SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-KSB

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

                   For the fiscal year ended December 31, 1996

                          Commission File Number 0-9455

                            ATLANTIC INDUSTRIES, INC.
                 (Name of small business issuer in its charter)

           Colorado                                       13-3045713            
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)      
                                      
        38 South Audley Street
       Mayfair, London, England                                    W1Y 5DH 
----------------------------------------                         ----------
(Address of principal executive offices)                         (Zip Code)
                                                       
                                                    
Issuer's telephone number, including area code:  (4471) 629-7617

                         Little Prince Productions, Ltd.
--------------------------------------------------------------------------------
     (Former name, former address and former fiscal year, if changed since
                                  last report)

Securities registered pursuant to Section 12(b) of the Act:  None

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

                          Common stock, $.01 par value
                          ----------------------------
                                (Title of Class)

         Check whether the issuer (1) 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 Company 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 is contained in this form, and no disclosure  will be
contained,  to the  best of the  Company'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. [ ]

         Issuer's revenues for the year ended December 31, 1996 $-0-.

         The aggregate market value of voting stock held by nonaffiliates of the
Company as of February 14, 1997 was -0-.

         The  number of  shares of the  Company's  $.01 par value  common  stock
outstanding as of February 14, 1997 was 192,996.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None

Transitional Small Business Disclosure Format        Yes         No    X
                                                        --------   --------
<PAGE>
                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

General

         Little Prince Productions,  Ltd. ("Little Prince"), was incorporated on
April 3, 1980 pursuant to the laws of the State of New York,  and was originally
formed to exploit certain  ancillary and subsidiary  rights to the literary work
entitled "The Little Prince." Subsequent to its organization the Company changed
its business focus. See "-Background of Company's  Operations" below. As used in
this report the term "Company" refers to Little Prince prior to December 6, 1996
and to Atlantic (as defined below) as of and subsequent to December 6, 1996.

         On  February  29,  1996,   the  Company  held  a  Special   Meeting  of
Shareholders (the "Meeting").  At the Meeting the Company's shareholders,  by an
affirmative vote of approximately 76% of the total shares  outstanding,  adopted
the following  proposals:  (i) a change in the Company's state of  incorporation
from New York to  Colorado  by means of a merger  (the  "Merger")  of the Little
Prince into the Atlantic Industries,  Inc. ("Atlantic"),  a Colorado corporation
organized  on January 31, 1996,  which was wholly owned by Little  Prince at the
time of the merger;  (ii) the terms of the merger  agreement which provided for,
among other things, a 10 for 1 reverse stock split and an increase in the number
of  authorized  shares of the  Company  after the  Merger to  50,000,000;  (iii)
consented and authorized  the Board of Directors  (the "Board"),  at the Board's
discretion, to (a) sell the Company's interest in the common stock of its wholly
owned  subsidiary,  LPPL Corp.,  to an  independent  third-party  or (b) vote to
dissolve LPPL Corp.

         The number of votes cast for,  against or that  abstained  from each of
the above proposals is set forth below:

   Description             For               Against            Abstain
   -----------             ---               -------            -------

   Proposal 1           19,036,766           124,350              160
   Proposal 2           19,036,766           124,350              160
   Proposal 3           19,036,766           124,350              160
   Proposal 4           19,036,666           124,450              160


         On  December  6, 1996,  the Merger  became  effective  (the  "Effective
Date").  The delay in the effective  date of the Merger was primarily due to the
need to prepare the Company's  past due income and franchise tax reports for the
State of New York.  By  operation  of law on the  Effective  Date,  all  assets,
property,  rights, liabilities and obligations of Little Prince were transferred
to and assumed by Atlantic. The principal effect of the Merger was to (i) change
the law applicable to the Company's corporate affairs from the New York Business
Corporation Law to the Colorado Business Corporation Act, (ii) reduce the number
of shares of the Company's $.01 par value
<PAGE>
common stock (the "Shares" or the "Common  Stock") issued and  outstanding,  and
(iii) increase the number of Shares authorized for issuance.

         Specifically,  on the  Effective  Date,  the Company was  authorized to
issue 50,000,000 shares of capital stock (the "Capital  Stock").  Of the Capital
Stock  reserved  for  issuance  40,000,000  shares are  reserved for issuance as
Common Stock,  of which  2,499,923  shares were  outstanding  at that time,  and
10,000,000  shares were  reserved for issuance as  preferred  stock  ("Preferred
Stock"), of which no shares were outstanding.

         Sale of LPPL Corp.

         Pursuant  to the  authority  granted to it by the  shareholders  at the
Meeting,  on July  22,  1996 the  Board  authorized  the  sale of its  ownership
interest in all of the issued and  outstanding  capital stock of LPPL Corp. (the
"LPPL Shares") to Frances Katz Levine, an independent  third party,  pursuant to
that certain Stock Purchase  Agreement (the "Agreement") dated July 22, 1996. As
consideration  for the LPPL Shares,  the Company  received $10 and Ms.  Levine's
agreement to use her best efforts to effect and complete by July 21, 1997, at no
cost to the  Company,  the  reincorporation  of LPPL  Corp.  under  the state of
Delaware.  Concomitantly  therewith, Ms. Levine agreed to increase the number of
shares of authorized  capital stock of LPPL Corp.  and  distribute the shares of
common  stock of LPPL Corp.  to the  shareholders  of the Company as of July 22,
1996 at a ratio of one LPPL  Share for  every  one share of Common  Stock of the
Company  (or such other ratio as required  by the  attendant  circumstances)  in
accordance with the requirements of all applicable  federal and state securities
laws and  regulations.  In the  event Ms.  Levine  fails to  complete  the above
actions by July 21, 1997, the Agreement  requires Ms. Levine to immediately take
all steps  necessary  to dissolve  LPPL Corp.  and deliver any assets  remaining
after dissolution, if any, to the Company.

Developments Subsequent to December 31, 1996

         On February 12, 1997 the Company held a Special Meeting of Shareholders
(the "1997  Meeting").  At the 1997 Meeting the  Company's  shareholders,  by an
affirmative vote of approximately 74% of the total shares outstanding, adopted a
proposal  to  effect  a  reverse  stock  split  of up to  twenty-for-one  of the
presently  issued and  outstanding  shares of Common Stock. At the 1997 Meeting,
shareholders  owning (i)  2,853,588  (74%)  shares of Common Stock voted for the
proposal,  (ii) 210 shares of Common Stock voted against the proposal, and (iii)
140 shares of Common Stock abstained.  The reverse stock split allowed the Board
to abandon the reverse stock split or the split to be reduced to something  less
than  twenty-for-one  by action of the Board at any time after the 1997  Meeting
and prior to February 12, 1998 if the Board determined,  in its sole discretion,
that the reverse  stock split would not be in the best  interests of the Company
or that a different ratio (but not greater than twenty-for-one)  would be in the
best interest of the Company.
                                       2
<PAGE>
         On February 13, 1997, the Company filed an amendment to its Articles of
Incorporation making effective a twenty-for-one  reverse stock split. The filing
of the amendment  resulted in a decrease in the number of outstanding  Shares to
approximately  192,996 and,  since the number of Shares  available  for issuance
remained at  40,000,000,  increased the number of Shares  available for issuance
from approximately 36,140,077 to 39,807,004.

Background of Company's Operations

         Tyne River Properties Acquisition.

         On November 16, 1992 (the "Acquisition Date"), the Company acquired and
became the successor to Tyne River  Properties,  plc, an English company ("TRP")
through  a  "Reverse  Acquisition"  pursuant  to which the  shareholders  of TRP
acquired an aggregate  of  11,899,236  shares of Common Stock (the  "Acquisition
Shares"),  comprising,  upon  issuance,  approximately  85%  of the  issued  and
outstanding  Common  Stock,  in exchange  for all of the issued and  outstanding
capital  stock  of TRP.  As a part of the  Reverse  Acquisition,  the  Company's
theatrical  operations  and assets were  transferred  and assigned to its wholly
owned  subsidiary,  LPPL Corp. to be continued therein under the direction of A.
Joseph Tandet. At this time (i) Mr. Tandet resigned his position as President of
the Company and was appointed President of LPPL Corp., and (ii) Peter N. Chapman
was appointed as an executive officer and Director of the Company.  As a further
consequence of the Reverse Acquisition,  on February 4, 1993 the Company changed
its fiscal year end from March 31 to  December  31 to  coincide  with the fiscal
year end of TRP.

         Following the Acquisition Date, the Company's business  activities were
intended to be conducted in three  separate  segments,  with TRP's proposed real
estate  acquisition  and  investment   operations   constituting  the  Company's
principal  business  and the  theatrical  production  operations  of the Company
constituting a smaller,  but continuing area of operations.  Certain real estate
development  projects  and  operations,  owned  and  conducted  by  TRP  at  the
Acquisition  Date were  intended to  constitute a third  segment which was to be
phased out as promptly as practicable  through the completion and/or disposition
of all such projects.

         TRP was, from its inception in 1987 through March 29, 1994,  engaged in
the acquisition and development of property in the  Newcastle-Upon-Tyne  area in
England. It conducted its business directly and indirectly through its operating
subsidiaries,  Exchange Buildings Limited ("EBL"),  Pandon Developments  Limited
("PDL"), and Selective  Construction plc ("SCP"). Its development sites included
the Pandon and Exchange  Building sites in central  Newcastle-Upon-  Tyne, among
others.

         After the  Reverse  Acquisition,  the Company was not able to raise any
funds through private or public sales of its securities,  or otherwise,  TRP was
therefore unable to institute its real estate  investment  business plan and the
lack of available working capital resulted in the Company's overall inability to
conduct operations in any of its three proposed business segments during 1993 or
subsequently thereto, except on a minimal level.
                                        3
<PAGE>
         Riparian Group Acquisition.

         Commencing in January of 1994,  the Riparian  Group (as defined  below)
had begun to explore the feasibility of acquiring a major stock position in, and
management  control of, the Company.  They were  interested in a publicly traded
corporation  because  they  believed  it would be an  effective  vehicle for the
effectuation of their proposed  business plan. In the interest of such potential
affiliation with the Company, the Riparian Group agreed with TRP to use its best
efforts to protect  the  Company  from the  anticipated  adverse  effects of the
dissolution  of TRP's  subsidiaries,  and the  liquidation  of  properties  held
thereby, under the unfavorable conditions then obtaining.

         On March 29, 1994,  the Company sold all of the issued and  outstanding
stock of TRP to Bravecorp Limited ("Bravecorp"),  a U.K. company wholly owned by
Riparian  Investments Limited ("RIL") and formed specifically for the purpose of
purchasing  TRP for the  nominal  consideration  of  (pound)1.  RIL is a company
affiliated with Riparian Securities Limited ("RSL") through common ownership and
management (RIL and RSL, as well as their controlling persons, will sometimes be
referred to herein, collectively, as the "Riparian Group").

         On April 15, 1994,  Barclays Bank which had previously  loaned funds to
TRP,  foreclosed on EBL and took legal possession of the Exchange  Building.  On
April 18, 1994, Bravecorp sold EBL to Lacebury Limited, a firm which specializes
in dealing with insolvent companies, for a price of (pound)2. On April 26, 1994,
Bravecorp  sold all of the  remaining  assets  of TRP,  except  for PDL (and the
Pandon Development owned by PDL) to Lacebury Limited for a price of (pound)2. At
approximately  the same point in time,  Bravecorp  sold PDL for the same nominal
sum to Gracelord  Limited  ("Gracelord").  Neither  Lacebury nor  Gracelord  was
affiliated with the Company,  the Riparian Group, or any affiliate of Registrant
or the Riparian Group. At the time of Bravecorp's  purchase of TRP, the Riparian
Group was not affiliated with the Company and all of the foregoing  transactions
were made at  arm's-length.  In connection with their services in respect of the
foregoing   transactions  and  dealing  with   outstanding   creditors  and  the
appointment   of  company   receivers  and   liquidators,   Bravecorp   incurred
unreimbursed expenses of approximately (pound)3,525 (approximately $5,000).

         On August 22, 1994,  the Company  entered  into an agreement  (the "RSL
Agreement") with RSL.

         The RSL Agreement principally provided for:

                  (a) a loan by RSL to the  Company  of  GB(pound)25,000,  to be
         used  to  satisfy   financial,   tax  and  regulatory   obligations  of
         Registrant;

                  (b) the sale by the Company to RSL of  3,250,000  newly issued
         shares of Common  Stock at a price of $.0001  per share in  conjunction
         with the sale by Peter N.
                                       4
<PAGE>
         Chapman and William J. Peacock to RSL of an additional 2,990,402 shares
         for the nominal price of $.0001 per share;

                  (c) the resignation of four of the five then present directors
         of Registrant, pursuant to which Terence G. Galgey, William J. Peacock,
         A. Joseph Tandet, and Carl Kuehner resigned as directors of Registrant,
         which resignations became effective as of October 1, 1994;

                  (d)  the  replacement  of  the  resigning   directors  by  two
         designees of RSL, Adrian P. Kirby and Christopher  N.C. Jones,  and the
         reduction in the size of the board from five to three persons; and

                  (e) the resignations of Messrs. Galgey,  Peacock,  Tandet, and
         Kuekner as officers of Registrant,  which resignations became effective
         as of October 1, 1994.

         The closing of the RSL Agreement  took place on September 9, 1994.  The
newly constituted board of directors took office on October 1, 1994. Thereafter,
Adrian P. Kirby was  appointed  as Chairman and Chief  Executive  Officer of the
Company  and  Christopher  N.C.  Jones  was  appointed  as  its  Executive  Vice
President.  Prior to their taking  office,  neither Mr. Kirby nor Mr. Jones held
any offices, employments,  directorships or other affiliations with the Company.
Peter N. Chapman  continued to hold the positions of Secretary,  Treasurer and a
Director of the Company.  On February 15, 1995,  Mr. Jones was removed for cause
by the remaining  members of the board and Robert D. Evans was appointed to fill
the vacancies created by Mr. Jones's removal. Mr. Evans subsequently resigned as
a director and executive vice president of the Company on December 19, 1996.

         Proposed  Business  Plan of RSL.  RSL  originally  entered into the RSL
Agreement with the intention of arranging, within six months, for the Company to
acquire  through  the  issuance  of large  blocks  of  common  stock  sufficient
investment  properties and related business  activities to enable the Company to
satisfy the minimum financial criteria for inclusion in the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ").

         Upon  consummation of the RSL Agreement and related  transactions,  the
Company lacked a sufficient  amount of authorized but unissued Shares to acquire
suitable  investment  properties.  In order to increase the number of authorized
Shares,  the Company needed to amend its Certificate of Incorporation,  which in
turn required holding a shareholders  meeting and distributing a proxy statement
soliciting the approval of the Company's  shareholders  owning a majority of the
Shares  outstanding.  In order to distribute the proxy statement,  however,  the
Company first had to prepare and file its past and currently due annual  reports
on Forms  10-K and  quarterly  reports  on Forms  10-Q with the  Securities  and
Exchange  Commission (the  "Commission").  Upon completing these reports,  in an
effort to restore the profitability of the Company,  the Board adopted a plan of
reorganization which was presented and approved by the Company's shareholders at
the Meeting held on February 29, 1996.
                                        5
<PAGE>
The Company's Business Plan

         The Company's  current focus is on acquiring  service or  manufacturing
businesses, as well as developing,  selling, leasing and managing real estate in
the United Kingdom,  the United States and other foreign countries.  The Company
has expanded its business plan to encompass the potential acquisition of service
or manufacturing  businesses,  as well as commercial real estate  properties for
equity in the Company.

         The Company's current acquisition  strategy involves the possibility of
acquiring,   in  exchange  for  the  Capital  Stock,  existing  businesses  that
management  believes will offer the  opportunity of sound  sustainable  earnings
with the potential  for growth.  Such  acquisitions  may result in the merger of
another  corporation  into the  Company in return for the  Capital  Stock of the
Company.  See  "Description  of Property"  for a  description  of the  Company's
investment strategies.

Competition

         Management  believes that the Company may face competition for the most
attractive  real estate  investment  opportunities  from other investors who are
aware of the  opportunities  available  at this time to purchase  properties  at
significantly  deflated prices. Other investors,  substantially all of whom have
greater resources than the Company, are in the market for real estate investment
and  present  intense   competition  due  to  their  being  considerably  better
established  and larger than the Company in total  assets and  resources.  There
cannot be any assurance  that the Company will, in fact, be able to raise equity
capital  on terms  favorable  to it or at times  necessary  to enable it to take
advantage of attractive real estate investment  opportunities  against potential
competitors.

Personnel

         During the fiscal  year ended  December  31,  1996,  the Company had no
employees other than its executive officers.

ITEM 2. DESCRIPTION OF PROPERTY

         The executive offices of the Company have been maintained at the office
of Mr. Kirby at 38 South Audley Street,  Mayfair,  London,  England W1Y 5DH. The
Company has no formal lease or agreement  with respect to its office  facilities
and pays no rent or other remuneration for their use.

Nature of Investments/Investment Strategy

         The Company  does not intend to seek  investments  that  involve a high
degree of dependence on specialized skills or market conditions or which will be
at risk from rapid changes in market  conditions or from  technological  change.
All potential acquisitions will be analyzed in depth
                                       6
<PAGE>
by the executive officers of the Company and approved by the Board.  Advice from
independent  advisors  will be  sought as deemed  appropriate  by the  executive
officers.

         In evaluating potential investments,  the Company will consider,  among
other factors:  (a) the current anticipated cash flows and their ability to meet
operational  needs  and  provide  a  competitive  market  return  on the  equity
invested; (b) the potential for capital appreciation;  (c) the geographical area
and location of the business and/or property (which businesses or properties may
be located in the United  Kingdom,  the  United  States or  elsewhere);  (d) the
ability to increase cash flow through a capable  management;  (e) the capability
of existing  management;  (f) the market positions and relative strengths of the
business related to its competitors; (g) the general economic growth and tax and
regulatory  environment of the communities in which the business  operates;  and
(h) the prospects for liquidity, through sale, financing or refinancing.

         The  Company  further  intends  to  keep  debt to  conservative  levels
relative to equity with regard to both mature  investments and new acquisitions.
The  Company  also may raise  funds by selling  its  Capital  Stock in public or
private  transactions.  The Company's  shareholders do not and will not have any
preemptive  rights with respect to any such issues of Capital  Stock.  Moreover,
there  can be no  assurance  that the  Company  will be able to raise  any funds
through the sale of Capital Stock.

         In  accordance  with  their  fiduciary  duties to the  Company  and its
shareholders,  the Board may determine that a change from the Company's  current
investment  strategies  and policies is in the best  interest of the Company and
its shareholders and shareholder  approval will not be necessary for a change in
the  Company's  investment  policies.  Although the Company  currently  does not
anticipate  such a change,  should the Board deem it advisable,  changes will be
made.  Alternative methods of financing,  which could be adopted by the Board in
the future, could include the issuance, in public or private transactions, of up
to 10,000,000  shares of Preferred  Stock in addition to short,  intermediate or
long-term borrowings, on secured or unsecured basis. Such borrowings could be in
the  form of bank  borrowings,  including  unsecured  borrowings  or  borrowings
secured on the Company's then existing  assets and/or assets being acquired with
borrowed  funds.  Borrowings  could  also be made by the  Company  by way of the
issuance  of senior or  subordinated  notes or  debentures,  including  notes or
debentures convertible into shares of Common Stock. The Company may also combine
any of the above financing methods.

ITEM 3. LEGAL PROCEEDINGS

         No material  legal  proceedings to which the Company (or any officer or
director of the Company, or any affiliate as owners of record or beneficially of
more than 5% of the Common Stock) to  management's  knowledge,  is a party or to
which the  property of the Company is subject,  is pending and no such  material
proceedings are known by management of the Company to be contemplated.
                                        7
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         During the fourth  quarter of the fiscal year ended  December 31, 1996,
no matters were submitted to a vote of security holders.  The Company,  however,
did hold  the  Special  Meeting  of  Shareholders  on  February  12,  1997.  See
"Description of Business-Developments Subsequent to December 31, 1996."
                                        8
<PAGE>
                                     PART II

ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Common  Stock is traded in the  over-the-counter  market  under the
symbol "LTLP." Because the Company did not meet the revised  financial  criteria
for  continued  inclusion in the National  Association  of  Securities  Dealers'
Automated Quotation System ("NASDAQ"), it was delisted therefrom,  effective May
27, 1992.  Since such date, the Common Stock has been quoted on the OTC Bulletin
Board.  The Company has been advised that no dealer has submitted bid prices for
the Common Stock since April, 1994.

         On December 31, 1996, the Company  authorized the issuance of 1,360,000
shares of Common Stock to the Patchouli  Foundation in payment for loans made by
the  Patchouli  Foundation  to the  Company.  Pursuant  to  Section  4(2) of the
Security  Act of 1933,  as amended (the  "Act"),  the issuance of the  1,360,000
shares was exempt from the  registration  requirements  of the Act. See "Certain
Relationships and Related Transactions."

         As of February  14, 1997,  there were 340 record  holders of the Common
Stock.  The Company has not declared or paid any form of dividends on the Common
Stock during the last two fiscal years and does not  contemplate  declaring  any
and paying any dividends on the Common Stock in the near future.

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

         The  following  discussion  should  be read  in  conjunction  with  the
Company's  financial  statements  and notes thereto  included  elsewhere in this
report.

         The statements contained in this report, if not historical, are forward
looking  statements  within the  meaning of the  Private  Securities  Litigation
Reform Act of 1995, and involve risks and uncertainties  that could cause actual
results to differ materially from the results,  financial or otherwise, or other
expectations  described  in such  forward-looking  statements.  These  risks and
uncertainties  that may  affect the  operations,  performance,  development  and
results of the Company's business include those,  among others,  discussed below
and under "Description of Business-The  Company's Business Plan," "-Competition"
and "Description of  Property-Nature  of  Investments/Investment  Strategy." Any
forward looking  statement or statements speak only as of the date on which such
statement  was made,  and the Company  undertakes  no  obligation  to update any
forward looking statement or statements to reflect events or circumstances after
the date on  which  such  statement  is made or to  reflect  the  occurrence  of
unanticipated events. Therefore, forward-looking statements should not be relied
upon as a prediction of actual future results.
                                        9
<PAGE>
Results of Operations

         Balance sheet amounts originally denominated in United Kingdom sterling
have been  translated  into U.S.  dollars  using the year-end  rate of exchange.
Operational results originally  denominated in United Kingdom sterling have been
translated  into  U.S.  dollars  using  the  average  annual  rate of  exchange.
Fluctuations  in foreign  exchange rates could have either  negative or positive
impacts on the Company's balance sheet and results of operations.

         During the fiscal year ended December 31, 1996, the Company was largely
inactive except for administrative activities in connection with the preparation
and filing of  periodic  reports  required  under  Section 13 of the  Securities
Exchange  Act of  1934,  as  amended,  and in  preparing  current  and  past due
corporate  income tax and  franchise  tax  reports  for the State of New York in
order to effectuate the Merger.  All filings are now up to date. The majority of
the  operating   costs  of  $26,545   incurred  during  the  1996  fiscal  year,
respectively,  related  specifically to the audit,  accounting,  secretarial and
legal costs associated with the preparation of the aforementioned documentation.

         In an effort to restore the  profitability of Little Prince,  the Board
adopted a plan or  reorganization  which,  among other  things,  resulted in the
merger of Little  Prince into the Company and  increased the number of shares of
Capital Stock authorized for issuance.  See  "Description of  Business-General."
The Board  believed the  additional  authorized  but unissued  shares of Capital
Stock were  necessary in order for the Company to improve its financial  affairs
by givingthe Board increased  flexibility in structuring  future  financings and
acquisitions.  Subsequent to the December 31, 1996, the Board authorized and the
Company's   shareholders   approved  an  additional  reverse  stock  split.  See
"-Liquidity and Capital Resources" below.

         As  discussed  above  under  "Description  of  Business-The   Company's
Business  Plan,"  the  Board  intends  to focus  the  Company's  efforts  on the
acquisition of service and  manufacturing  businesses and commercial real estate
properties. Given the change in emphasis in the Company's current operations and
previous  litigious  history of LPPL Corp. and its uncertain  profitability  the
Board  believed  that it was in the Company's  best  interest to relinquish  its
interest in LPPL Corp. See "Description of  Business-General."  Accordingly,  on
July 22, 1996,  the Company sold all of the shares of LPPL Corp.  The  Company's
gain on the  disposition  of LPPL Corp.  of  $150,630  is  deferred  and will be
recognized upon the completion of the  dispositions,  which is expected to occur
in July of 1997.

         On December  31,  1997,  the Company  reduced its  accounts  payable by
approximately  $170,000 through the issuance of 1,360,000 shares of Common Stock
to the  Patchouli  Foundation  ("Patchouli").  This  issuance of the  additional
Shares to the Patchouli  resulted in a Pathcouli having effective control of the
Company by  increasing  its  percentage  ownership  of Common  Stock from 25% to
51.4%. See "Certain Relationships and Related Transactions."
                                       10
<PAGE>
Liquidity and Capital Resources

         As a result of the sale of LPPL  Corp.,  the Company  currently  has no
income  producing  assets.  The  Company  is  dependent  in the short  term from
continued loans from Patchouli.  As stated above, the Company intends to acquire
through the issuance of additional  shares of Capital Stock a suitable  business
or businesses and/or to obtain additional funds through the sale of Common Stock
or Preferred Stock in public or private  transactions.  The Company's investment
strategy   is   set   forth   under    "Description   of    Property-Nature   of
Investments/Investment Strategy."

         After the merger of Little Prince into the Company,  the Board believed
that its  ability to acquire  suitable  income  producing  properties  was still
limited by the number of Shares  outstanding at the end of the Company's  fiscal
year. For example, an arbitrarily assigned value of $5.00 per Share for purposes
of  conducting  a reverse  acquisition  would  indicate  that the  Company had a
capitalization  of  $20  million,   with  the  current  number  of  Shares  then
outstanding.  Because the Shares are currently valueless, the person selling the
business  in return for Shares  would  recognize a  substantial  dilution in the
value of the Shares such person received.  Under the same scenario, after giving
effect to a reverse stock split of  twenty-for-one,  the Company's  hypothetical
capitalization would decrease to approximately $1 million and the person selling
the business  would  recognize a less  substantial  dilution in the value of its
Shares.  Although,  the  above  example  is  hypothetical  and  meant  only  for
illustrative  purposes to reflect the current  difficulties the Company faced in
attempting  to  locate a viable  business  or  assets to  acquire,  the  Company
believed that the  twenty-for-one  reverse stock split that became  effective on
February 13, 1997,  would enhance the Company's  ability to enter into potential
acquisitions in the future.

           The Company can not provide  any  assurances  that the reverse  stock
spit will enable it to acquire a suitable business,  businesses or assets in the
future.  In addition,  the Company can not provide any assurance as to the value
per Share a person  interested in selling its business or assets in exchange for
Shares would demand or accept.

         The Company had no material commitments for capital expenditure for the
period ended December 31, 1996.

ITEM 7. FINANCIAL STATEMENTS

         The financial  statements of the company required by Regulation S-B are
attached  to this  Report.  Reference  is made to Item 13 below for an "Index to
Financial Statements."

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

         None.
                                       11
<PAGE>
                                    PART III

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

Directors and Executive Officers During the Year Ended December 31, 1996.

The table  below sets forth the  persons who were the  directors  and  executive
officers of the Company  during the year ended  December 31, 1996  together with
their respective ages, their respective dates of service, the year in which each
was first  elected or appointed an officer or director,  and any other office in
the Company held by each such person.  All persons who served as officers of the
Company during this period also served as executive officers.
<TABLE>
<CAPTION>

                                                                          Officer and Director
                                                               ---------------------------------------
Name of Director            Other Offices Held         Age           From                         To
----------------            ------------------         ---           ----                         --
<S>                       <C>                          <C>      <C>                            <C>
Adrian P. Kirby(1)        Chief Executive Office,      38       October 1, 1994                Present
                          Chairman, President
Peter N. Chapman          Treasurer, Secretary         41       November 16, 1992              Present
                                                                 
</TABLE>

---------------
(1) Mr.  Kirby  took  office  on  October  1,  1994  in  connection  with  RSL's
acquisition of approximately 25% of the Company's issued and outstanding  common
stock.  
(2) On December 19, 1996, the Company  accepted the resignation of Mr. Robert D.
Evans as a director and executive vice president of the Company.

         Messrs.   Kirby  and  Chapman,   the  Company's  current  officers  and
directors, devote such of their time to the Company's business and affairs as is
required for their executive duties and meetings of the Board of Directors.

Family Relationships

         No family relationship exists between any director or executive officer
of the Company or person contemplated to become such.

Business Experience

         The following summarizes the present occupation and business experience
during  the past five  years for each  person who is  currently  a  director  or
executive officer of the Company. No other persons have been nominated or chosen
to become a director of the Company.

         Adrian P. Kirby has been the  President,  Chief  Executive  Officer and
Chairman of the Board of Directors of the Company  since October 1, 1994. He was
a founder and is a major
                                       12
<PAGE>
shareholder  of Atlantic  Properties,  Ltd., and has served as a Director and as
Treasurer of such corporation since its inception on February 15, 1995. In 1993,
Mr. Kirby founded The Riparian Group,  consisting of Riparian Securities,  Ltd.,
Riparian  Investments,  Ltd. ("RIL"),  and Riparian  Properties,  Ltd. Mr. Kirby
served as the Chief Executive Officer of all of the constituent  corporations of
the Riparian  Group until his  resignation  therefrom in March of 1995. In 1984,
Mr.  Kirby  incorporated   Guardacre   Investments  Limited,  and  subsequently,
Guardacre  Securities  and Guardacre  Properties  Limited.  Collectively,  these
corporations  were known as the  "Guardacre  Group." From 1984 through  November
1993, Mr. Kirby was the Chief Executive Officer of the Guardacre Group.

         Peter N. Chapman has served as Treasurer,  Secretary, and a Director of
the Company from  November  16, 1992  through the  present.  He also served as a
Director and the  Secretary of TRP from 1986 until March 29, 1994.  On April 15,
1994,  Barclays  Bank  foreclosed  on  Exchange  Buildings,  Ltd.,  a  principal
subsidiary  of TRP.  Chapman has been employed as a chartered  accountant  since
1979. He has been self employed since 1990, first independently and subsequently
as a partner in Chapman & Chapman,  a firm of chartered  accountants.  From 1988
through  January 1990,  Mr.  Chapman worked for William A. Swales Limited where,
commencing in January 1989, he served as Finance  Director.  Effective  November
16, 1992,  Mr. Chapman was appointed as an officer and director of LPPL Corp., a
wholly owned  subsidiary  of the Company  until July 22, 1996.  Mr.  Chapman was
admitted as a Fellow of the  Institute of Chartered  Accountants  in England and
Wales in 1979.

Section 16(a) Beneficial Ownership Reporting Compliance

         Section  16(a) of the  Securities  Exchange  Act of 1934 and the  rules
thereunder  require the Company's  officers and  directors,  and persons who own
more than ten percent of a registered class of the Company's equity  securities,
to file reports of ownership and changes in ownership  with the  Securities  and
Exchange Commission and with the NASDAQ and to furnish the Company with copies.

         Based on its review of the copies of the Section  16(a) forms  received
by it, or written  representations  from certain reporting persons,  the Company
believes   that,   during  the  last  fiscal  year,  all  Section  16(a)  filing
requirements applicable to its officers,  directors and greater than ten-percent
beneficial owners were complied with, except as set forth below:

                  Mr.  Kirby,  the  Chairman of the Board,  President  and Chief
         Executive   Officer   of  the   Company,   the   Patchouli   Foundation
         ("Patchouli")  and  Dr.  Christoph  Hoffmann,   administrator  for  the
         Patchouli Foundation, failed to file a Form 3 reporting their ownership
         of 6,240,402 shares of Common Stock on October 7, 1994, with respect to
         Mr.  Kirby,  and January 14, 1995,  with  respect to Patchouli  and Mr.
         Hoffmann.  In  addition,  such  parties  failed to timely file a Form 4
         reporting  the  issuance of an  additional  1,360,000  shares of Common
         Stock on December 31, 1996. The above parties correctly  reported these
         transactions on a Form 5 timely filed on February 14, 1997.
                                       13
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION

Current Remuneration

         The Company has no stock option or stock appreciation rights, long term
or other incentive  compensation plans, deferred compensation plans, stock bonus
plans,  pension plans, or any other type of  compensation  plan in place for its
executive  officers,  directors,  or other  employees  and none of its executive
officers or directors have ever received compensation of any such types from the
Company pursuant to plans or otherwise.

         The  following  table  sets  forth  information  concerning  the annual
compensation  received or accrued for services provided in all capacities to the
Company for the years ended  December 31, 1996,  1995 and 1994 by the  Company's
chief executive  officer.  None of the Company's  executive officers received or
accrued annual  compensation in excess of $100,000 in any of such years.  All of
the Company's current  executive  officers have agreed to render services to the
Company solely for the purpose of enhancing the value of their  shareholdings in
the  Company,  until  such  time  as the  Company  has the  financial  resources
available to compensate such persons for their services.

                           Summary Compensation Table

                                                      Annual         All Other
                                                   Compensation     Compensation
                                                   ------------     ------------
                                   Fiscal Year
     Name            Position      December 31,       Salary
     ----            --------      ------------       ------
Adrian P. Kirby(1)   President       1996(2)          $  -0-           $ -0-
                     and CEO


---------------
(1) Mr. Kirby became  president  and chief  executive  officer of the Company on
October 1, 1994.  Mr.  Kirby has agreed to render his  services  to the  Company
solely  for the  purpose  of  enhancing  the value of the  shareholdings  of the
Patchouli  Foundation  in the  Company  until such time as the  Company  has the
financial  resources  available  to  compensate  him  for his  services.
(2) On December  31,  1996,  the  Patchouli  Foundation  ("Patchouli")  received
1,360,000 shares of Common Stock in exchange for the cancellation of the debt of
$170,000  owed to  Patchouli  by the  Company.  Mr.  Kirby may be deemed to be a
beneficial  owner of such shares  through the investment and voting powers which
Mr. Kirby has over such shares through his position as attorney-in-fact  for the
administrator of the Patchouli  Foundation.  The purpose of this transaction was
not to pay Mr. Kirby  compensation  for his services as an executive  officer of
the Company. See "Certain Relationships and Related Transactions."

Directors Remuneration

         The directors of the Company are not  compensated for their services as
such.
                                       14
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners and Management

         The  following  table  sets forth  certain  information  regarding  the
beneficial ownership of outstanding Common Stock as of February 14, 1997, by (i)
each person known by the Company to own beneficially five percent or more of the
outstanding  shares  of  Common  Stock,  (ii)  the  Company's  directors,  Chief
Executive  Officer and  executive  officers  whose total  compensation  exceeded
$100,000  for the last  fiscal  year,  and (iii)  all  directors  and  executive
officers of the Company as a group.

     Name and Address                  Amount and Nature of
    of Beneficial Owner                Beneficial Ownership     Percent of Class
    -------------------                --------------------     ----------------

Patchouli Foundation                          99,202(1)             51.4%
c/o Hans Zum Elefant
Kirchgasse 3/5
 Postfach 8024
Zurich

Adrian P. Kirby, Chairman of the              99,202(1)             51.4
Board, CEO and President
38 South Audley Street
Mayfair, London
England W1Y 5DH

Terence G. Galgey                             11,250                 5.8
27 John Adam Street
London, England WC2N 6HX

Peter N. Chapman, Director, CFO                1,625                 *
and Secretary
38 South Audley Street
Mayfair, London
England W1Y 5DH

All executive officers and directors         100,827                52.2
as a group (2 persons).
                                       15
<PAGE>
------------------
(1) Includes 99,202 Shares beneficially owned by the Patchouli  Foundation.  Mr.
Kirby  may be  deemed  to be a  beneficial  owner  of such  shares  through  the
investment  and voting  powers which Mr. Kirby has over such shares  through his
position as attorney-in-fact for the administrator of the Patchouli  Foundation.
* Indicates  less than 1%  beneficial  ownership 
** Calculated on the basis of 192,996 Shares outstanding on February 14, 1997.


Changes in Control

         The Company is not aware of any existing  arrangements  that may result
in a change in control of the  Company at this time.  A change in control of the
Company could occur in the future if the Company locates a suitable  business or
assets to acquire.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions and Business Relationships with Management

         Since 1994, the Patchouli  Foundation  ("Patchouli")  has made loans to
the Company to cover costs and  expenses  incurred in  connection  with  various
corporate activities, including without limitation, legal, accounting and filing
fees incurred in connection with the preparation of the Company's Annual Reports
on Forms 10-KSB,  Quarterly  Reports on Form 10-Q,  proxy  statements  and state
income tax returns.  Patchouli is a non-discretionary  family trust, governed by
Liechtenstein  law, set up for the benefit of the family of Adrian P. Kirby, the
Chairman of the Board, Chief Executive Officer and President of the Company. Mr.
Kirby  may be  deemed  to be a  beneficial  owner  of such  shares  through  the
investment  and voting  powers which Mr. Kirby has over such shares  through his
position as attorney-in-fact for the administrator of Patchouli.

         As of December 31, 1996, Patchouli had advanced to the Company $170,000
(the  "Patchouli  Advance").   On  December  31,  1996,  the  Board  unanimously
authorized  the  issuance of  1,360,000  shares of Common  Stock to Patchouli in
payment  for the  Patchouli  Advance.  As a result of this  exchange,  Patchouli
became the  beneficial  owner of 51.4% of Common Stock  issued and  outstanding.
Although the Common Stock  currently  has no value,  the Board valued the Common
Stock at a price of $.125 per share for  purposes of  determining  the number of
Shares Patchouli would receive as payment for the Patchouli  Advance.  The Board
believed  that the offered  price of $.125 per share was fair and  reasonable to
the Company and its shareholders.

Relationship Between the Company and Atlantic Properties, Ltd.

         On February 15, 1995,  the Company's  current  officers and  directors,
founded Atlantic Properties,  Ltd., a Delaware  corporation,  for the purpose of
engaging in business of acquiring, developing,  re-developing,  owning, selling,
leasing  and  managing  residential  leisure  and  other  types  of real  estate
properties.  In consideration of the services rendered and unreimbursed expenses
incurred in connection with its organization,  Atlantic Properties,  Ltd. issued
105,000  shares,  constituting  approximately  2.5%  of  its  total  issued  and
outstanding common stock to the
                                       16
<PAGE>
Company.  On March 30, 1995,  Atlantic  Properties,  Ltd.  filed a  registration
statement on Form S-11 with the Securities and Exchange Commission (SEC File No.
33-90790), which was declared effective on November 11, 1995. The 105,000 shares
owned by the Company were included therein to be registered under the Securities
Act of 1933, as amended,  for distribution,  on a pro rata basis, to the holders
of Company's common stock of record, on a date to be determined,  at the rate of
one share of common stock for every two hundred thirty-eight (238) shares of the
Company's  Common  Stock,   without  any   Consideration   being  paid  by  such
shareholders.  Notwithstanding the foregoing, any person who holds Shares of the
Company  as of the  initial  record  date in an amount of less than two  hundred
thirty-eight  (238) will receive one share of Atlantic  Properties,  Ltd. common
stock.
                                       17
<PAGE>
                                     PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a)  The following documents are filed as part of this Report.

         Financial Statements.  See Index to Financial Statements on page F-1 of
         this Report.

         Exhibits.  Exhibits  filed as part of this  report are as follows  (for
         electronic  filing  purposes  only,  this report  contains  Exhibit 27,
         Financial Data Schedule):

Exhibit No.     Description
-----------     -----------

2.1(1)          Agreement and Plan of Merger dated February 9, 1996, between the
                Company and Atlantic Industries, Inc.

2.2*            Certificate of Merger of Little Prince Productions,  Ltd., a New
                York  corporation  into  Atlantic  Industries,  Inc., a Colorado
                corporation,  dated March 29, 1996, under Section 907 of the New
                York Business Corporation Law.

2.3*            Articles of Merger of Little  Prince  Productions,  Ltd.,  a New
                York corporation into Atlantic  Industries,  Inc., under Section
                7-111-107 of the Colorado Business Corporation Act.

3.1*            Articles of  Incorporation  of  Atlantic  Industries,  Inc.,  as
                amended

3.2*            Amended and Restated Bylaws of Atlantic Industries, Inc.

4.1             A  description  of the rights of the Company's  shareholders  is
                contained in the Articles of Incorporation, as amended, filed as
                Exhibit 3.1 and is incorporated herein by reference.

27*             Financial Data Schedule
---------------
*Filed herewith.
(1) Filed  with the  Securities  and  Exchange  Commission  as an exhibit to the
Company's  Form 10-K,  dated  December 31, 1995,  which exhibit is  incorporated
herein by reference.

         (b)  Reports on Form 8-K

         On January 14,  1997,  the Company  filed a current  report on Form 8-K
dated  December  31, 1996,  reporting  the change in control of the Company as a
result of the  issuance of  1,360,000
                                       18
<PAGE>
shares of Common Stock to the Patchouli Foundation  ("Patchouli") as payment for
$170,000 the Company owed Patchouli.
                                       19
<PAGE>
                                   SIGNATURES

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

                                        ATLANTIC INDUSTRIES, INC.


February 14, 1997                       By /s/ Adrian P. Kirby
                                           -------------------------------------
                                              ADRIAN P. KIRBY, Chairman of the
                                              Board, Chief Executive Officer and
                                              President

         In accordance with the Securities Exchange Act of 1934, this report has
been  signed  by the  following  persons  on behalf  of the  Company  and in the
capacities and on the dates indicated.



February 14, 1997                       By /s/ Adrian P. Kirby
                                           -------------------------------------
                                              ADRIAN P. KIRBY, Chairman of the
                                              Board, Chief Executive Officer and
                                              President



February 14, 1997                       By /s/ Peter N. Chapman
                                           -------------------------------------
                                              PETER N. CHAPMAN, Director,
                                              Treasurer and Secretary
                                       20
<PAGE>
                          INDEX TO FINANCIAL STATEMENTS

                            Atlantic Industries, Inc.
<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----

<S>                                                                                                             <C>
Independent Auditor's Report....................................................................................F-2

Financial Statements:

         Balance Sheet as of December 31, 1996..................................................................F-3
         Statement of Operations and Accumulated Deficit for the period from
                  January 31, 1996 (inception) to December 31, 1996............................................ F-4
         Statement of Stockholders' Deficit for the period from January 31, 1996
                  (inception) to December 31, 1996............................................................. F-5
         Statement of Cash Flows for the period from January 31, 1996 (inception)
                  to December 31, 1996......................................................................... F-6
Notes to Financial Statements.................................................................................. F-7
</TABLE>
                                       F-1
<PAGE>
                          INDEPENDENT AUDITOR'S REPORT



The Directors and Shareholders
Atlantic Industries, Inc.

We have audited the balance  sheet of Atlantic  Industries,  Inc. as of December
31, 1996, and the related  statements of operations,  stockholders'  deficit and
cash flows for the period  from  January 31, 1996  (inception)  to December  31,
1996.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted our audit 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 statements presentation.
We believe that our audit provides a reasonable basis for our opinion

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Atlantic Industries, Inc. as of
December 31, 1996 and the results of its  operations  and its cash flows for the
period from January 31, 1996 (inception) to December 31, 1996 in conformity with
generally accepted accounting principles.

                                        Moore Stephens, P.C.


New York, New York
February 4, 1997,
except for Note 7,
as to which the date
is February 12, 1997.
                                       F-2
<PAGE>
                            Atlantic Industries, Inc.

                                  Balance Sheet

                                December 31, 1996

                                     ASSETS

ASSETS OF BUSINESS TRANSFERRED UNDER CONTRACTUAL
  ARRANGEMENT (net of valuation allowance)                             $  3,320
                                                                       --------
                                                                       $  3,320
                                                                       ========

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
  Accounts payable and accrued expenses                                $ 20,561
  Due to shareholder                                                        491
  Liabilities of business transferred under contractual arrangement      59,145
                                                                       --------

         Total Current Liabilities                                      180,197
                                                                       --------

STOCKHOLDERS' DEFICIT
  Preferred stock, $.01 par value; authorized - 10,000,000 shares; 
    issued and outstanding - 0 shares
  Common stock, $.01 par value; authorized - 40,000,000 shares;
    192,996 shares issued and outstanding                                 1,930
  Paid-in capital                                                      (138,227)
  Accumulated deficit                                                   (40,580)
                                                                       --------
         Total Stockholders' Deficit                                   (176,877)
                                                                       -------- 
                                                                       $  3,320
                                                                       ========

    The accompanying notes are an integral part of these financial statements
                                       F-3
<PAGE>
                            Atlantic Industries, Inc.

                             Statement of Operations

        For the Period January 31, 1996 (Inception) to December 31, 1996



REVENUE                                                                $    -0-

GENERAL AND ADMINISTRATIVE EXPENSES                                      26,545
                                                                       --------

LOSS FROM OPERATIONS                                                    (26,545)
                                                                       -------- 


OTHER INCOME (LOSS)
  Loss of transferred business                                          (14,035)
                                                                       -------- 

LOSS BEFORE INCOME TAX PROVISION                                        (40,580)

INCOME TAX PROVISION                                                        -0-
                                                                       -------- 

NET LOSS FOR THE PERIOD                                                $(40,580)
                                                                       ======== 

LOSS PER SHARE                                                         $  (.324)
                                                                       ========
                                                                       
WEIGHTED AVERAGE NUMBER OF SHARES                                       125,199
                                                                       ========

    The accompanying notes are an integral part of these financial statements
                                       F-4
<PAGE>
                            Atlantic Industries, Inc.

                       Statement of Stockholders' Deficit

      For the Period from January 31, 1996 (Inception) to December 31, 1996
<TABLE>
<CAPTION>
                              Preferred Stock       Common Stock                                 
                              ---------------       ------------       Additional                    Total
                             Number of            Number of              Paid-in   Accumulated   Stockholders' 
                              Shares   Amount      Shares     Amount     Capital     Deficit        Deficit
                              ------   ------      ------     ------     -------     -------        -------
<S>                             <C>    <C>     <C>           <C>        <C>          <C>           <C>       
January 31, 1996 Issuance
  of Common Stock                      $              100     $    1    $            $             $       1
Acquired Equity of Little
  Prince Productions Ltd.                       2,499,923     24,999     (331,297)                  (306,298)
Common Stock Issued in
   Payment of Amount Due
   to Shareholder                               1,360,000     13,600      156,400                    170,000
Recapitalization Adjustment                          (100)        (1)           1                          0
Loss for the Period
  January 31, 1996 to
  December 31, 1996                                                                    (40,580)     ( 40,580)
February 12, 1997 Reverse
  Stock Split: 20 for 1
  (See Note 7)                                 (3,666,927)   (36,669)     (36,669)

                             ----------------------------------------------------------------------------------
Balance December 31, 1996       0      $  0       192,996     $1,930    $(138,227)   $ (40,580)    $(176,877)
                             ==================================================================================
</TABLE>
    The accompanying notes are an integral part of these financial statements
                                       F-5
<PAGE>
                            Atlantic Industries, Inc.

                             Statement of Cash Flows

        For the Period January 31, 1996 (Inception) to December 31, 1996


OPERATING ACTIVITIES:
  Net loss                                                           $(  40,580)
  Adjustments to reconcile net income to net cash provided by 
    operating activities:
    Loss on transferred business                                         14,035
    Issuance of common shares for related party services
      (see Note 3)                                                       10,000
    Changes in operating assets and liabilities:
         Increase in accounts payable and accrued expenses               16,544
                                                                      ---------

                  Net Cash Used by Operations                          (      1)
                                                                      ---------

FINANCING ACTIVITIES:
  Issuance of common shares                                                   1
                                                                      ---------

                  Net Cash Provided by Financing Activities                   1
                                                                      ---------

INCREASE IN CASH                                                            -0-

CASH, beginning of period                                                   -0-

CASH, end of period                                                  $      -0-
                                                                     ==========

SUPPLEMENTAL DISCLOSURES:
-------------------------

1.       During the year, the Company satisfied $160,000 of a payable to a major
         shareholder  through the issuance of 1,280,000 common shares. The total
         payable  satisfied was $170,000,  which  included  $10,000 for services
         rendered and which is a component of operating activities (see Note 3).

2.       A summary of the assets and  liabilities of Little Prince  Productions,
         Ltd. ("Little Prince") that were merged into the Company is as follows:

                  Miscellaneous receivable                         $  8,829
                  Investments                                             1
                  Accounts payable                                    4,017
                  Due to shareholder                                160,491

    The accompanying notes are an integral part of these financial statements
                                       F-6
<PAGE>
         The $8,829  receivable  is from LPPL Corp.  ("LPPL"),  Little  Prince's
         former subsidiary (see Note 5). This amount has been eliminated against
         LPPL's payable on the balance sheet.

    The accompanying notes are an integral part of these financial statements

I.       ORGANIZATION AND STOCK ACQUISITION

         Atlantic  Industries,  Inc. (the "Company") was incorporated  under the
         laws of Colorado  on January 31, 1996 for the purpose of having  merged
         into it a public  company,  Little  Prince  Productions,  Ltd  ("Little
         Prince"),  and to continue the real estate activities of Little Prince.
         Little  Prince  was  organized  in New York on  April  3,  1980 for the
         purpose of exploiting  certain  ancillary and subsidiary  rights to the
         literary work entitled "The Little Prince" by Antoine de  Saint-Exupery
         and to engage in various  other  aspects of the  theatrical  production
         business.  On November 16, 1992,  Little  Prince  acquired  100% of the
         issued common shares of Tyne River  Properties  plc ("Tyne  River"),  a
         company  organized in the United  Kingdom,  in exchange for  11,899,236
         (approximately  85%) of the outstanding common shares of Little Prince.
         Due to the relative  size of the  companies,  Tyne River was deemed the
         purchaser.  For accounting  purposes,  the acquisition was treated as a
         recapitalization  of Tyne  River,  with Tyne River as the  acquirer  (a
         reverse  acquisition).  As  part of this  reverse  acquisition,  Little
         Prince's theatrical operations, assets and liabilities were transferred
         and assigned to its wholly-owned  subsidiary,  LPPL Corp ("LPPL"), with
         the intention that LPPL would continue the theatrical activities.

         After the Tyne River acquisition,  Little Prince planned to conduct its
         business operations in three segments.  The principal segment was to be
         Tyne  River's   proposed  real  estate   acquisition   and   investment
         activities, with the theatrical operations constituting a smaller area.
         The third segment  comprised certain real estate  development  projects
         and operations  owned by Tyne River at the date of  acquisition.  These
         operations were intended to be phased out as soon as practicable  after
         the acquisition  through the completion and/or  disposition of all such
         projects.

         Little Prince conducted its business in these three segments,  however,
         towards  the  end of 1993  Tyne  River  experienced  severe  cash  flow
         problems which resulted in Tyne River's  insolvency by early 1994. Tyne
         River's  condition  continued to worsen until Little Prince sold all of
         its Tyne River  shares on March 29,  1994.  Following  this stock sale,
         Little Prince  continued,  although at a minimal level,  the theatrical
         production  operations  through its  subsidiary,  LPPL. In an effort to
         restore the  profitability  of Little  Prince,  its board of  directors
         adopted a plan of reorganization  which, among other things, called for
         the merger of Little Prince into the Company. This plan was ratified by
         a special meeting of Little Prince's Shareholders on February 29, 1996.

         On December 6, 1996, the Company issued 2,499,936 common shares for all
         the 24,999,236  outstanding  common shares of Little Prince. The shares
         of  Little  Prince  were  then  cancelled  and the  separate  corporate
         existence of this company ceased,  with the Company surviving to all of
         Little Prince's assets and liabilities.  For accounting  purposes,  the
         acquisition is treated as a recapitalization of the Company, with the
                                       F-7
<PAGE>
                            Atlantic Industries, Inc.

                          Notes to Financial Statements
                                   (continued)


Company as the acquirer.  The 2,499,923  shares issued are treated as issued for
cash and are shown  outstanding for all periods  presented in the same manner as
for a stock split. The financial statements of the Company reflect its financial
position as of December  31, 1996 and its results of  operations  for the period
from  January  31, 1996  (inception)  to December  31,  1996.  Because it is the
acquiree for  accounting  purposes,  the results of operations for Little Prince
are not included  for the period from  January 1, 1996 to December 6, 1996,  the
date of merger.  The  balance  sheet of Little  Prince as of December 6, 1996 is
merged  into the  Company's  balance  sheet at that  date.  Pro forma  financial
information  for the merger  transaction is not presented as, at the date of the
transaction,  Little Prince was considered a public shell and  accordingly,  the
transaction will not be considered a business combination.

The  Company's  business  plan  encompasses  its  real  estate  acquisition  and
investment activities and an expansion into the potential acquisition of service
or manufacturing  businesses.  The Company intends to look for these investments
throughout the world. The Company has also decided to discontinue its theatrical
productions operations through the disposition of LPPL (see Note 5).

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         a.       Use of Estimates

                  The  preparation  of financial  statements in conformity  with
                  generally accepted  accounting  principles requires management
                  to make  estimates  and  assumptions  that affect the reported
                  amounts  of  assets  and   liabilities   and   disclosures  of
                  contingent  assets and  liabilities  at December 31, 1996, and
                  reported  amounts of revenues and  expenses  during the fiscal
                  year. Actual results could differ from those estimates.

         b.       Cash Equivalents

                  The  Company  considers  all highly  liquid  investments  with
                  maturities  of three months or less when  purchased to be cash
                  equivalents.

         c.       Foreign Currency Translation

                  Balance sheet amounts  denominated  in foreign  currencies are
                  translated  into  U.S.  dollars  using  the  year  end rate of
                  exchange, Revenues, income, expenses and losses denominated in
                  foreign currencies are translated at the average exchange rate
                  for the year.

                                       F-8
<PAGE>
                            Atlantic Industries, Inc.

                          Notes to Financial Statements
                                   (continued)


         d.       Earnings per Share

                  Income  per  common  share  is  computed  on the  basis of the
                  weighted  average  shares  of  common  stock  outstanding.  At
                  December 31, 1996 this average was 125,199 (see Note 7).

         e.       Assets and Liabilities of Transferred Business

                  The Company reports the disposition of LPPL in accordance with
                  the SEC's SAB Topic 5E,  which  requires  the  Company  not to
                  recognize the gain on the disposition and to continue to carry
                  the assets and  liabilities of LPPL on its balance sheet until
                  it can be  reasonably  determined  that the  risks  of  LPPL's
                  business  have been  transferred  to the purchaser of the LPPL
                  shares.  These assets and  liabilities  are  segregated on the
                  balance sheet.  Operating  losses but not operating  income of
                  the divested business are included in the Company's results of
                  operations (see Note 5).

3.       RELATED PARTY TRANSACTIONS

         A major  shareholder  of the Company has advanced  funds to the Company
         and Little  Prince in order to allow the Company  and Little  Prince to
         meet their  obligations  to  creditors.  The total  advance  aggregated
         $170,491 on December 31, 1996 when the Company issued  1,360,000 common
         shares to the  shareholder in  satisfaction of $170,000 of the payable.
         The  attorney-in-fact for this shareholder,  which is a foundation,  is
         also a director and officer of the Company.

         Included in the $170,491 advance was $10,000 of administrative services
         provided to the Company.  The issuance of 80,000 for these services was
         based on the fair  value of the  services  received.  The charge to the
         Company is included in general and administrative expenses.

4.       INCOME TAXES

         Income  taxes have not been  provided  due to the  Company's  operating
         loss.  At December 31, 1996 the Company has a gross  deferred tax asset
         of approximately $662,000,  which arises principally from net operating
         losses.  These  losses  include  those  of  Little  Prince  to which it
         succeeded  in the merger.  A valuation  allowance  of $662,000 has been
         recorded,  which  reduces the asset to $0. An  allowance of this amount
         has been reserved due to the  uncertainty of the Company  utilizing the
         losses in the future.
                                       F-9
<PAGE>
                            Atlantic Industries, Inc.

                          Notes to Financial Statements
                                   (continued)


         The net operating losses, which total approximately $1,949,000,  can be
         used to reduce future federal taxable income, expire as follows:

               Year Ending December 31,                        Loss
               ------------------------                        ----

                         2008                              $1,742,000
                         2009                                  73,000
                         2010                                  74,000
                         2011                                  60,000



         Included in the net operating  losses of  $1,949,000  is  approximately
         1,889,000  carried  forward from Little Prince under  Internal  Revenue
         Code Section 381 and related regulations.

5.       ASSETS  AND  LIABILITIES  OF  BUSINESS  TRANSFERRED  UNDER  CONTRACTUAL
         ARRANGEMENT

         On July 22,  1996,  Little  Prince  sold all of the  shares in its 100%
         owned subsidiary,  LPPL. Under the terms of the sales agreement,  these
         shares could revert to the  shareholders of Little Prince under certain
         circumstances.  Due to this clause in the  agreement,  Little Prince is
         deemed  not to have  transferred  the risks of LPPL's  business  to the
         purchaser.  In  accordance  with the SEC's SAB Topic 5E,  Little Prince
         continued  to carry the assets and  liabilities  of LPPL on its balance
         sheet,  and these assets and liabilities were merged into the Company's
         balance  sheet on  December  6,  1996,  along  with the rest of  Little
         Prince's   assets  and   liabilities.   Little  Prince's  gain  on  the
         disposition  of $150,630 is deferred  and will be  recognized  upon the
         completion of the disposition which,  according to the sales agreement,
         is  expected  to  occur in July  1997.  The  Company  also  charges  to
         operations  losses incurred by Little Prince  subsequent to the sale of
         the shares. For the period ended December 31, 1996, $14,035 was charged
         to  operations.   At  December  31,  1996,  the  following  assets  and
         liabilities of LPPL are carried on the Company's balance sheet:
                                      F-10
<PAGE>
                            Atlantic Industries, Inc.

                          Notes to Financial Statements
                                   (continued)


Cash and cash equivalents                                             $     208
Prepaid expenses                                                            612
Production rights, net of amortization                                    2,500
                                                                      ---------

         Total Assets                                                 $   3,320
                                                                      =========

Accounts payable                                                      $ 159,145
                                                                      ---------

         Total Liabilities                                            $ 159,145
                                                                      =========
                                   

6.       AUTHORITATIVE PRONOUNCEMENTS

         In September  1996,  the FASB  released SFAS No. 125,  "Accounting  for
         Transfers  and  Servicing of Financial  Assets and  Extinguishments  of
         Liabilities."  The  statement   prescribes   accounting  and  reporting
         standards  for   transfers  and  servicing  of  financial   assets  and
         extinguishments  of  liabilities  and is effective  for  transfers  and
         servicing  financial assets and  extinguishments  of liabilities  after
         December 31, 1996. Due to the Company's minimal investment in financial
         assets, the adoption of SFAS No. 125 is not expected to have a material
         impact on its financial statements.

7.       SUBSEQUENT EVENTS

         On February  12,  1997,  at a special  meeting of the  shareholders,  a
         resolution was passed to effect a twenty-for-one reverse stock split as
         of February 13, 1997.  The effect of this split is to reduce the issued
         and outstanding  shares to  approximately  192,996,  and this change is
         reflected in these financial statements.
                                      F-11
<PAGE>
                                  EXHIBIT INDEX

         Certain of the following exhibits, designated with an asterisk (*), are
filed herewith.  The exhibits not so designated  have been filed  previously and
are  incorporated  herein by  reference to the  documents  indicated in brackets
following the  descriptions  of such exhibits.  For electronic  filing  purposes
only, this report contains Exhibit 27, Financial Data Schedule.

Exhibit No.       Description
-----------       -----------

2.1(1)            Agreement and Plan of Merger  dated  February 9, 1996, between
                  the Company and Atlantic Industries, Inc.

2.2*              Certificate  of Merger of Little Prince  Productions,  Ltd., a
                  New  York  corporation  into  Atlantic  Industries,   Inc.,  a
                  Colorado corporation,  dated March 29, 1996, under Section 907
                  of the New York Business Corporation Law.

2.3*              Articles of Merger of Little Prince  Productions,  Ltd., a New
                  York corporation into Atlantic Industries, Inc., under Section
                  7-111-107 of the Colorado Business Corporation Act.

3.1*              Articles of  Incorporation  of Atlantic  Industries,  Inc., as
                  amended

3.2*              Amended and Restated Bylaws of Atlantic Industries, Inc.

4.1               A description of the rights of the Company's  shareholders  is
                  contained in the Articles of Incorporation,  as amended, filed
                  as Exhibit 3.1 and is incorporated herein by reference.

27*               Financial Data Schedule

---------------
*Filed herewith.
(1) Filed  with the  Securities  and  Exchange  Commission  as an exhibit to the
Company's  Form 10-K,  dated  December 31, 1995,  which exhibit is  incorporated
herein by reference.