U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   Form 10-KSB

(Mark One)

[X] Annual report under section 13 or 15(d) of the Securities
    Exchange Act of 1934 for the fiscal year ended June 30, 2000

[ ] Transition report under section 13 or 15(d) of the Securities Exchange Act
    of 1934 for the transition period from ____ to ____.

Commission File No:   000-30947
                     ----------

                               Power Fluids, Inc.
                               ------------------
                     (Name of small business in its charter)

                 Florida                           59-3461879
                 --------                          ----------
         (State or other jurisdiction             (IRS Employer
             of Incorporation)                  Identification No.)

                      10125 West Colonial Drive, Suite 212
                      ------------------------------------
            Address of Principal Executive Office (street and number)


                                 Ocoee, FL 34761
                                 ---------------
                            City, State and Zip Code

Issuer's telephone number: (407) 822-3664

Securities registered under Section 12(b) of the Act:

         None

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

          Common Stock, par value $.01


         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes X
No ____


<PAGE>


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

         State issuer's revenue for its most recent fiscal year: $  -0-

         State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked priced of such stock, as of a specified date within
the past 60 days (See definition of affiliate in Rule12b-2): -0-

         Note: If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by non-affiliates on the basis of reasonable
assumptions, if the assumptions are stated.

         (Applicable only to corporate registrants) State the number of shares
outstanding of each of the issuer's classes of common equity, as of the latest
practicable date: 4,050,500 as of August 31, 2000.

         (Documents incorporated by reference. If the following documents are
incorporated by reference, briefly describe them and identify the part of the
Form 10-KSB (e.g. Part I, Part II, etc.) into which the document is
incorporated: (1) any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule 424(b) or
(c) of the Securities Act of 1933 ("Securities Act"). The listed documents
should be clearly described for identification purposes.


<PAGE>


                                     PART I

ITEM 1.        DESCRIPTION OF BUSINESS.


Business of Issuer.

         Upon incorporation, the Company intended to develop and operate a
lubricating processing plant; however, we were unsuccessful in raising
sufficient funds or obtaining financing for to implement this business plan.
Accordingly, in approximately April 2000, we reformulated our business plan to
be a distributor of lubricating devices.

         We have not developed any distribution methods for our products. We
have no sources and availability of raw materials or principal suppliers. We
have no agreements with suppliers, manufacturers, or distributors. Due to the
developmental nature of our business, there is no assurance that we may not
become dependent upon one or a few major customers; especially in the initial
stages of our development. However, we have no intention of becoming dependent
upon one or a few major customers.

Competition.

         We will face competition from several fronts. Lubricating and pump
technology manufacturers are highly competitive and often sell their products
directly to the public or other industrial concerns. Many of the competitors
have financial resources of hundreds of millions of dollars and revenue sources
that continually fund research and development in the lubricating device area.
These companies not only carry a diversified product line, but also a broad
service network, thereby enhancing their reputation for customer service leading
to repeat business. These companies also have the competitive advantage of being
able to design and develop new and improved products, by maintaining
strategically located parts distribution centers and by promoting the efforts of
its sales force in the world market. Moreover, many of these companies have a
worldwide presence, leading to an enhanced reputation as a "big player" in thee
markets.

Intellectual Property.

         We have no patents, trademarks, licenses, franchises, concessions,
royalty agreements or labor contracts.

Government Regulation.

         Our operations will be subject to extensive and ever-changing federal,
state and local laws and regulation by government agencies, such as the United
States Occupational Safety and Health


                                        1


<PAGE>


Administration ("OSHA"). We are subject to significant compliance burdens from
this extensive regulatory framework that may substantially increase our
operational costs. OSHA to ensure that devices are maintained and constructed in
a safe manner regulates the lubrication device industry in the U.S.

Research and development

         We have spent no time or money on research or development since our
inception.

Environmental Compliance

         We do not expect that we will incur any costs or be responsible for any
environmental compliance because:

     o We will act as a secondary distributor of lubricating devices
     o We will not act in the capacity of a manufacturer of lubricating devices
     o Our business will not involve the emitting of environmental pollutants

         Accordingly, we are not aware of any other environmental matters that
would have a material impact on our future recurring costs, capital expenditures
or mandated expenditures.

Employees.

         We currently have only two employees. Our president and director, Lyle
Meyers, will be responsible for implementing our proposed plan of operations and
directing our operations. Our secretary and treasurer, Joseph Camillo, will be
responsible for back office operations.

ITEM 2.           DESCRIPTION OF PROPERTY.

         We do not own or lease any real or personal property. We will utilize a
10,000 square foot facility owned by our president to distribute our products.
The facility is located in 201 N. Webster Street, White Cloud, Michigan 49349.
The facility is in excellent condition and does not require any capitol
improvements. Our president and director own this facility; and are furnishing
it to us at no charge. Office services will also be conducted from this location
and will be provided without charge to us by our president. We have not occupied
the facility premises to date but plan to occupy the facility in approximately
September 2000. We do not intend upon leasing any other portion of the facility
to any other business or person.

ITEM 3.        LEGAL PROCEEDINGS.

         The Company is not a party to any pending legal proceedings, and no
such proceedings are known to be contemplated.


                                        2


<PAGE>


         No director, officer or affiliate of the Company, and no owner of
record or beneficial owner of more than 5.0% of the securities of the Company,
or any associate of any such director, officer or security holder is a party
adverse to the Company or has a material interest adverse to the Company in
reference to pending litigation.

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

         No matters were submitted to a vote of the security holders of the
Company during the fourth quarter of the fiscal year which ended June 30, 2000.



                                     PART II

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

         The Company's shares currently trade on the National Quotation Pink
Sheets under the trading symbol "PFLD," To date, no trading of such shares has
occurred and no bid or asked prices have been posted. The Company's securities
are currently held of record by a total of approximately 102 persons.

         No dividends have been declared or paid on the Company's securities,
and it is not anticipated that any dividends will be declared or paid in the
foreseeable future.

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

         The Company remains in the development stage and, since inception, has
experienced no significant change in liquidity or capital resources or
stockholder's equity.

Results of Operations

         During the period from June 30, 1999 through June 30, 2000, the Company
has engaged in no significant operations other than filing of a registration of
its securities under the Securities Exchange Act of 1934, as amended, compliance
with its periodical reporting requirements, and efforts to locate a suitable
merger or acquisition candidate. No revenues were received by the Company during
this period.

Need for Additional Financing

         The Company will require additional capital in order to meet its cash
needs for the next year,


                                        3


<PAGE>



including the costs of compliance with the continuing reporting requirements of
the Securities Exchange Act of 1934, as amended.

       No specific commitments to provide additional funds have been made by
management or other stockholders, and the Company has no current plans,
proposals, arrangements or understandings with respect to the sale or issuance
of additional securities prior to the location of a merger or acquisition
candidate. Accordingly, there can be no assurance that any additional funds will
be available to the Company to allow it to cover its expenses. Notwithstanding
the foregoing, to the extent that additional funds are required, the Company
anticipates receiving such funds in the form of advancements from current
shareholders without issuance of additional shares or other securities, or
through the private placement of restricted securities rather than through a
public offering. The Company does not currently contemplate making a Regulation
S offering.

ITEM 7.

         See attached Financial Statements.

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

         None.


                                    PART III

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

         The directors and executive officers currently serving the Company are
as follows:

Name                      Age                 Positions Held
----                      ---                 --------------
L.G. Meyers               72                President/Director

Joseph Camillo            53                Secretary/Director


         The directors named above will serve until the next annual meeting of
the Company's stockholders. Thereafter, directors will be elected for one-year
terms at the annual stockholders' meeting. Officers will hold their positions at
the pleasure of the board of directors, absent any employment agreement, of
which none currently exists or is contemplated. There is no arrangement or
understanding between any of the directors or officers of the Company and any
other person


                                        4


<PAGE>


pursuant to which any director or officer was or is to be selected as a director
or officer.

         The directors and officers will devote their time to the Company's
affairs on an "as needed" basis, which, depending on the circumstances, could
amount to as little as two hours per month, or more than forty hours per month,
but more than likely will fall within the range of five to ten hours per month.

Biographical Information

         Mr. Meyer has been an officer and director of the Company since
September 1, 1997. In 1976, Mr. Meyers formed LubeCon Systems, Inc., a private
company in the business of conveyor lubrication by offering an integrated
program of lubricants, lubrication application equipment and service. Mr. Meyers
was responsible for directing the operations of Lube Con Systems for
approximately 25 years. Mr. Meyers owned 35% of LubeCon Systems until he sold
his interest in approximately February 1999 to Castrol Oil Company. Mr. Myers
now holds no directorships in any reporting companies. His current term as
Director expires, subject to re-election, on December 1, 2000.

         Mr. Joseph Camillo, has been an officer and director of the Company
since September 1, 1997. From 1991 to 1996, Mr. Camillo was employed as a
registered representative with Kober Financial, a securities broker-dealer. From
1996 to present, Mr. Camillo has been a consultant to private and public
corporations. Mr. Camillo has served as one or our Directors since inception.
His current term as Director expires, subject to re-election, on December 1,
2000. From July 14, 1998 to the present, Mr. Camillo has also served as
Secretary and Director of Asphalt Paving International, Inc.

Employees

         Other than those mentioned above, we have no employees. We do not
anticipate hiring any additional employees until our revenues or demand for our
products reaches a sufficient level to mandate hiring additional employees.
There are no family relationships among our officers, directors, or nominees for
such positions. None of our directors, executive officers, promoters or control
persons has been involved in any legal proceedings material to the evaluation of
the ability or integrity of any of the aforementioned persons.

ITEM 10.       EXECUTIVE COMPENSATION.

         No officer or director received any remuneration from the Company
during the fiscal year. Until the Company acquires additional capital, it is not
intended that any officer or director will receive compensation from the Company
other than reimbursement for out-of-pocket expenses incurred on behalf of the
Company. See "Certain Relationships and Related Transactions." The Company has
no stock option, retirement, pension, or profit-sharing programs for the benefit
of directors, officers or other employees, but the Board of Directors may
recommend adoption of one or more such programs in the future.


                                        5


<PAGE>


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

         As of June 6, 2000, there were 4,050,500 shares of our common stock,
$.001 par value outstanding. The following tabulates holdings of our shares by
each person who, subject to the above, at the date of this registration, holds
of record or is known by our management to own beneficially more than 5.0% of
the common shares and, in addition, by all of our directors and officers
individually and as a group. To the best of our knowledge, each named beneficial
owner (1) has sole voting and investment power with respect to the shares set
forth opposite his name.

<TABLE>
<CAPTION>
                                                 Amount of        Nature of     Percent
Title of Class     Beneficial Owner              Ownership        Ownership     of Class
<S>               <C>                          <C>                <C>             <C>

Common            Lyle G. Meyers               4,000,000 Shares   Direct          99%
                  10125 West Colonial Drive
                  Suite 212
                  Ocoee, Florida 34761

All officers and
directors as a Group                           4,000,000 Shares   Direct          99%

</TABLE>




ITEM 12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         None.


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

    (a) The Exhibits listed below are filed as part of this Annual Report.


Exhibit No.                    Document

    3.1      Articles of Incorporation (incorporated by reference from
             Registration Statement on Form 10-SB filed with the Securities and
             Exchange Commission under File No. 000-30947.

    3.2      Bylaws (incorporated by reference from Registration Statement on
             Form 10-SB filed


                                        6


<PAGE>


              with the Securities and Exchange under File No. 000-30947

   27         Financial Data Schedule

    (b)       No reports on Form 8-K were filed by the Company during the last
              quarter of it's fiscal year ending June 30, 2000.


                                        7


<PAGE>


                                   SIGNATURES

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

                                   Power Fluids, Inc.



                                   By: /s/ L.G. Meyers
                                       --------------------------------------
                                       L. G. Meyers
                                      (Principal Executive Officer and Director)

                                      Date: September 14, 2000


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


NAME                                      TITLE                    DATE
----                                      -----                    -----
/s/ L. G. Meyers                      President/Director          9/14/00
------------------------
L.G.  Meyers

/s/ Joseph Camillo                    Secretary/Director          9/14/00
------------------------
Joseph Camillo


                                        8


<PAGE>


                               Power Fluids, Inc.
                          (A Development Stage Company)
                                  Balance Sheet
                                  June 30, 2000

                                                               June 30,
                                                                2000
                                                              ---------
                      ASSETS
                      ------
Current assets:

  Cash                                                         $     75
                                                               --------
      Total current assets                                     $     75

Organization costs                                                   90
                                                               --------
                                                               $    165
                                                               ========


        LIABILITIES AND  STOCKHOLDERS' EQUITY
        -------------------------------------

Current liabilities:

      Total current liabilities                                $   0.00

Commitments and contingencies

Stockholders' equity:
 Common stock, $.001 par value,
  50,000,000 shares authorized,
  4,050,500 shares issued and
 outstanding                                                      4,050
 Additional paid-in capital                                      10,600
 (Deficit)
accumulated during development stage                            (14,485)
                                                               --------
                                                                    165

                                                               $    165
                                                               ========


                 See accompanying notes to financial statements.

                                        9


<PAGE>


                               Power Fluids, Inc.
                          (A Development Stage Company)
                            Statements of Operations
                      Year Ended June 30, 2000 and 1999 and
                 For the Period From Inception (August 19, 1997)
                                to June 30, 2000


                                                                    Inception
                                 Year Ended         Year Ended          To
                                   June 30,          June 30,        June 30,
                                    2000               1999            2,000
                                 ---------         -----------      ----------

Operating expenses                   2,250               2,240          14,485
                                 ---------         -----------      ----------

Net (loss)                       $  (2,250)        $    (2,240)     $  (14,485)
                                 =========         ===========      ==========


Per share information:
 Basic (loss) per                $   (0.00)        $    (0.00)      $    (0.00)
 common share                    =========         ===========      ==========

 Weighted average                4,050,500          4,050,000        4,041,736
shares outstanding





                 See accompanying notes to financial statements.

                                       10


<PAGE>


                               Power Fluids, Inc.
                          (A Development Stage Company)
                  Statement of Changes in Stockholders' Equity
        For the Period From Inception (August 19, 1997) to June 30, 2000


<TABLE>
<CAPTION>
                                                                           Deficit
                                                                          Accumulated
                                                   Common Stock           Additional        During
                                               ---------------------        Paid-in       Development
                                              Shares         Amount         Capital          Stage               Total
                                            ---------     ----------      -----------      ----------         ----------
<S>                                         <C>          <C>              <C>              <C>                 <C>
ACTIVITY

Balance at inception                             0.00    $         0      $         0      $        0          $       0

Shares issued to officer
 for reimbursement of
 expenses

 September @ $.00257                        4,000,000          4,000            6,291          10,291

Shares issued for cash by
private placement:

  January @ $.20                               38,000             38            7,562           7,600
  February @ $.20                              12,500             12            2,488           2,500

Less expenses of offering                                                     (10,141)        (10,141)

Net (loss) for the period
 ended June 30, 1998                                0              0                0          (9,995)            (9,995)
                                            ---------     ----------      -----------      ----------         ----------

Balance, June 30, 1998                      4,050,500          4,050            6,200          (9,995)               255

Contribution of capital
 by officer                                                                     2,100                              2,100

Net (loss) for the period
 ended June 30, 1999                                0              0                0          (2,240)            (2,240)
                                            ---------     ----------      -----------      ----------         ----------


Balance, June 30, 1999                      4,050,500          4,050            8,300         (12,235)               115

Contribution of capital
 by officer                                                                     2,300                              2,300

Net (loss) for the year                             0              0                0          (2,250)            (2,250)
                                            ---------     ----------      -----------      ----------         ----------

Balance, June 30, 2000                      4,050,500     $    4,050      $    10,600      $  (14,485)        $      165
                                            =========     ==========      ===========      ==========         ==========
</TABLE>

                 See accompanying notes to financial statements.

                                       11


<PAGE>


                               Power Fluids, Inc.
                          (A Development Stage Company)
                            Statements of Cash Flows
                      Year Ended June 30, 2000 and 1999 and
        For the Period From Inception (August 19, 1997) to June 30, 2000



                                                                    Inception
                                 Year Ended         Year Ended         To
                                   June 30,          June 30,       June 30,
                                    2000              1999            2,000
                                 ---------         -----------      ----------

Net income (loss)                $   (2,250)       $   (2,240)      $  (14,485)
  Adjustments to
reconcile net income
(loss) to net
   cash provided by
(used in) operating
activities:

   Expenses paid by
    officer as capital
    contribution                      2,200             2,100            4,300
   Amortization                          30                30               60

Change in assets and
liabilities:

  Increase (decrease) in
   cash overdraft                        (5)                5                0
                                 ----------        ----------       ----------
Total adjustments                     2,225             2,135            4,360
  Net cash (used in)
   operating activities                 (25)             (105)         (10,125)

Cash flows from
financing activities:

  Cash contributed by
    officer                             100                 0              100
   Common stock sold for
    cash                                  0                 0           10,100
                                 ----------        ----------       ----------
  Net cash provided by
   (used in)
   financing activities

                                        100                 0           10,200
                                 ----------        ----------       ----------

Increase (decrease) in
 cash                                    75              (105)              75
Cash and cash
 equivalents,
 beginning of period                      0               105                0
                                 ----------        ----------       ----------
Cash and cash
 equivalents,
 end of period                   $       75        $        0       $       75
                                 ==========        ==========       ==========



                 See accompanying notes to financial statements.

                                       12


<PAGE>


                               Power Fluids, Inc.
                          (A Development Stage Company)
                             Statement of Cash Flows
                          Year Ended June 30, 2000 and
                     1999 and For the Period From Inception
                       (August 19, 1997) to June 30, 2000

                                                                    Inception
                                 Year Ended         Year Ended         To
                                   June 30,          June 30,       June 30,
                                    2000              1999            2,000
                                 ---------         -----------      ----------

Supplemental cash flow
information:

   Cash paid for interest       $        0
   Cash paid for income
    taxes                       $     0.00







                See accompanying notes to financial statements.

                                       13


<PAGE>


INDEPENDENT AUDITOR'S REPORT



Board of Directors and Shareholders
Power Fluids, Inc.


We have audited the balance sheet of Power Fluids, Inc. as of June 30, 2000 and
the related statements of operations, changes in stockholders' equity, and cash
flows for the years ended June 30, 2000 and 1999 and for the period from
inception (August 19, 1997) to June 30, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above, present fairly, in
all material respects, the financial position Power Fluids, Inc. as of June 30,
2000 and the results of its operations and cash flows for the years ended June
30, 2000 and 1999, in conformity with generally accepted accounting principles.

                                         James E. Scheifley & Associates, P.C.
                                        Certified Public Accountants



Denver, Colorado
July 21, 2000


                                       14


<PAGE>


Power Fluids, Inc.
Notes to Financial Statements
June 30, 2000


Note 1. Organization and Summary of Significant Accounting Policies.
        ------------------------------------------------------------

The Company was incorporated in Florida on August 19, 1997. The Company is in
its development stage and to date its activities have been limited to
organization and capital formation.

     Loss per share:
Basic Earnings per Share ("EPS") is computed by dividing net income available to
common stockholders by the weighted average number of common stock shares
outstanding during the year. Diluted EPS is computed by dividing net income
available to common stockholders by the weighted-average number of common stock
shares outstanding during the year plus potential dilutive instruments such as
stock options and warrants. The effect of stock options on diluted EPS is
determined through the application of the treasury stock method, whereby
proceeds received by the Company based on assumed exercises are hypothetically
used to repurchase the Company's common stock at the average market price during
the period. Loss per share is unchanged on a diluted basis since the Company has
no potentially dilutive securities outstanding.

     Intangible Assets:
The Company makes reviews for the impairment of long-lived assets and certain
identifiable intangibles whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Under SFAS No. 121,
an impairment loss would be recognized when estimated future cash flows expected
to result from the use of the asset and its eventual disposition is less than
its carrying amount. No such impairment losses have been identified by the
Company to date.

      Cash:
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.

     Estimates:
The preparation of the Company's financial statements requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from these
estimates


                                       15


<PAGE>


     Fair value of financial instruments

The Company's short-term financial instruments consist of cash and cash
equivalents and accounts payable. The carrying amounts of these financial
instruments approximates fair value because of their short-term maturities.
Financial instruments that potentially subject the Company to a concentration of
credit risk consist principally of cash. During the year the Company did not
maintain cash deposits at financial institutions in excess of the $100,000 limit
covered by the Federal Deposit Insurance Corporation. The Company does not hold
or issue financial instruments for trading purposes nor does it hold or issue
interest rate or leveraged derivative financial instruments

     Stock-based Compensation

The Company adopted Statement of Financial Accounting Standard No. 123 (FAS
123), Accounting for Stock-Based Compensation beginning with the Company's first
quarter of 1996. Upon adoption of FAS 123, the Company continued to measure
compensation expense for its stock-based employee compensation plans using the
intrinsic value method prescribed by APB No. 25, Accounting for Stock Issued to
Employees. The Company did not pay any stock based compensation during any
period presented.

New Accounting Pronouncements

SFAS No. 130, "Reporting Comprehensive Income", establishes guidelines for all
items that are to be recognized under accounting standards as components of
comprehensive income to be reported in the financial statements. The statement
is effective for all periods beginning after December 15, 1997 and
reclassification financial statements for earlier periods will be required for
comparative purposes. To date, the Company has not engaged in transactions which
would result in any significant difference between its reported net loss and
comprehensive net loss as defined in the statement. Therefore the reported net
loss is considered to be equivalent to comprehensive net loss as defined under
the statement.

Effective December 31, 1998, the Company adopted SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information ("SFAS 131"). SFAS 131
superseded SFAS No. 14, Financial Reporting for Segments of a Business
Enterprise. SFAS 131 establishes standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports. SFAS 131 also establishes
standards for related disclosures about products and services, geographic areas,
and major customers.

The adoption of SFAS 131 did not affect results of operations or financial
position. To date, the Company has not operated in any business activity.


                                       16


<PAGE>


Note 2. STOCKHOLDERS' EQUITY

The Company issued 4,000,000 shares of common stock to an officer of the Company
for reimbursement of amounts paid by the officer for legal services incurred in
the formation of the Company and for services performed in conjunction with the
completion of a private placement of the Company's common stock. The value
assigned to the stock issued is based on the fair value of the legal services
provided to the Company.

During January and February 1998 the Company sold 50,500 shares of its common
stock to a limited group of investors for cash aggregating $10,100.

Note 3. INCOME TAXES

Deferred income taxes may arise from temporary differences resulting from income
and expense items reported for financial accounting and tax purposes in
different periods. Deferred taxes are classified as current or non-current,
depending on the classifications of the assets and liabilities to which they
relate. Deferred taxes arising from temporary differences that are not related
to an asset or liability are classified as current or non-current depending on
the periods in which the temporary differences are expected to reverse. The
deferred tax asset related to the operating loss carryforward has been fully
reserved.

The Company has not provided current or deferred income taxes for the period
presented due to a loss from operations.

The Company currently has a net operating loss carryforward aggregating
approximately $14,500 that expires $10,100 in 2013, $2,100 in 2014 and $2,300 in
2015. The tax benefit of the loss, estimated to be approximately $2,200, has
been fully reserved as its realization in future periods is not assured as it is
more likely than not that future earnings will not be available to utilize the
loss carryforward. The reserve increased by approximately $400 during the year
ended June 30, 2000.

Note 3. Related Party Transactions.

The Company neither owns nor leases any real or personal property. Office
services are provided without charge by an officer of the Company and certain
expenses of the Company have been paid for by the officer. Such costs and the
fair value of the services provided to the Company for the years ended June 30,
2000 and 1999 amounted to $2,200 and $2,100, respectively and the Company
received a $100 cash advance by the officer in 2000.


                                       17


<PAGE>


The advance and the expenses paid by the officer have been accounted for as
capital contributions to the Company by the officer as the Company is not
obligated to make repayment to the officer.

The officers and directors of the Company are involved in other business
activities and may become involved in other business activities in the future.
Such business activities may conflict with the activities of the Company. The
Company has not formulated a policy for the resolution of any such conflicts
that may arise.

To date, the Company has engaged in no significant operations and has minimal
expected operating costs forecasted for its next fiscal year. The Company's
officers plan to continue the support the limited operations of the Company as
needed.

Note 4. Statement of Operations Information

Operating expenses consist of the following for the years ended June 30, 2000
and 1999:

                               2000           1999
                             ------          ------

   Professional fees         $1,600          $1,500
   Office expenses              600             600
   Other expenses                50             140
                             ------          ------
                             $2,250          $2,240



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