<PAGE>   1
================================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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



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

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES 
      EXCHANGE ACT OF 1934

      FOR THE TRANSITION PERIOD FROM ____________TO____________________ .

                          COMMISSION FILE NUMBER 1-9190

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



                          STARTRONIX INTERNATIONAL INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                  DELAWARE                                   91-1263272
     (STATE OR OTHER JURISDICTION OF                      (I.R.S. EMPLOYER
      INCORPORATION OR ORGANIZATION)                      IDENTIFICATION NO.)

2402 MICHELSON DRIVE, SUITE 160, IRVINE, CA                  92612-1314
 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                    (ZIP CODE)

         REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 714-474-1700

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for 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   .
                                      ---    ---

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

    Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

<TABLE>
<CAPTION>
            CLASS                                OUTSTANDING AT JANUARY 31, 1997
            -----                                -------------------------------
<S>                                                        <C>       
Common stock, $.001 par value.....................         27,289,690
Preferred stock, $.01 par value...................            395,500
</TABLE>

================================================================================


<PAGE>   2
                          STARTRONIX INTERNATIONAL INC.

                                      INDEX

<TABLE>
<CAPTION>
                                                                        PAGE NO.
                                                                        --------
<S>      <C>                                                              <C>
PART I   Financial information
         Condensed consolidated balance sheets at December 31, 
         1996 (unaudited) and June 30, 1996.............................     3
         Condensed consolidated statements of loss (unaudited) -- three
         and six month periods ended December 31, 1996 and 1995.........     4
         Condensed consolidated statements of cash flow (unaudited) --
         six month periods ended December 31, 1996 and 1995.............     5
         Notes to condensed consolidated financial statements...........     6
         Management's discussion and analysis of financial conditions
         and results of operations......................................    10
PART II  Other Information
         Item 1  Legal Proceedings......................................    12
         Item 2  Changes in Securities..................................    12
         Item 3  Defaults Upon Senior Securities........................    12
         Item 4  Submission of Matters to a Vote of Security holders....    12
         Item 5  Other Information......................................    12
         Item 6  Exhibits and Reports on Form 8-K.......................    13
</TABLE>



                                       2
<PAGE>   3
                         PART I -- FINANCIAL INFORMATION

                 STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                       DECEMBER 31, 1996      JUNE 30, 1996*
                                                       -----------------      -------------
                                                           (UNAUDITED)
                                     ASSETS
<S>                                                      <C>                   <C>
Current Assets
  Cash .........................................         $     31,734          $      2,355
  Accounts Receivable, Net .....................               21,193                 1,628
  Inventory ....................................            1,212,501                84,533
  Deposits, Purchase of Inventory ..............            1,524,558               293,065
  Prepaids and Other Current Assets ............              454,179               197,149
                                                         ------------          ------------
          Total Current Assets .................            3,244,165               578,730

Property and Equipment .........................            1,327,496               411,854
  Less Accumulated Depreciation and Amortization              145,070                35,802
                                                         ------------          ------------
                                                            1,182,426               376,052
Other Assets
  Subordinated Debenture Receivable ............            1,492,272             1,427,750
  Minority Interest Investments ................                   --               900,000
  Prepaid Production Costs .....................              300,000               300,000
  Other ........................................               84,695                12,855
                                                         ------------          ------------
           Total Other Assets ..................            1,876,967             2,640,605
                                                         ------------          ------------
                                                         $  6,303,558          $  3,595,387
                                                         ============          ============
                                  LIABILITIES
Current Liabilities
  Accounts Payable .............................         $  1,822,922          $    443,292
  Notes Payable ................................              400,000               400,000
  Dividends Payable ............................               62,870                   -
  Accrued Expenses .............................            1,272,450               604,425
  Contingency Reserve ..........................              424,582               424,582
                                                         ------------          ------------
          Total Current Liabilities ............            3,982,824             1,872,299
Stockholders' Equity
  Preferred Stock, $.01 Par, Series B ..........                    0                   900
  Preferred Stock, $.01 Par, Series C ..........                3,955                   150
  Common Stock, $.001 Par ......................               23,538                15,475
  Additional Paid in Capital ...................           21,744,826            15,553,068
  Retained Earnings ............................          (17,385,335)          (12,680,255)
  Unrealized Holding Gains (Losses) ............           (2,066,250)           (1,166,250)
                                                         ------------          ------------
          Total Stockholders' Equity ...........            2,320,734             1,723,088
                                                         ------------          ------------
                                                         $  6,303,558          $  3,595,387
                                                         ============          ============
</TABLE>

----------
* Condensed from audited financial statements.


         The accompanying notes are an integral part of these condensed
                             financial statements.



                                       3
<PAGE>   4
                 STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF LOSS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED                   SIX MONTHS ENDED
                                                                    DECEMBER 31,                        DECEMBER 31,
                                                         -------------------------------       -------------------------------
                                                              1996              1995              1996                1995
                                                         ------------       ------------       ------------       ------------
<S>                                                      <C>                <C>                <C>                <C>         
Sales, net                                               $    641,198       $     20,718       $  1,344,539       $     68,396
Cost of sales                                                 132,066             18,822            715,367             73,238
                                                         ------------       ------------       ------------       ------------
Gross Profit                                             $    509,132       $      1,896       $    629,172            ($4,842)

Selling, general and administrative expenses                2,084,604          1,701,816          5,164,577          2,897,844
Depreciation and amortization expense                          82,330             13,125            109,267             38,902
Interest income                                                32,832             74,597             65,093            149,194
Interest expense                                                8,195             41,736             15,695             83,469
                                                         ------------       ------------       ------------       ------------
Income (loss) before income taxes                        $ (1,633,165)      $ (1,680,184)      $ (4,595,274)      $ (2,875,863)

Income taxes                                                        0                  0                  0                  0
Net income before dividends on preferred stock           $ (1,633,165)      $ (1,680,184)      $ (4,595,274)      $ (2,875,863)
Dividends on preferred stock                                   61,098                  0            109,806                  0
                                                         ------------       ------------       ------------       ------------
Net income (loss) applicable to common stockholders      $ (1,694,263)      $ (1,680,184)      $ (4,705,080)      $ (2,875,863)
                                                         ============       ============       ============       ============
Weighted average number of shares outstanding
Primary                                                    22,703,485         11,503,412         19,026,474         10,476,239
Net loss per share
Primary                                                  $      (0.07)      $      (0.15)      $      (0.25)      $      (0.27)
                                                         ============       ============       ============       ============
</TABLE>

         The accompanying notes are an integral part of these condensed
                              financial statements.



                                       4
<PAGE>   5
                 STARTRONIX INTERNATIONAL INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                                   (UNAUDITED)



<TABLE>
<CAPTION>
                                                             SIX MONTHS ENDED
                                                                DECEMBER 31,
                                                      -----------------------------
                                                          1996              1995
                                                      -----------       -----------
<S>                                                   <C>               <C>         
Cash flows from operating activities
  Net income (loss) ............................      $(4,705,080)      $(2,875,863)
  Depreciation .................................          109,268            38,902
  Stock Issued for services and dividends ......        1,239,146         1,233,000
  Increases in inventory .......................       (1,127,968)              -
  Increases in deposits ........................       (1,231,493)          (27,318)
  (Increase) decrease in other assets ..........         (341,117)          307,267
  Increases in Accounts Payable and accrueds ...        2,110,526           480,306
                                                      -----------       -----------
  Net cash used in operations ..................       (3,946,718)         (843,706)

Cash flows from investing activities
  Capital expenditures .........................         (915,642)          (56,908)
  Deposits .....................................          (71,840)              -
                                                      -----------       -----------
  Cash used for investing activities ...........         (987,482)          (56,908)

Cash flows from financing activities
  Funds received from issuance of capital
    stock ......................................        5,363,579           900,000
  Accrued stock financing costs.................         (400,000)              -
                                                      -----------       -----------
  Cash provided by financing activities ........        4,963,579           900,000

Net increase (decrease) in cash ................           29,379              (614)
Cash, beginning of period ......................            2,355             6,150
                                                      -----------       -----------
Cash, end of period ............................      $    31,734       $     5,536
                                                      ===========       ===========
Cash payments for
  Interest expense .............................      $         0       $         0
  Income taxes..................................
</TABLE>



         The accompanying notes are an integral part of these condensed
                             financial statements.



                                       5
<PAGE>   6
                          STARTRONIX INTERNATIONAL INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1:  BASIS OF PRESENTATION

    The accompanying condensed consolidated financial statements have been
prepared by the Company without audit (except for the balance sheet information
as of June 30, 1996) in accordance with generally accepted accounting principles
for interim financial information and with instructions to Form 10-Q and Article
10 of Regulation S-X. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) considered necessary for a fair presentation
have been included.

    The accompanying condensed consolidated financial statements do not include
certain footnotes and financial presentations normally required under generally
accepted accounting principles and, therefore, should be read in conjunction
with the audited financial statements included in the Company's Report on Form
10-K for the fiscal year ended June 30, 1996. The results of operations for the
interim periods are not necessarily indicative of the results to be expected for
the full year.

  Principles of Consolidation

    The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries: Eagle Claw Mining Company Inc., StarTronix
Inc. (formerly StarTronix USA), Global TelCom Inc., StarTronix TelCom Inc.
(formerly GoldTone Communications, Inc.) StarTronix Online, Inc. and StarTronix
Marketing N.A. Inc. All significant intercompany accounts and transactions have
been eliminated.

  Property and Equipment

    Equipment is stated at cost. Depreciation is provided over the estimated
useful lives of the respective assets, using the straight-line method.

  Cash Equivalents

    For the purpose of the consolidated balance sheets and statements of cash
flows, the Company considers a cash equivalent to be any highly liquid debt
instrument purchased with an original maturity of three months or less.

  Inventory

    As of June 30, 1996, the Company carried in inventory certain marketing
materials, referred to as "Starter Kits", and related items held for sale in the
normal course of business. During fiscal 1997, the Company began receiving
shipments of its principal products: the StarScreen telephone, StarVoice
telephone, StarVoice/Data Bank, and proprietary health, nutritional products,
and beauty aids. Inventories are stated at the lower of cost, determined under
the first-in, first-out (FIFO) method, or market.

  Prepaid Production Costs (Infomercial)

    In October 1994, the Company contracted with U.S. Corporate Development
Group Inc. (USCDG) to produce a one half-hour infomercial related to its
StarScreen and direct sales marketing plan, issuing 500,000 shares of the
Company's common stock in satisfaction of the $300,000 contract price. In
September 1996, USCDG contracted with Harmony Media Communications, Inc. to
produce the infomercial. Film footage of sponsored events has begun, and the
infomercial is scheduled to air in April, 1997. Under SOP 93-7, the costs of the
infomercial will be expensed when the infomercial airs for the first time. The
Company has determined that realizability of the benefit of the prepaid cost can
be reasonably assured.

  Minority Interest Investments



                                       6
<PAGE>   7


    During fiscal 1996, the Company made an investment in AmWest Environmental
Group, Inc. (a Nevada corporation). The value of this investment is determined
under the rules set forth in Statement of Financial Accounting Standards (FAS)
No. 115 for securities "available-for-sale".

  Net Loss per Share

    Net loss per share amounts are based on the weighted average number of
shares of common stock and common stock equivalents outstanding during each
period. Common stock equivalents, which include or included warrants,
convertible preferred stock, stock options and stock appreciation rights, have
been excluded from net loss per share calculations for all periods presented
because under Accounting Practice Bulletin (APB) No. 15 they would be
anti-dilutive.

  Income Taxes

    Income taxes are provided based on the liability method of accounting
pursuant to Statement of Financial Accounting Standards (SFAS) No. 109.
Accounting for Income Taxes. Under this approach, deferred income taxes are
recorded to reflect the tax consequences on future years of differences between
the tax basis of assets and liabilities and their financial reporting amounts at
each year end.

  Reclassification

    Certain amounts for 1995 have been reclassified to conform to the 1996
presentation.

NOTE 2:  INVENTORIES

    Inventories at December 31, 1996, have been calculated at lower of cost,
determined on a first-in, first-out (FIFO) basis, or market. The composition of
inventories at December 31, 1996 and June 30, 1996 are as follows:

<TABLE>
<CAPTION>
                                           DECEMBER 31, 1996     JUNE 30, 1996
                                           -----------------     -------------
         <S>                                 <C>                  <C>       
         Sales material ..........           $  551,325           $   84,533
         StarScreen ..............              407,483                  -
         StarVoice Telephone .....              113,056                  -
         Body products ...........               51,022                  -
         Nutritional products ....               12,089                  -
         Carrying Case ...........               42,249                  -
         StarData Bank ...........               35,277                  -
                                             ----------           ----------
                                             $1,212,501           $   84,533
                                             ==========           ==========
</TABLE>

         At December 31, 1996, management increased the carrying value of
inventories $384,718, thereby decreasing cost of sales a corresponding amount.
This adjustment was primarily the result of overcosting amounts charged to cost
of sales ($348,514). The effect of this adjustment on reported assets and
earnings for the first quarter ended September 30, 1996 would not have been
material, and therefore the entire amount is reported as an adjustment to the
inventory and cost of sales for the quarter ended December 31, 1996.

NOTE 3:  DEPOSITS, PURCHASES OF INVENTORY

    Since the Company is in the initial stages of establishing its product for
future sales, supplying vendors have requested deposits in advance of producing
and shipping of product. Upon physical receipt of products, amounts as
applicable, are reclassed from deposits to inventory. The Company made advance
payments on production commitments and prepaid the cost of certain inventory
items as follows:

<TABLE>
<CAPTION>
                                       DECEMBER 31, 1996      JUNE 30, 1996
                                       -----------------      -------------
         <S>                              <C>                  <C>       
         Voice telephone ......           $   23,943           $   90,665
         Voice data bank ......                    0               23,800
         Body products ........                    0               33,600
         Nutritional products .                    0               10,000
         Screen telephone .....            1,500,615              135,000
                                          ----------           ----------
                                          $1,524,558           $  293,065
                                          ==========           ==========
</TABLE>



                                       7
<PAGE>   8

     The Company made cash payments of $1,727,500 to the manufacturer of its
StarScreen telephone during the six months ending December 31, 1996. Payments of
$195,000 had been made through June 30, 1996. Additionally, the manufacturer
shipped 360 StarScreen telephones in December 1996 to the Company, resulting in
certain amounts being reclassified to inventory.

NOTE 4:   CAPITAL EXPENDITURES

    Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                    DECEMBER 31, 1996     JUNE 30, 1996
                                                    -----------------     -------------
<S>                                                   <C>                  <C>       
         Office furniture and equipment ...           $  221,869           $  241,524
         Computer equipment and peripherals              961,343              118,521
         Leasehold improvements ...........              144,284               51,809
                                                      ----------           ----------
                                                       1,327,496              411,854
         Less accumulated depreciation ....              145,070               35,802
                                                      ----------           ----------
         Net property and equipment .......           $1,182,426           $  376,052
                                                      ==========           ==========
</TABLE>

    The increase in computer equipment and peripherals is a direct result of an
increase in the Company's customer and technical support services, as well as
assets purchased by StarTronix On-line Inc., the Company's internet and web
services subsidiary.

NOTE 5.  DEPOSITS

    Additional deposits were made for the six month period ended December 31,
1996 which include $56,500 to attorneys in Canada as a retainer fee to purchase
bonds to do business in Canada.


NOTE 6.  MINORITY INTEREST INVESTMENTS

    During fiscal 1996, the Company exchanged 1,500,000 shares of its restricted
Rule 144 common stock for 1,500,000 shares of the restricted Rule 144 stock of
AmWest Environmental Group, Inc. (AmWest). The Company made the investment as a
vehicle to facilitate entry into foreign markets, particularly Hong Kong. The
market value of the AmWest common stock at the date of the transaction was $1.45
per share. The Company recorded the investment at $2,066,250, after discounting
for restriction. Under Statement of Financial Accounting Standards (FAS) 115 for
securities "available for sale", the investment is carried at fair value and net
unrealized holding gains or losses are excluded from earnings and reported
separately in shareholders' equity. At December 31, 1996, the Company valued
this investment at zero due to inactivity in the market and no reasonable
assurance of current marketability. The net unrealized holding loss carried in 
shareholders' equity is $2,066,250. The restriction on the AmWest common stock 
lapsed in September 1996.


NOTE 7.  SUBORDINATED DEBENTURE RECEIVABLE

    The subordinated zero coupon debenture carries a $4,000,000 redemption
price, matures in June 2008, and is presented in the consolidated balance sheet
net of an unamortized discount based on an imputed interest rate of 8.75%.


NOTE 8.  MATERIAL MANAGEMENT ADJUSTMENTS

  Corrections to Accounts Payable and Accrued Expenses

     During the second quarter ended December 31, 1996, management recorded
adjustments to accounts payable and accrued expenses which decreased reported
expenses by $231,713 relating to the first quarter ended September 30, 1996.
This adjustment is not material to the results of operations or net assets
reported in the first quarter; however, had these amounts been properly 
recorded in the first quarter the separate quarter loss from operations and 
weighted average loss per share would have been as follows:


                                       8
<PAGE>   9
<TABLE>
<CAPTION>
                                            3 MONTHS ENDED         3 MONTHS ENDED         6 MONTHS ENDED
                                          SEPTEMBER 30, 1996     DECEMBER 31, 1996      DECEMBER 31, 1996
                                          ------------------     -----------------      -----------------
<S>                                             <C>                    <C>                    <C>         
         Net Loss, as reported ......           $(3,010,817)           $(1,694,263)           $(4,705,080)
         Decrease in accounts payable
         and accrued expenses .......               231,713               (231,713)                  --
         Net loss, adjusted .........           $(2,779,104)           $(1,925,976)           $(4,705,080)
         Loss per share .............                $(0.17)                $(0.09)                $(0.25)
</TABLE>


NOTE 9.  RELATED PARTY TRANSACTIONS

During the six months ending December 31, 1996, the Company had the following
transactions with related parties:

The Company issued 600,000 shares of its common stock at $1.50 per share to T.
Davis Capital for stock promotion services, taking a total charge to income of
$900,000.

The Company issued 215,800 shares of its common stock at $1.00 per share to
Marketing Direct Concepts and its designees for financial marketing services,
resulting in a charge to income of $215,800.

The Company issued 150,000 shares of common stock at $1.00 per share to the
president of StarTronix Inc. as a performance incentive. He rescinded his rights
to this stock during December, 1996 and the stock was retired. The transaction
had no effect on net income.

The Company issued 110,000 shares of its common stock pursuant to a settlement
agreement with a former officer of the Company. The total value of these shares
was $76,414. The Company also paid the former officer $75,000. These amounts had
been accrued for at June 30, 1996; therefore, there was no effect on current
earnings.

The Company paid or accrued $60,000 to U.S. Corporate Development Group pursuant
to a consulting agreement dated July, 1994. Additionally, the Company accrued
$400,000 in finders' fees under the same agreement for performance in connection
with capital raising efforts. These transactions reduce net income and net
equity $60,000 and $460,000, respectively.

The Company paid $14,000 to Pacific Horizons, Inc., a company owned by a 
personal friend of the President and CEO for consulting services.





                                       9
<PAGE>   10

                         STARTRONIX INTERNATIONAL INC.

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

    The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying condensed consolidated
financial statements.

THREE AND SIX MONTH PERIOD ENDING DECEMBER 31, 1996 AND 1995

    Sales and cost of sales for the three and six months ended December 31, 1995
were from sales of prepaid telephone calling cards and related long distance
activity of the Company's subsidiary, Global TelCom Inc. This business has been
discontinued.

    All sales and cost of sales for the three and six month period ended
December 31, 1996, resulted from activity of the Company's subsidiary,
StarTronix Inc., which provides a home-based business opportunity to independent
distributors thereby enabling them to become both users and marketers of the
Company's product.

    The majority of the sales for this period were realized from the sale of the
Company's "starter kit" which sells for $59.95 plus shipping and handling, and
provides the recipient with an introduction to the Company and sets forth the
requirements to become an independent distributor. Approximately 10.8% of the
total sales of $1,344,539 for the six month period ending December 31, 1996 were
to distributors in the providence's of Canada. An analysis of sales, by mix, for
the three month and six month periods ending December 31, 1996 are as follows:

<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED                     SIX MONTHS ENDED
                                              DECEMBER 31, 1996              %       DECEMBER 31, 1996             %
                                              ------------------         ------      -----------------          ------
<S>                                               <C>                      <C>          <C>                       <C> 
         Voice telephone                          $    8,257               1.29         $   19,733                1.47
         Voice data bank                               5,894                .90             12,787                 .95
         Body products                                 1,118                .17              2,201                 .16
         Nutritional products                          1,643                .26              4,968                 .37
         Sales material and Starter kit              624,286              97.38          1,304,850               97.05
                                                  ----------             ------         ----------              ------
                                                  $  641,198             100.00         $1,344,539              100.00
                                                  ==========             ======         ==========              ======
</TABLE>

    Consolidated selling, general and administrative expense for all entities
for the three and six month periods ending December 31, 1996 was $2,166,934 and
$5,273,844, respectively, and included:

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED                  SIX MONTHS ENDED
                                                  DECEMBER 31, 1996           %       DECEMBER 31, 1996              %
                                                  -----------------        ------     -----------------           ------
<S>                                                   <C>                   <C>            <C>                     <C>   
         Payroll and payroll taxes, including 
           benefits                                   $  767,423            35.42         $1,219,402               23.12
         Professional services & consulting              462,732            21.35            700,392               13.28
         Financial marketing services                     55,110             2.55          1,192,160               22.60
         Advertising and promotion                       230,422            10.63            363,122                6.88
         Distributor commissions and fees                350,573            16.18            518,992                9.82
         Start-up and development costs                   16,526              .76            371,404                7.03
         Other selling, general and
           administrative                                284,147            13.11            908,372               17.27
                                                      ----------           ------         ----------              ------
         Total selling, general and
           administrative                             $2,166,934           100.00         $5,273,844              100.00
                                                      ==========           ======         ==========              ======
</TABLE>


      Consolidated selling, general and administrative expense for all entities
for the three and six months ending December 31, 1995 was $1,714,941 and
$2,936,746 respectively, as follows:

<TABLE>
<CAPTION>
                                             THREE MONTHS ENDED                    SIX MONTHS ENDED
                                              DECEMBER 31, 1995            %       DECEMBER 31, 1995              %
                                              -----------------         ------     -----------------           ------
<S>                                             <C>                      <C>            <C>                    <C>
         Professional services &
           consulting                           $  646,723               37.71         $  962,080               32.76
         Financial marketing services              875,000               51.02          1,125,000               38.31
         Write-off of goodwill                           0                   0            475,911               16.20
         Other selling, general and
           administrative                          193,218               11.27            373,755               12.73
                                                ----------              ------         ----------              ------
         Total selling, general and
           administrative                       $1,714,941              100.00         $2,936,746              100.00
                                                ==========              ======         ==========              ======
</TABLE>

During the six months ending December 31, 1996, the Company significantly
increased its operating activities, including substantially increasing its
employee base to provide technical and customer support services. Also, the
Company began promoting and marketing its products and services, including
newspaper advertising, roadshows, and product demonstrations. Additionally, the
Company's direct marketing subsidiary, StarTronix, Inc., began processing fees
and commissions related to the selling efforts of its distributors. There were
no such activities in the comparable period ending December 31, 1995.

During the six months ending December 31, 1996 and 1995, the Company used the
services of third party promoters to raise working capital. These services were
compensated by the issuance of common stock. Refer to Item 5 and discussions in
the June 30, 1996 Form 10-K for detailed information.


                                       10
<PAGE>   11

    The net loss for the three and six months through the first quarter ended
December 31, 1996, was $1,694,263 and $4,705,080, respectively, compared to a
loss of $1,680,184 and $2,875,863, respectively, for the comparable periods
ended December 31, 1995.

LIQUIDITY AND CAPITAL RESOURCES AT DECEMBER 31, 1996

    The Company has reported net operating losses since inception. These losses
have been funded by the issuance of capital stock and borrowings.

    Continuation of the Company is contingent upon the Company establishing
markets for its products and services and achieving profitable operations. Such
operations will also require management to secure additional financing for the
Company in the form of debt or equity, which management plans to partially
satisfy through the issuance of shares of its capital stock.

    During fiscal 1996, the Company made a private placement offering of 200,000
shares of its Series "B" $0.01 par value convertible preferred stock. As of June
30, 1996, 90,000 shares had been issued for $900,000, less $90,000 issue costs
and $45,000 in finder's fees. The Series "B" preferred stock is convertible into
common stock at any time 45 days after the issuance date. The conversion rate is
$10.00 divided by the conversion price, which is based on a predetermined
formula. As of December 31, 1996, all 90,000 shares had been converted into
952,847 shares of common stock at an average price of $0.97 per share. In
addition 21,176 shares of stock with a value of $20,326 were issued to pay
dividends due on the Series "B" preferred stock at date of conversion.

    During fiscal 1996, the Company made a private placement offering of 650,000
shares of its Series "C" $0.01 par value convertible preferred stock. As of June
30, 1996, the Company had issued 15,000 shares for $150,000, less $24,017 in
issue costs and $7,500 in finder's fees. The Series "C" preferred stock is
convertible into common stock at any time 41 days after the issuance date. The
conversion rate is $10.00 divided by the conversion price, which is based on a
predetermined formula. During the three month period ended September 30, 1996,
the Company issued an additional 433,250 shares of Series "C" preferred stock,
realizing gross proceeds of $4,332,500, less $694,958 in issuance costs. During
the three month period ending December 31, 1996, the Company issued an
additional 201,750 shares of Series "C" preferred stock, realizing profits of
$2,017,500, less $322,800 in issuance costs. As of December 31, 1996, 254,500
shares had been converted into 6,121,766 shares of common stock at an average
price of $0.45 per share. In addition 61,884 shares of common stock with a value
of $26,610 were issued to pay dividends due on the Series "C" preferred stock at
date of conversion. See Item 1 for suspension of conversion feature and
resulting litigation.

    All series of preferred stock pay dividends at a rate of $0.60 per share per
year. These dividends are cumulative and accrue day by day whether or not
declared. All dividends are payable in common stock of the Company and paid only
upon conversion. Cash dividends may be paid at the discretion of the Company's
Board of Directors, however no common stock dividends may be declared or paid to
the common stock holders until the preferred stock holders have been paid their
dividends in full. During the three and six month periods ending December 31,
1996, dividends on the preferred stock of $61,098 and $109,806 were paid
($29,262) and ($46,936) or accrued ($31,836) and ($62,870), respectively.

    In February, 1997, the Company made a private placement offering of its
Series "D" $0.01 par value convertible preferred stock, not to exceed
$15,000,000. The series is expected to be issued in two traunches of $7,500,000
each. As of the date of this filing, no firm subscriptions have been received
and no shares have been issued.

    In addition to common shares issued for conversion of the Series "B" and
Series "C" preferred stock and payment of applicable dividends on the preferred
stock, additional shares were issued for the following:

<TABLE>
<CAPTION>
                                                   VALUE       TOTAL
           RECIPIENT                   SHARES    PER SHARE     AMOUNT         ACCOUNT CHARGED
           ---------                   ------    ---------     ------         ---------------
       <S>                           <C>          <C>        <C>            <C>
       T. Davis Capital........        600,000    $ 1.50     $ 900,000      Promotion, common stock
       MDC Marketing...........        215,800      1.00       215,800      Financial marketing
       Individual issues.......      3,814,000      -       $1,532,000      Cash
</TABLE>
                                         



                                       11
<PAGE>   12
                          PART II -- OTHER INFORMATION

ITEM 1  LEGAL PROCEEDINGS

    In November 1996 the Company suspended the conversion of its Series "C"
Convertible Preferred Stock as a result of the concerted market irregularities
in the trading of the Company's common stock, which management believes is
related to the conversion terms contained in the private placement offering of
the Series "C" Preferred Stock. The suspension of the conversion provisions of
the private placement offering is more fully described in the Company's Form 8-K
filed with the SEC on October 25, 1996.

    Subsequent to the Company suspending the conversion of the Series "C"
Preferred Stock, a shareholder group filed a lawsuit against the Company in the
United States District Court in New York. The action seeks to compel the Company
to resume conversion of the Class "C" Preferred Stock or, in the alternative, to
rescind the subscription agreement and recover the shareholders' original
investment in the amount of $1,337,500. Limited discovery has commenced as of
the date of this report. Management intends to vigorously defend its position,
however the ultimate outcome of any litigation on this matter cannot be
determined at this time.

    In December 1996, a second action was filed by a shareholder group in the
Superior Court of the State of California in Los Angeles County related to the
suspension of the conversion feature of the Series "C" Preferred Stock. The
action seeks to compel the Company to resume conversion of the Series "C"
Preferred Stock or, in the alternative, to rescind subscription agreement and
recover the shareholders' original investment in the amount of $2,367,500, plus
interest and punitive damages. Limited discovery has commenced, the ultimate
outcome of any litigation on this matter cannot be determined at this time;
however, management intends to vigorously defend its position.


ITEM 2  CHANGE IN SECURITIES

    The Series "C" Preferred Stock authorized the issuance of 400,000 shares at
$10.00 per share. This was subsequently increased to 650,000 shares. The
registered holders of outstanding shares of Series "C" Preferred Stock are also
entitled to a number of privileges and rights including the right to receive
cumulative dividends at the annual rate of $0.60 per share payable in common
stock, conversion rights according to a predetermined formula and liquidation
rights in the event of a liquidation, dissolution or winding up of the Company.

    On November 7, 1996 a suspension of conversion of the Series "C" Convertible
Preferred stock was announced to preferred stockholders as a result of
irregularities in the trading of the Company's common stock which management
believes is related to the conversion terms of the Regulation S private
placement. A shareholder has filed a lawsuit against the Company to compel the
conversion of certain class "C" Preferred Stock to Common stock.

ITEM 3  DEFAULTS UPON SENIOR SECURITIES

    Not Applicable

ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    Not Applicable

ITEM 5  OTHER INFORMATION

    At June 30, 1996, the Company had 90,000 warrants outstanding to various
entities for the purchase of 90,000 shares of the Company's common stock. For
the quarter ended December 31, 1996, no additional warrants were issued and none
were exercised.




                                       12
<PAGE>   13
    In December, 1996, a related party transaction occurred where Greg Gilbert,
Chairman and CEO, transferred 2,331,360 shares of common stock to Degerstrom,
Inc., Neal Degerstrom, Robert E. Sterling and Dale D. Popp pursuant to their
rights under certain agreements which required the specific performance of Mr.
Gilbert thereunder.


ITEM 6  EXHIBITS AND REPORTS ON FORM 8-K

 (a).    EXHIBITS

         Exhibit 27  Financial Data Schedule

 (b).    Reports on Form 8-K

         Form 8-K, dated September 20, 1996 and filed with the Commission on
         September 27, 1996, reporting on the resignation of BDO Seidman LLP 
         as the Company's independent auditors.

         Form 8 K/A, dated September 20, 1996 and filed with the Commission on
         October 4, 1996 reporting on BDO Seidman's agreement on content of the
         Company's Form 8-K dated September 20, 1996.

         Form 8-K, dated October 24, 1996 and filed with the Commission on
         October 29, 1996 reporting on the appointment of Strabala Ramirez &
         Associates as the Company's independent auditors.

         Form 8-K, dated October 25, 1996 and filed with the Commission on
         November 7, 1996 reporting on the suspension of the conversion of the
         Company's Series "C" Convertible Preferred Stock.

         Form 8-K, dated January 15, 1997 and filed on January 16, 1997,
         reporting on the issuance of 3,750,000 shares of the Company's common
         stock to an accredited investor.

         The Company is in the process of filing a Form 8-K reporting on the
         resignation of a member of the Board of Directors. The resignation 
         became effective February 13, 1997. The Company is expecting a
         resignation letter from the member to attach to the Form 8-K.






                                       13
<PAGE>   14

                                   SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto authorized.

                                       STARTRONIX INTERNATIONAL INC.
                                              (Registrant)

Date: February 19, 1997                By:  /s/ GREG GILBERT
                                           ----------------------------------
                                                Greg Gilbert
                                                 President

Date: February 19, 1997                By: /s/ JAMES VALLE
                                           -----------------------------------
                                               James Valle
                                          Chief Financial Officer





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