  accounted  for  more  than  five percent of the Company's net
        sales  in  1997,  1996,  and  1995,  and no account receivable from any
        customer  exceeded 5% of account receivable as of year end. Credit risk
        is  mitigated  due  to  the  fact  that  the Company's customer base is
        diverse  and  geographically  dispersed within Costa Rica.  The Company
        estimates  an  allowance  for  doubtful  accounts  based  on the credit
        worthiness  of  its  customers  as well as general economic conditions.
        Consequently,  an  adverse  change  in  these  factors could affect the
        Company's estimate of bad debts.
<PAGE>
<PAGE>
        
  (16)  Business Segment Information
        ----------------------------
        
   
  The Company's  operations  have  been classified into five business segments:
   broiler   chicken,  animal   feed,  by-products,  exports,  and  other.
   Summarized  financial  information  by business segment for 1997, 1996,
   and 1995 is as follows (in thousands of dollars):
  
 <TABLE>
<CAPTION>
                                       1997         1996          1995
                                     -------      -------      --------
<S>                                 <C>           <C>         <C>     
  Net sales:
  Broiler chicken                  $     44.3         41.2        37.6
  Animal feed                             7.0          5.0         5.7
  By-products                             7.9          7.1         6.5
  Exports                                 2.3          1.2         1.1
  Other                                   8.5          7.0         6.2
                                   ----------     --------    --------
                                   $     70.0         61.5        57.1
                                   ----------     --------    --------
  Cost of sales:
  Broiler chicken                  $     32.6         28.8        24.6
  Animal feed                             5.8          4.5         4.7
  By-products                             4.8          4.6         5.1
  Exports                                 1.7          0.9         0.7
  Other                                   8.3          6.6         5.5
                                   ----------     --------    --------
                                   $     53.2         45.4        40.6
                                   ----------     --------    --------
  Gross profit:
  Broiler chicken                  $     11.7         12.4        13.0
  Animal feed                             1.2          0.6         1.0
  By-products                             3.1          2.4         1.5
  Exports                                 0.6          0.3         0.3
  Other                                   0.2          0.4         0.7
                                   ----------     --------    --------
                                   $     16.8         16.1        16.5
                                   ----------     --------    --------
  Selling expenses:
  Broiler chicken                  $      4.4          4.2         4.9
  Animal feed                             0.2          0.2         0.4
  By-products                             1.5          1.3         1.0
  Exports                                 0.2          0.2         0.2
  Other                                     -            -           -
  Corporate                               0.5          0.6           -
                                   ----------     --------    --------
                                   $      6.8          6.5         6.5
                                   ----------     --------    --------
  General and administrative:
  Corporate                        $      6.0          4.4         4.2
                                   ----------     --------    --------
  Income from operations
                                   $      4.0          5.2         5.8
                                   ----------     --------    --------
</TABLE>
<PAGE>
<PAGE>
   
  The  Company  has  not  allocated  its  assets  by  segments  due  to  its
    impracticability.
   
  (17)  Commitments and Contingencies
   
  The  Company does not have damage insurance or a specific self-insurance fund
        for  vehicles  that  are  not  under lease agreements.  The Company has
        liability  insurance  to cover third parties through an umbrella policy
        ranging from $41,881 to a maximum of $1,047,033.
   
  The  income tax  returns  of Pipasa for 1993, 1994, and 1995 were assessed at
        $39,354,   $131,222,   and   $76,976,  respectively.     Due   to   the
        disallowance by the Costa Rican tax authorities of approximately 26% in
        the  aggregate  of  the  deductions taken by Pipasa for 1993, 1994, and
        1995,  all  assessments have been contested by the Company.  Management
        does  not believe this matter will be resolved in the next fiscal year.
        No  accrual  has  been  made  for  any  losses that may result from the
        resolution of this uncertainty.
   
  The  Company is involved in various other claims and legal actions arising in
        the  ordinary  course  of  business.  In the opinion of Management, the
        ultimate  disposition of these matters will not have a material adverse
        effect  on  the  Company's  consolidated financial position, results of
        operations, or liquidity.
  
  (18)  Liquidity and Working Capital
        -----------------------------
   
  As of  September 30,  1997,  the  Company  has  a working capital deficiency
        amounting to $2,288,838.
   
  Management is  currently  working  on a debt restructuring option.  Company's
        Management believes that such debt restructuring, coupled with expected
        operating  cash  flows  for  the  1998  fiscal  year  will  improve the
        Company's liquidity position.
<PAGE>
<PAGE>

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

There were no disagreements  between the Company and its accountants  during the
relevant period.


PART III

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

The  Directors  and  Executive  Officers of the Company,  their ages and present
positions held in the Company, as of September 30, 1997, are as follows:

<TABLE>
<CAPTION>

NAME                        AGE     POSITION HELD
----                        ---     -------------
<S>                         <C>     <C>               
Calixto Chaves              51      Chief Executive
                                    Officer, Chairman, President
                                    and Director
(*) Oscar Barahona          81      Director
Federico Vargas             64      Director
Jorge M. Quesada            48      Chief Financial Officer, Treasurer and Director
Luis J. Lauredo             48      Director
Alfred E. Smith, IV         45      Director
Monica Chaves Zamora        26      Secretary
The Hon Luis G.Guinot       62      Director

</TABLE>

(*) Mr. Barahona resigned from the Board of Directors on August 1, 1997 and will
be replaced in the following Annual Shareholders Meeting of the Company.

The  Company's  Directors  will  serve in such  capacity  until the next  annual
meeting of the  Company's  shareholders  and until  their  successors  have been
elected and  qualified.  The officers   serve at the discretion of the Company's
Directors.  Calixto  Chaves and Monica Chaves are father and daughter.  Jorge M.
Quesada is the brother-in-law of Calixto Chaves. Otherwise,  there are no family
relationships  among the  Company's  officers and  directors,  nor are there any
arrangements  or  understanding  between any of the directors or officers of the
Company or any other person  pursuant to which any officer or director was or is
to be selected as an officer or director.









                                       31

<PAGE>
<PAGE>

CALIXTO  CHAVES.  He was the founder and President of Corporacion  Pipasa,  S.A.
from its  inception  in 1969 to the  present.  He is also the  founder and first
President of Aero Costa Rica,  S.A.,   a  private   Costa  Rican  airline  until
early 1997. He is currently on the Boards of Directors of Central  American Oils
and Derivatives,  S.A., the  Administrative  Consultation of CODESA(Costa  Rican
Development  Corporation),  and American Oleaginous Industry. From 1994 to 1996,
he was a Board member of Cerveceria  Americana,  a private brewery.  In 1994, he
served as an advisor to the Ministry of Economic Business Affairs.  From 1983 to
1985,  he was a member of the Board of Directors of the Sugar Cane  Agricultural
League.  From 1982 to 1986,  he served in the Costa Rican  Ministry of Industry,
Energy and Mines and became the Minister of Natural Resources in 1986. From 1982
to 1986,  he was a member of the Board of  Directors  of MINASA,  a Costa  Rican
mining  Company.  Mr. Chaves was the founder of the Chamber of Industries in the
Costa Rican  province of Heredia.  From 1973 to 1974,  he was  President  of the
Board of  Directors of Banco  Nacional de Belen.  He will devote a minimum of 48
hours per week to the affairs of the Company.

DR. FEDERICO VARGAS.  He has  served as a  Professor  of  Economics  and  Social
Sciences at the  University  of Costa Rica from 1963 to the present.  Dr. Vargas
has been involved in extensive  political  activities  since 1974.  From 1990 to
1994, he served as a Deputy in the Costa Rican  Assembly.  From 1993 to 1994, he
was  Chairman of the  Legislative  Section of the National  Liberation  Party of
Costa  Rica.  Prior to 1990,  Dr.  Vargas  held a number of  political  offices,
including  Ambassador  of Costa Rica to the United  States,  Ambassador of Costa
Rica to the Organization of American States, Counselor to the President of Costa
Rica in Finance and  External  Debt,  with the rank of Minister,  and  Economics
Advisor to the President of Costa Rica. His teaching activities included serving
as  the  Chairman  of  Economists,   Instituto  de  Investigaciones  Economicas,
University  of Costa Rica and Director of the  Economics  Department,  School of
Economics and Social  Sciences,  University of Costa Rica.  Dr. Vargas serves on
the  Boards  and  advisory   bodies  of  numerous   charitable  and  educational
organizations  and is the author of a number of  publications  in  economic  and
educational  matters. He obtained his Bachelors in Business  Administration from
Nichols  College in  Massachusetts  in 1954 and his Ph.D. from the University of
Colorado  in 1967.  He has also  attended  the  Wharton  School of  Finance  and
Commerce at the University of  Pennsylvania.  He will devote such time as may be
necessary to fulfill his obligations as an outside director of the Company.

LIC. JORGE M. QUESADA CHAVES.  He has held numerous  positions with  Corporacion
Pipasa, S.A. since 1985 and has been Executive Vice President since 1990. He has
been a member of the Boards of Directors of Banco  Fomento  Agricola  since 1991
and of Aero Costa Rica, S.A. From 1987 to 1991, he was on the Board of Directors
of Financiera Belen, S.A. Mr. Quesada has conducted  numerous seminars regarding
marketing  issues.  He  obtained  his Degree in  Business  Administration,  with
emphasis on Public  Accounting,  from the  University  of Costa Rica in 1984. He
will devote a minimum of 48 hours per week to the affairs of the Company.










                                       32

<PAGE>
<PAGE>

LUIS J.  LAUREDO.  From 1995 to the  present,  he has been the  Director  of the
International  Consulting Group for the law firm of Greenberg Traurig, of Miami,
Washington,  and New York.  From 1994 to 1995, he was Executive  Director of the
Summit of the Americas, a non-profit  organization.  From 1992 to 1994, he was a
Commissioner  on the Florida Public Service  Commission,  as well as Chairman of
the International  Relations Committee of the National Association of Regulatory
Utility  Commissioners.  From 1989 to the present, he has also been the owner of
Occidental  Aviation,  of Miami. In his career, Mr. Lauredo has held a number of
positions  in  the  banking  industry.   He  has  served  on  numerous  advisory
committees,  including the export-import Bank of the U.S. He has represented the
President of the United States as special U.S.  Ambassador to the  inaugurations
of the Presidents of Colombia, Venezuela, Brazil, and Costa Rica. He also served
as a founding  Director of the Hispanic Council on Foreign Affairs  (Washington,
D.C.). Mr. Lauredo  received his B.A. from Columbia  University in New York City
and has attended the University of Madrid in Spain and Georgetown University Law
Center in  Washington,  D.C.  He will devote  such time as may be  necessary  to
fulfill his obligations as an outside director of the Company.

ALFRED E. SMITH,  IV. Mr. Smith has been a director of the Company since June 1,
1994.  He was a partner of the New York  Stock  Exchange  member  firm of Adler,
Coleman  & Co.,  Inc.  from  1979 to 1994.  Since  1994,  he has  been  with CMJ
Partners,  a New York Stock  Exchange  member firm. In September,  1994,  Adler,
Coleman & Co. sold the Adler, Coleman Clearing division to an unaffiliated third
party. In February,  1995, the entity which acquired the Adler, Coleman Clearing
division filed for bankruptcy protection under Chapter 11. Mr. Smith is a member
of the Government  Relations Committee of the New York Stock Exchange,  Director
and Secretary of the Alfred Emanuel Smith Memorial  Foundation,  Chairman of the
Cardinal's Committee for the Laity-Wall Street Division,  Director of the Center
for Hope,  a  Trustee  of St.  Vincent's  Hospital,  and a Trustee  of Iona Prep
School.  He is a member of the New York City  Advisory  Board of the  Enterprise
Foundation  and the American  Association  of the  Sovereign  Military  Order of
Malta. He has received  numerous awards for his charity and  humanitarian  work.
Mr. Smith was educated at Villanova University.  He will devote such time as may
be necessary to fulfill his obligations as an outside Director of the Company.

MONICA  CHAVES.  Ms Chaves is  Secretary of the Board of Directors of Costa Rica
International,  Inc. and is also member of the Board of Directors of Corporacion
Pipasa,  CRI's  main  subsidiary.  Mrs.  Chaves  joined  Corporacion  Pipasa  as
assistant manager in the company's Financial Division in 1991; since 1993 she is
in charge of the Corporation's Special Investment Department.  In 1996, when the
Company went public,  Mrs. Chaves assumed the direction of this enterprise since
its  origin  and   is  currently  Costa  Rica  International   Inc.'s   Investor
Relations  manager.   Mrs.  Chaves  received  a  bachelors  degree  in  Business
Administration from Saint Michael's College,  Vermont. She will devote such time
as  may  be necessary  to  fulfill her obligations as an outside director of the
Company.














                                       33

<PAGE>
<PAGE>

As a subsequent  event,  Mr.  Isenhour is no longer a Director nor an officer of
the registrant, and was substituted by Mr. Luis Guinot, Jr.

HONORABLE  AMBASSADOR  MR. LUIS  GUINOT,  JR.:  Luis Guinot Jr.  was born in San
Juan,  Puerto Rico on April 8, 1935. He attended  college in the mainland United
States, where he graduated from the Catholic University of America School of Law
in Washington,  D.C.  After  completing  his  undergraduate  studies at New York
University , he was  commissioned and Ensign in the U.S. Navy where he served in
several  billets-both  shore and  afloat -  including  a tour of duty as gunnery
officer of the destroyer USS Gearing  (DD710) and Senior Shore Patrol officer of
the U.S,  Site Fleet based in Naples,  Italy.  After  completion of his military
obligation,  Mr. Guinot entered the private practice of law in Washington,  D,C.
Mr. Guinot has served as United States Ambassador to The Republic of Costa Rica,
as the Assistant  General Counsel of the United States Department of Agriculture
and as  Administrator  of the  Office  of the  Commonwealth  of  Puerto  Rico in
Washington,  D.C.  Additionally,  Mr.  Guinot has also  appeared  as speaker and
lecturer on United States-Latin American Trade, NAFTA, and GATT related matters,
and he is the author of several newspaper articles on the same subjects.  Guinot
is a member of the  Commonwealth  of Virginia  and the  District of Columbia Bar
Association and has been admitted to practice before the bar of the U.S. Supreme
Court,  the 1st and 11th  Circuit  Court of  Appeals,  the Bars of the  Southern
District of New York , and the Southern  District of Florida,  Eastern Districts
of Virginia,  and the Court of military Appeals.  Guinot is also a fellow of the
American Bar Foundation,  a former member of the U.S. Presidential Commission on
Civil Disorders (Kerner  Commission)and  former member of the Board of Directors
of the Legal  Services  Corporation.  Guinot was awarded the Grand Order of Juan
Mora  (Silver  Plaque) by the  Government  of Costa Rica.  He has been  featured
speaker on  Conferences  on the general  subject of  hemispheric  free trade and
served as legal advisor to U.S.  corporations doing business in Latin America as
well as legal advisor to ministries of  Central and South American Countries. He
will  devote  such  time  as  may  be necessary to fulfill his obligations as an
outside Director of the Company.

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

Section 16(a) of the Securities Exchange Act of 1934 (the "34 Act") requires the
Company's officers and directors and persons owning more than ten percent of the
Company's  Common  Stock,  to file initial  reports of ownership  and changes in
ownership  with the Securities and Exchange  Commission  ("SEC").  Additionally,
Item 405 of Regulation  S-K under the 34 Act requires the Company to identify in
its Form 10K and proxy  statement  those  individuals  for whom one of the above
referenced reports was not filed on a timely basis during the most recent fiscal
year or prior  fiscal  years.  Given  these  requirements,  the  Company has the
following  report to make under this section:  All of the Company's  officers or
directors, and all persons owning more than ten percent of its shares have filed
the subject reports on a timely basis during the past fiscal year.












                                       34

<PAGE>
<PAGE>

ITEM 10.   EXECUTIVE COMPENSATION

The  following  table sets forth the  Summary  Compensation  Table for the Chief
Executive Officer and the four most highly compensated  executive officers other
than the Chief Executive  Officer who were serving as executive  officers at the
end  of  the last completed fiscal year for the subsidiary  Pipasa,  due  to the
fact that the Company has as of today, no compensation plan for its officers, or
directors.  No other compensation not covered in the following table was paid or
distributed by the Company to such persons during the period covered.  Directors
receive no additional  compensation  for service on the Board of  Directors.  In
May, 1994, Mr. Smith, an outside Director,  received warrants to purchase 50,000
common shares of the Company at $.50 per share,  for a period of five years.  On
August 1, 1995, the Company approved the sale of 50,000  additional  Warrants to
Mr.  Smith and a total of  100,000  Warrants  to Mr.  Douglas  Brown,  the other
outside  Director.  Both Warrant  packages  were for five years,  at an exercise
price of $0.10 per share.  The warrants could have been  exercised  anytime from
August 1, 1995 to August 1, 2000.  Mr. Smith  exercised his 100,000  warrants in
December, 1996 and Mr. Brown exercised his 100,000 warrants in November 1996.
<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE
-------------------------------------------------------------------------------------------
                               ANNUAL COMPENSATION
-------------------------------------------------------------------------------------------
             Name and          YEARS         Salary        Bonus (2)      Other Annual
-------------------------------------------------------------------------------------------
           Main Position                 Compensation(1)  Compensation(2)  Compensation(3)
-------------------------------------------------------------------------------------------
<S>                             <C>       <C>             <C>               <C>         
                                1997      $104,477.00     $5,098.00         1,121,633.75
Calixto Chaves Zamora           1996      $ 94,780.65      3,864.09         1,219,587.00
Chief Executive Officer         1995      $ 98,247.41      6,951.51         1,102,472.00
-------------------------------------------------------------------------------------------
                                1997      $ 72,221.00     $6,088.00            10,654.00
Jorge Quesada Chaves            1996      $ 64,621.97      4,616.88           20,318.00
Chief Financial Officer         1995      $ 68,834.08      7,609.71           13,682.00
-------------------------------------------------------------------------------------------
                                1997      $ 57,646.00     $4,930.00            6,408.00
Jose Zamora Viquez              1996      $ 48,714.65      4,143.33           17,262.00
Production Vice-president       1995      $ 47,647.22      6,681.19           10,484.00
-------------------------------------------------------------------------------------------
                                1997      $ 39,672.00     $2,230.00               --
Luis Varela Conejo              1996      $ 35,702.32      1,088.42               --
Financial Director              1995      $ 34,040.30      2,453.24               --
-------------------------------------------------------------------------------------------
                                1997      $ 30,633.00     $6,150.00            4,269.00
William Alvarez Gonzalez        1996      $ 26,821.36        800.44           14,414.00
Production Director             1995      $ 26,043.18      2,425.81            9,393.00

(1)   All  salary  compensation  was  paid in Costa Rican Colones, rather than U.S. Dollars.
      For the purposes of this  presentation,  all  compensation  has been converted to U.S.
      Dollars at the then current exchange rate for Costa Rican Colones.

(2)   Represents Director's fees payable for acting as a Director of Pipasa.

(3)   Represents dividends paid on common and Preferred stock of Pipasa throughout each year.



(1)   Compensation Committee Interlocks and Insider Participation
      -----------------------------------------------------------

The Company has a Compensation Committee consisting of Calixto Chaves, Chairman of the Board
and Jorge Quesada,  Chief Financial  Officer.  This Committee makes the  determinations  for
stock issuance pursuant to the Company's  compensation  plans.The Company has no retirement,
pension or profit sharing plans covering its officers and  directors,  but does  contemplate
implementing any such plan in the future through Pipasa.

</TABLE>
                                      35

<PAGE>
<PAGE>

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

The following  sets forth the number of shares of the Company's  $.001 par value
common stock beneficially owned by the person (i)each person who, as of December
15, 1997,  was known by the Company to own  beneficially  more than five percent
(5%) of its common  stock,  (ii) the  individual  Directors of the Company,  and
(iii) the Officers and Directors of the Company as a group.

<TABLE>
<CAPTION>

   Name and Address                  Amount and Nature               Percent of
   of Beneficial Owner               of Beneficial Ownership(1)(2)   Class
   -------------------               -----------------------------   ----------
<S>                                    <C>                            <C>   
   Calixto Chaves                      5,979,945 (3)                  30.6%

   Oscar Barahona                              0                         0

   Federico Vargas                             0                         0

   Jorge Quesada                         156,885 (4)                   0.8%

   Luis J. Lauredo                             0                         0

   Luis G. Guinot                              0                         0

   Alfred E. Smith, IV(5)                100,000 (5)                   0.5%
   20 Broad Street, 16th Floor
   New York, New York 10005

   Teresa Chaves                         156.885 (6)                   0.8%

   Jose Zamora                           156.885 (7)                   0.8%

   Monica Chaves                         400.000 (8)                   2.0%

</TABLE>


(1)   All ownership is beneficial and of record except as specifically indicated
      otherwise.

(2)   Beneficial  owners listed above have sole voting and investment power with
      respect to the shares shown unless otherwise indicated.

(3)   Includes  2,044,145 owned of record by Mr. Chaves,  2,500,000 shares owned
      by  Inversiones  Leytor,  S.A., a Company  owned by Mr. Chaves and wife, a
      total of 539,800  shares owned by Mr.  Chaves'   wife,  and 896,000 shares
      owned of record by  O.C.C.,  S.A.,  which is owned by Mr.  Chaves  and his
      wife. The son of Mr. and Mrs. Chaves owns 837,971 shares, and the daughter
      of Mr. and Mrs. Chaves owns 400,000 shares,  each for which Mr. Chaves and
      his wife disclaim any beneficial ownership.

                                       36

<PAGE>
<PAGE>

(4)   The wife and son of Mr. Quesada control Jorque,  S.A.,  which owns 156,885
      shares  and for  which  Mr.  Quesada  may be  deemed  to  have  beneficial
      ownership.

(5)   In May, 1994,  Alfred E. Smith,  IV received  warrants to purchase  50,000
      common shares of the Company at $.50 per share for a period of five years.
      In August 1995,  Mr.  Smith  received  warrants to purchase an  additional
      50,000 common shares of the Company at $.10 per share for a period of five
      years. Mr. Smith exercised his warrants in December 1996, all at $0.10 per
      share.

(6)   Inversiones Wytalcha, S.A. owns 156,885 common shares of record. This is a
      Company owned equally by Ms.  Chaves,  an officer of  Corporacion  Pipasa,
      S.A., and her husband.  She is a sister of Mr.  Chaves,  who disclaims any
      beneficial ownership to these shares.

(7)   Inversiones  Zamora y Aguilar,  SRL, a Company owned by Mr. Zamora and his
      wife, and owns 156,885 shares of record.  He is an officer of Pipasa,  and
      brother in law of Mr. Chaves,  who disclaims any  beneficial  ownership to
      these shares.

(8)   Owned of record by Ms  Chaves,  who is the  daughter  of Mr.  Chaves.  Mr.
      Chaves disclaims any beneficial ownership to these shares.

In August,  1995, A. Douglas Brown,  Jr., a former member of the Board under the
past administration,  received warrants to purchase 100,000 common shares of the
Company at $.10 per share for a period of five years.  Mr. Brown  exercised  his
warrants in November  1996.  Mr.  Brown is no longer a director of the  Company,
since August 5, 1996.


ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

In 1994,  Pipasa  acquired  9% of the  outstanding  common  stock of  Cerveceria
Americana,   S.A.  (C.A.)  from  Inversiones  La  Ribera,  S.A.,  Pipasa's  main
stockholder,  for approximately $1,080,000. On June 30, 1996, Pipasa sold its 9%
ownership in C.A.  back to  Inversiones  La Ribera for  $848,402,  which was the
carrying value as of that date.

On August 26, 1996, Pipasa entered into an agreement with Inversiones La Ribera,
S.A. (main  stockholder)  to acquire,  for $4,858,955,  10% of equity  ownership
in   Grupo  Inolasa-Adecsa,  an  independent  third  party   and  a  significant
supplier  to Pipasa.  As of  September  30,  1996,  Pipasa had made  payments of
$934,842 in connection with its  commitment;  the unpaid balance was paid during
the year ended September 30, 1997.












                                       37

<PAGE>
<PAGE>

      Balances and transactions with related parties consist of the following:


                                  1997               1996               1995
                                  ----               ----               ----
Due from stockholders           $ 920,476        $ 1,104,990        $ 1,939,380
Due from related parties        $  76,243        $   199,510        $   172,170

Due to stockholders             $  36,870        $ 3,924,114                  0
Due to stockholders long-term   $  20,489                  0                  0


Balance due to  stockholders  is originated from the agreement to acquire equity
ownership  rights  equivalent to 10% of the outstanding  common stock of Inolasa
Group, which was owned by Inversiones La Ribera, S.A.

Balance due from stockholders  originates from  non-interest  bearing loans made
when the Company was still privately owned mainly to Inversiones La Ribera, S.A.
and the company's Chief Executive Officer and shareholders;  starting on October
1, 1996 such loans bear interest at market rates.

STOCKHOLDERS EQUITY

CRI

COMMON STOCK

As of  December  15,  1997,  60,000,000  common  shares at $0.001 par value were
authorized and 19,809,396 shares had been issued.

PREFERRED STOCK

As of December 15, 1997,  5,000.000  Preferred shares of CRI were authorized and
no shares had been issued.

PIPASA

PREFERRED STOCK

As of September 30, 1997,  82,169 Class "C" Preferred shares were authorized but
not  issued.  No  price  in US  Dollars  can be set for  these  shares  that are
authorized but not issued.  The price in US Dollars for these shares will depend
on the  prevailing  exchange  rate at the time the shares are  actually  issued.
317,831 Class "C" Preferred  shares  amounting to $2,216,072 were authorized and
outstanding.  The main  characteristics  of Class "C"  Preferred  shares  are as
follows:

The 53,034 shares of Class "C-A", 60,702 shares of Class "C-B" and 72,695 shares
of Class "C-D" receive a 10% annual  dividend  payable monthly and adjustable by
the Board of Directors.






                                       38

<PAGE>
<PAGE>

The 131,400 shares of Class "C-C" receive a dividend equal to the prime rate set
by the Central Bank of Costa Rica plus two points, payable monthly.

As of  September  30, 1997,  200,000  Class "D" shares were  authorized  but not
issued.

RETAINED EARNINGS

Costa  Rican  legislation  requires  that 5% of  annual  net  income  (in  local
currency) up to an amount  equivalent to 20% of total capital stock be allocated
to a legal reserve.  As of September 30, 1997 and 1996 the Company has set aside
earnings of $605,887 and $498,540  respectively,  for the creation of this legal
reserve.

COMMITMENTS AND CONTINGENCIES

       The Company does not have damage  insurance or a specific  self-insurance
       fund for vehicles  that are not under lease  agreements.  The Company has
       liability  insurance to cover third  parties  through an umbrella  policy
       ranging from $41,881 to a maximum of $1,047,033.

       The income tax returns of Pipasa for 1993,  1994,  and 1995 were assessed
       at $39,354,  $131,222, and $76,976 respectively.  Due to the disallowance
       by the  Costa  Rican  tax  authorities  of  approximately  26.03%  in the
       aggregate of the deductions taken by Pipasa for 1993, 1994, and 1995, the
       assessments  were contested by the Company.  Management  does not believe
       this matter will be resolved in the next fiscal year. No accrual has been
       made  for  any  losses  that  may  result  from  the  resolution  of this
       uncertainty.

       The Company is involved in various other claims and legal actions arising
       in the ordinary  course of business.  In the opinion of  Management,  the
       ultimate  disposition  of these matters will not have a material  adverse
       effect on the  Company's  consolidated  financial  position,  results  of
       operations or liquidity.



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


Reports on form 8-K.
--------------------

The Company  filed 3 reports on Form 8-K during the last  quarter of fiscal year
ended September 30, 1996.










                                      39

<PAGE>
<PAGE>



                                   SIGNATURES

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.


                                           COSTA RICA INTERNATIONAL, INC.

                                           CHIEF EXECUTIVE OFFICER


Dated: December 31, 1997                   By: /s/ Calixto Chaves Zamora
                                              --------------------------------
                                                   Calixto Chaves Zamora
                                                   Chairman and President

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.


                                          CHIEF FINANCIAL OFFICER



Dated: December 31, 1997                  By: /s/ Jorge M. Quesada
                                             --------------------------------
                                                  Jorge M. Quesada
                                                  Treasurer



                                                 SECRETARY


Dated: December 31, 1997                  By: /s/ Monica Chaves Zamora
                                             -------------------------------
                                                  Monica Chaves Zamora
                                                  Secretary