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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

     (Mark one)

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

               For the fiscal year ended June 30, 1997

                                       OR

          [ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE
               SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

               For the transition period from ________ to _________

               Commission file number 33-37674-NY

                                EDG CAPITAL, INC.
             (Exact name of registrant as specified in its charter)

New York                                                    11-3023098
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)

67 Westchester Drive
Rocky Point, NY                                                  11778
(Address of principal executive offices)                         Zip Code

Issuer's telephone number (516) 744-0414

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

                                                  Name of each exchange on
Title of each class                               which registered

       N/A                                                  N/A

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

                                      None
                                (Title of class)

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

Yes __X__     No _____



<PAGE>




Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  Registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year. $78

State the  aggregate  market value of the voting stock held by non--  affiliates
computed by reference  to the price at which the stock was sold,  or the average
bid and asked  prices of such stock,  as of a specified  date within the past 60
days.  (See definition of an affiliate in Rule 12b-2 of the Exchange Act.) Zero.
(According  to the  National  Quotation  Bureau,  Inc.  there  are no  published
quotations for the issuer's Common Stock.)

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. 102,500 shares of Common Stock, $.001
par value, outstanding as of September 22, 1997.


                   DOCUMENTS INCORPORATED BY REFERENCE - None


                                        2


<PAGE>



                                     PART I

Item 1. Description of Business.

General

     EDG Capital,  Inc. (the "Company" or the  "Registrant")  was organized as a
New York  corporation on August 13, 1990 for the purpose of investing in any and
all types of  assets,  properties  and  businesses.  It has not  engaged  in any
business operations.  The Company,  which is commonly known as a "blind pool" or
"blank  check",  will  attempt  to  acquire a  business  in an  industry  as yet
undetermined.   The  Company   presently  has  no  specified  type  of  business
contemplated to be acquired.

     In connection with its initial capitalization, the Registrant issued 12,500
shares of its Common Stock to its officers and  directors  for the aggregate sum
of $2,500.  In furtherance of its corporate  purpose,  on November 11, 1991, the
Registrant  closed its initial  public  offering  of 50,000  Units at a price of
$1.00 per Unit. Each Unit consisted of one share of Common Stock,  one Class "A"
Common Stock Purchase Warrant,  and one Class "B" Common Stock Purchase Warrant.
The Warrants,  which entitled the holders to purchase additional Common Stock at
$5.00 and $10.00,  respectively,  have expired.  In September  1997, the Company
raised  $10,000  from the sale of 40,000  shares of its Common Stock in order to
obtain working capital.

     The  Registrant  is seeking the  acquisition  of or merger with an existing
company  ("Potential  Business  Acquisitions").  Given the limited assets of the
Registrant, it is likely to acquire or merge with a company which is not seeking
immediate  substantial  amounts  of cash but one which  desires to  establish  a
public  trading market for its shares.  However,  within the next six months the
Company intends to seek to raise  additional  funds to augment its cash on hand,
which also could be used for the benefit of any Business  Acquisition seeking an
immediate cash infusion.  There can be no assurance that the Company's financing
efforts will be successful.

     There are numerous  reasons why an existing  privately-held  company  would
seek to become a public  company  through a merger or  acquisition  rather  than
doing its own public  offering.  Such reasons  include  avoiding the time delays
involved in a public offering; retaining a larger share of voting control of the
publicly-held  company;  reducing the cost factors incurred in becoming a public
company; and avoiding any dilution  requirements set forth under various states'
blue sky laws.

     The  Registrant  is seeking the  acquisition  of or merger with an existing
company  ("Potential  Business  Acquisitions").  Given the limited assets of the
Registrant, it is likely to acquire or merge with a company which is not seeking
immediate substantial amounts


                                        3


<PAGE>



of cash but one which  desires  to  establish  a public  trading  market for its
shares. There are numerous reasons why an existing  privately-held company would
seek to become a public  company  through a merger or  acquisition  rather  than
doing its own public  offering.  Such reasons  include  avoiding the time delays
involved in a public offering; retaining a larger share of voting control of the
publicly-held  company;  reducing the cost factors incurred in becoming a public
company; and avoiding any dilution  requirements set forth under various states'
blue sky laws.

     The  Registrant  does not  propose to  restrict  its  search for  Potential
Business  Acquisitions to any particular  industry or any particular  geographic
area and may, therefore, engage in essentially any business to the extent of its
limited resources.

     It is anticipated that knowledge of Potential Business Acquisitions will be
made known to the  Registrant  by various  sources,  including  its officers and
directors,   shareholders,   professional   advisors   such  as  attorneys   and
accountants,  securities  broker-dealers,  venture  capitalists,  members of the
financial  community,  and  others who may  present  unsolicited  proposals.  In
certain  circumstances,  the  Registrant  may agree to pay a finder's  fee or to
otherwise  compensate  such  persons for services  rendered in bringing  about a
transaction.  However,  no cash  finder's  fee shall be paid to any  officer  or
director of the Registrant or their affiliates or associates.  The amount of any
such  finder's fee or other  compensation  which may be paid to such persons for
services  rendered  in  bringing  about  a  transaction  is  subject  to  future
negotiation between the Registrant, the entity to be acquired and the finder.

Selection of Opportunities
--------------------------

     The analysis of new business opportunities has and will be undertaken by or
under the supervision of the officers and directors of the  Registrant,  none of
whom  is a  professional  business  analyst  or has  any  previous  training  or
experience in business analysis or in selecting or hiring business analysts. The
Registrant has, since the date of the closing of its public offering, considered
potential  acquisition  transactions  with several companies but as of this date
has not entered into any definitive agreement with any party. The Registrant has
unrestricted  flexibility in seeking,  analyzing and  participating in Potential
Business Opportunities. In its efforts to analyze potential acquisition targets,
the Registrant will consider the following kinds of factors:

     (a) Potential for growth,  indicated by new technology,  anticipated market
expansion or new products;


                                        4


<PAGE>



     (b)  Competitive  position as  compared to other firms of similar  size and
experience  within the  industry  segment as well as within  the  industry  as a
whole;

     (c) Strength and diversity of management,  either in place or scheduled for
recruitment;

     (d) Capital requirements and anticipated availability of required funds, to
be provided by the Registrant or from operations, through the sale of additional
securities,  through  joint  ventures  or  similar  arrangements  or from  other
sources;

     (e)  The  cost  of  participation  by the  Registrant  as  compared  to the
perceived tangible and intangible values and potentials;

     (f) The extent to which the business opportunity can be advanced;

     (g) The  accessibility of required  management  expertise,  personnel,  raw
materials, services, professional assistance and other required items; and

     (h) other relevant factors.

     In applying the foregoing  criteria,  no one of which will be  controlling,
management will attempt to analyze all factors in the  circumstances  and make a
determination based upon reasonable  investigative  measures and available data.
Potentially  available  business  opportunities  may  occur  in  many  different
industries and at various stages of development, all of which will make the task
of  comparative  investigation  and  analysis  of  such  business  opportunities
extremely  difficult  and  complex.  Due to  the  Registrant's  limited  capital
available for  investigation  and  management's  limited  experience in business
analysis,  the Registrant may not discover or adequately  evaluate adverse facts
about the opportunity to be acquired.

Form of Acquisition
-------------------

     The manner in which the  Registrant  participates  in an  opportunity  will
depend upon the nature of the  opportunity,  the respective needs and desires of
the  Registrant  and  the  promoters  of  the  opportunity,   and  the  relative
negotiating strength of the Registrant and such promoters.

     It is likely  that the  Registrant  will  acquire  its  participation  in a
business opportunity through the issuance of common stock or other securities of
the Registrant.  Although the terms of any such transaction cannot be predicted,
it should be noted that in certain  circumstances  the criteria for  determining
whether or not an  acquisition is a so-called  "tax free"  reorganization  under
Section 368(a)(1) of the Internal Revenue Code


                                        5


<PAGE>



of 1986,  as  amended,  depends  upon the  issuance to the  shareholders  of the
acquired  company of at least 80 percent  of the  common  stock of the  combined
entities  immediately  following  the  reorganization.  If  a  transaction  were
structured to take  advantage of these  provisions  rather than other "tax free"
provisions  provided  under the Internal  Revenue Code,  all prior  shareholders
would  in  such  circumstances  retain  20%.  or less of the  total  issued  and
outstanding shares. This could result in substantial  additional dilution to the
equity  of  those  who  were  shareholders  of  the  Registrant  prior  to  such
reorganization.

     The present  shareholders of the Registrant will likely not have control of
a majority of the voting  shares of the  Registrant  following a  reorganization
transaction.  As  part  of  such  a  transaction,  all  or  a  majority  of  the
Registrant's directors may resign and new directors may be appointed without any
vote by shareholders.

     In the case of an acquisition, the transaction may be accomplished upon the
sole  determination of management  without any vote or approval by shareholders.
In the case of a statutory merger or consolidation,  it will likely be necessary
to call a  shareholders'  meeting  and obtain the  approval  of the holders of a
majority of the  outstanding  shares.  The necessity to obtain such  shareholder
approval may result in delay and additional  expense in the  consummation of any
proposed  transaction  and will also give rise to  certain  appraisal  rights to
dissenting shareholders. Most likely, management will seek to structure any such
transaction so as not to require shareholder approval.

     It is anticipated that the investigation of specific business opportunities
and the negotiation,  drafting and execution of relevant agreements,  disclosure
documents and other  instruments  will require  substantial  management time and
attention and  substantial  costs for  accountants,  attorneys and others.  If a
decision is made not to  participate  in a specific  business  opportunity,  the
costs  theretofore   incurred  in  the  related   investigation   would  not  be
recoverable.  Furthermore, even if an agreement is reached for the participation
in a specific business  opportunity,  the failure to consummate that transaction
may result in the loss to the Registrant of the related costs incurred.

Acquisition Restrictions
------------------------

     The  Company  does  not  intend  to  pursue  any  business  opportunity  or
transaction which would render it an "investment company" as the term is defined
in the  Investment  Company  Act of 1940.  In this  regard,  the Company has not
engaged  and does  not  intend  to  engage  in the  business  of (1)  investing,
reinvesting,  or trading in securities as its primary business, (2) issuing face
amount  certificates  of the  installment  type or (3)  investing,  reinvesting,
owning, holding, or trading in securities. Being deemed an


                                        6


<PAGE>



"investment  company" under such Act, without registration as such, could result
in certain  instances in civil  liability and criminal  penalties to controlling
persons of, as well as civil liabilities and  unenforceability of contracts with
regard to, the Company.

     The  Company  has not  engaged  and does not intend nor have  authority  to
engage  in  the  business  of  advising  others,   either  directly  or  through
publications  or  writings,  as  to  the  value  of  securities  or  as  to  the
advisability of investing in, purchasing, or selling securities for compensation
nor as a part of its regular business to issue or promulgate analyses or reports
concerning  securities.  The  Company  does  not  intend,  nor  does it have any
authority, to pursue any course of business which would render it an "investment
advisor" as that term is defined in the Investment Advisors Act of 1940.

Daily Operations and Employees
------------------------------

     To date, the Company has had no, and until an active  business is commenced
or acquired  the  Company  will have no,  employees  or  day-to-day  operations.
Management  is unable to make any estimate as to the future  number of employees
which may be necessary, if any, to work for the Company. If an existing business
is  acquired  it is  possible  that  its  existing  staff  would be hired by the
Company.  At the present time it is the intention of management to meet or be in
telephone contact as needed to review business opportunities, evaluate potential
acquisitions and otherwise  operate the affairs of the Company.  Management will
not be compensated for these services rendered on behalf of the Company.


Item 2. Description of Property.

     The  Company  has  entered  into an oral  arrangement  with Edwin D. Green,
President, Treasurer and Chairman of the Board of the Company, providing for him
to  furnish  the use of a  portion  of his home as a  temporary  office  for the
Company until such time it needs additional facilities. The Company will not pay
rent for the use of such temporary facilities.


Item 3. Legal Proceedings.

     There are no material  pending legal  proceedings to which the Company is a
party or to which any of its  property  is subject and no such  proceedings  are
known to the Company to be threatened or contemplated by or against it.


Item 4. Submission of Matters to a Vote of Security Holders.

     No matters were  submitted to a vote of security  holders during the fiscal
year covered by this Report.


                                        7


<PAGE>



                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

Market Information
------------------

     There is no public market for the Company's securities.

Holders
-------

     As of September  19, 1997,  there were 34 record  holders of the  Company's
Common Stock.

Common Stock
------------

     The Company is authorized to issue  50,000,000  shares of Common Stock, par
value $.001 each. As of September 22, 1997 there were 102,500 such shares issued
and  outstanding,  all of which were fully paid and  non-assessable.  Holders of
shares of Common Stock are  entitled to one vote for each share held.  There are
no preemptive,  subscription,  conversion or redemption rights pertaining to the
shares.  Holders  of the shares of Common  Stock are  entitled  to receive  such
dividends  as may be declared by the Board of  Directors  out of assets  legally
available  therefor and to share ratably in the assets of the Company  available
upon liquidation.

     The  holders  of shares of Common  Stock do not have the right to  cumulate
their votes in the election of directors and,  accordingly,  the holders of more
than  50% of  all  such  shares  outstanding  can  elect  all of the  directors.
Remaining shareholders will not be able to elect any directors.

Dividends
---------

     The  Company  has not paid cash  dividends  to date and  intends  to retain
earnings,  if any, for use in its  activities.  Payment of cash dividends in the
future  will be  wholly  dependent  upon  the  Board of  Directors  and upon the
Company's earnings,  financial condition, capital requirements and other factors
deemed  relevant by them. It is not likely that cash  dividends  will be paid in
the foreseeable future.

     In the  event  of the  acquisition  of or  merger  with a  business  by the
Company,  control of the Company and its Board of Directors  may pass to others.
In that event,  the payment of  dividends  would be wholly  dependent  upon such
persons.


                                        8


<PAGE>



Item 6. Management's Discussion and Analysis or Plan of Operation.

     (a) Plan of Operation

     The  Registrant  was formed August 13, 1990 for the purpose of investing in
any and all types of assets,  properties and businesses.  In connection with the
initial  capitalization  of the  Company a total of 12,500  shares of its common
stock were issued to its officers and directors for the aggregate sum of $2,500.
On June 12, 1991, the United States Securities and Exchange  Commission  granted
effectiveness to a Registration Statement on Form S-18 for an offering of 50,000
Units of Common Stock and Warrants to purchase shares of Common Stock at a price
of $1.00 per Unit. The offering was closed in November, 1991. In September 1997,
the Company raised $10,000 from the sale of 40,000 shares of its Common Stock in
order to obtain working capital.

     The Registrant is implementing its plan of operation by seeking to locate a
suitable company which desires to go public through a "reverse acquisition" with
it.  Although no assurance can be given,  the Company  believes its cash on hand
will  satisfy  its cash  requirements  until  it  effects  such an  acquisition.
However,  it may seek to raise  additional  funds  in the  next six  months  (in
addition to the $10,000  raised in September  1997) to augment its cash on hand,
which  could also be used for the  benefit of any  company it  acquires  or with
which it merges.  There can be no assurance that the Company's financing efforts
will be successful. The Company's Plan of Operation is further described in Item
1 hereof.

     (b)  Management's  Discussion  and  Analysis  of  Financial  Condition  and
          Results of Operations

     Since  inception the  Registrant has not any business  operations,  and its
activities  have been limited to the sale of its securities and the search for a
company to acquire through a "reverse acquisition". The Registrant will not have
any  business  operations  until,  if  ever,  such  time as it  effects  such an
acquisition or merger.  Accordingly,  no operating  income has been generated by
the Registrant since its inception.

     For the years ended June 30,  1996 and 1997,  the Company had a net loss of
($6,938)  and   ($9,607),   respectively,   or  ($.11)  and  ($.15)  per  share,
respectively.  From  inception to June 30,  1996,  the Company had a net loss of
$39,897,  or ($.73) per share.  Such losses are attributable  primarily to costs
associated with the Company's attempts to identify and acquire a business.


                                        9


<PAGE>



Item 7. Financial Statements.

                          Index to Financial Statement
                          ----------------------------

     Independent Accountants' Report

     Balance Sheets

          June 30, 1997 and 1996

     Statement of Operations

          Years ended June 30, 1997, 1996 and 1995

     Statement of Changes in Stockholders' Equity

          Years ended June 30, 1997, 1996 and 1995

     Statement of Cash Flows
          Years ended June 30, 1997, 1996 and 1995

     Notes to Financial Statements



            [Balance of this Page Has Been Left Blank Intentionally]


                                       10


<PAGE>



                          INDEPENDENT AUDITOR'S REPORT


To the Board of Directors and Stockholders of
EDG Capital, Inc.


We have  audited  the  accompanying  balance  sheets  of EDG  Capital,  Inc.  (a
development  stage  company)  as of June 30,  1997  and  1996,  and the  related
statements  of  operations,  stockholders'  equity  and cash flows for the years
ended  June  30,  1997,  1996  and  1995  and for the  period  August  13,  1990
(inception) to June 30, 1997. These financial  statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,   the  financial  position  of  EDG  Capital,  Inc.  (a
development  stage  company) as of June 30, 1997 and 1996 and the results of its
operations and its cash flows for the years ended June 30, 1997,  1996, 1995 and
for the period August 13, 1990  (inception) to June 30, 1997 in conformity  with
generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial statements,  the Company has suffered recurring losses from operations
and has a net capital  deficiency that raise substantial doubt about its ability
to continue as a going  concern.  The  financial  statements  do not include any
adjustments that might result from the outcome of this uncertainty.


/s/ Scott & Guilfoyle


Lake Success, New York
August 11, 1997



                                       11


<PAGE>



                                EDG CAPITAL, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET
                                     JUNE 30


                                                          1997           1996

                                     ASSETS


CURRENT ASSETS
         Cash                                           $    444       $ 10,517
                                                        ========       ========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
         Accrued expenses                               $  2,488       $  2,954
                                                        --------       --------

         TOTAL LIABILITIES                                 2,488          2,954
                                                        --------       --------

STOCKHOLDERS' EQUITY
         Common stock, $.001 par value
          50,000,000 shares authorized,                   62,500            xxx
          shares issued and outstanding                       63             63
         Capital in excess of par value                   37,790         37,790
         Deficit accumulated during
          development stage                              (39,897)       (30,290)

         TOTAL STOCKHOLDERS' EQUITY                       (2,044)         7,563
                                                        --------       --------

         TOTAL LIABILITIES AND
           STOCKHOLDERS' EQUITY                         $    444       $ 10,517
                                                        ========       ========



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


                                       12


<PAGE>



                                EDG CAPITAL, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF OPERATIONS



                                    FOR THE YEARS ENDED          FROM INCEPTION
                                          JUNE 30                AUGUST 13, 1997
                               1997        1996        1997     TO JUNE 30, 1997
                                                                    
REVENUE                                                             
   Interest                  $     78    $    282    $    414       $  2,419
                             --------    --------    --------       --------
                                                                    
EXPENSES                                                            
   Miscellaneous                   65           0           0            414
   Office                           0           0         165          2,431
   Professional                 8,396       6,031       5,306         32,450
   Filing and transfer fees       853         768         687          4,092
                             --------    --------    --------       --------
                                                                    
   TOTAL                        9,314       6,799       6,158         39,387
                             --------    --------    --------       --------
                                                                    
LOSS BEFORE INCOME TAXES       (9,236)     (6,517)     (5,744  )     (36,968)
                                                                    
INCOME TAXES                      371         421         421          2,929
                             --------    --------    --------       --------
                                                                    
NET LOSS                     $ (9,607)   $ (6,938)   $ (6,165  )    $(39,897)
                             ========    ========    ========       ========
                                                                    
LOSS PER SHARE                                                      
  Net loss per share         $   (.15)   $   (.11)   $   (.10  )    $   (.73)
                             ========    ========    ========       ========
                                                                    
WEIGHTED AVERAGE NUMBER OF                                          
COMMON SHARES OUTSTANDING      62,500      62,500      62,500         55,006
                             ========    ========    ========       ========
                                                                    
                                                                     
                                                                 

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


                                       13


<PAGE>



                                EDG CAPITAL, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                        Deficit             Total
                                                       Common Stock          Capital in Excess     Accumulated During   Stockholders
                                                  Shares          Amount       Of Par Value        Development Stage       Equity
                                                                                                     
                                                                                                     
<S>                                                <C>           <C>             <C>                   <C>               <C>     
Balance, August 13, 1990  (inception)                   0        $      0        $      0              $      0          $      0
                                                                                                                        
Issuance of shares to Officer and                                                                                       
  Directors of the Company for cash                                                                                     
  August 13, 1990                                  12,500              13           2,487                                   2,500
                                                                                                                        
Net loss from inception to                                                                                              
  June 30, 1991                                                                                          (2,163)           (2,163)
                                                                                                                        
Public offering of common stock                                                                                         
  and warrants                                     50,000              50          49,950                                  50,000
                                                                                                                        
Offering costs                                                                    (14,647)                                (14,647)
                                                                                                                        
Net loss for the year ended                                                                                             
  June 30, 1992                                                                                          (4,977)           (4,977)
                                                                                                                        
Net loss for the year ended                                                                                             
  June 30, 1993                                                                                          (4,750)           (4,750)
                                                                                                                        
Net loss for the year ended                                                                                             
  June 30, 1994                                                                                          (5,297)           (5,297)
                                                 --------        --------        --------              --------          --------
                                                                                                                        
Balance, June 30, 1994                             62,500              63          37,790               (17,187)           20,666
                                                                                                                        
Net loss for the year ended                                                                                             
  June 30, 1995                                                                                          (6,165)           (6,165) 
                                                 --------        --------        --------              --------          --------
                                                                                                                        
Balance, June 30, 1995                             62,500              63          37,790               (23,352)           14,501
                                                                                                                        
Net loss for the year ended                                                                                             
  June 30, 1996                                                                                          (6,938)           (6,938) 
                                                 --------        --------        --------              --------          --------
                                                                                                                        
Balance, June 30, 1996                             62,500              63          37,790               (30,290)            7,563
                                                                                                                        
Net loss for the year ended                                                                                             
  June 30, 1997                                         0               0               0                (9,607)           (9,607)
                                                 --------        --------        --------              --------          --------
                                                                                                                        
Balance, June 30, 1997                             62,500        $     63        $ 37,790              $(39,897)         $ (2,044)
                                                 ========        ========        ========              ========          ========
</TABLE>



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


                                       14


<PAGE>



                                EDG CAPITAL, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF CASH FLOWS




                                       FOR THE YEARS ENDED      FROM INCEPTION
                                            JUNE 30             AUGUST 13, 1997
                                  1997        1996        1997  TO JUNE 30, 1997


CASH FLOWS FROM OPERATING
 ACTIVITIES
     Net loss                  $ (9,607)   $ (6,938)   $ (6,165)    $(39,897)
     (Decrease) increase in                                        
     accrued expenses              (466)        555         287        2,488
                               --------    --------    --------     --------
                                                                   
NET CASH USED BY OPERATING                                         
 ACTIVITIES                     (10,073)     (6,383)     (5,878)     (37,409)
                               --------    --------    --------     --------
                                                                   
CASH FLOWS FROM FINANCING                                          
 ACTIVITIES                                                        
     Issuance of common stock         0           0           0           63
     Paid in capital                  0           0           0       52,437
     Offering costs                   0           0           0      (14,647)
                               --------    --------    --------     --------
                                                                   
NET CASH PROVIDED BY                                               
 FINANCING ACTIVITIES                 0           0           0       37,853
                               --------    --------    --------     --------
                                                                   
NET INCREASE (DECREASE)                                            
 IN CASH                        (10,073)     (6,383)     (5,878)         444
                                                                   
BEGINNING CASH BALANCE           10,517      16,900      22,778            0
                               --------    --------    --------     --------
                                                                   
ENDING CASH BALANCE            $    444    $ 10,517    $ 16,900     $    444
                               ========    ========    ========     ========
                                                                   
                                                                  



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


                                       15


<PAGE>



                                EDG CAPITAL, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                            JUNE 30, 1997, 1996, 1995

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION BUSINESS ACTIVITY AND DIVIDEND POLICY

The Company was  incorporated  under the laws of the State of New York on August
13, 1990. The Company is in the development  stage and has not commenced planned
principal operations.  The Company is seeking the acquisition of, or merger with
an existing Company.  The fiscal year of the corporation is June 30. The Company
has, at the present time,  not paid any dividends and any dividends  that may be
paid in the future will depend upon the  financial  requirements  of the Company
and other relevant factors.

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 and  disclosures.  Actual results could differ from
those estimates and assumptions.

RELATED PARTY

The Company entered into an oral  arrangement  with the President of the Company
providing for the use of a portion of her home as a temporary  office until such
time as the Company needs additional  facilities.  The Company does not pay rent
for the use of such facilities.

SUPPLEMENTAL CASH FLOWS INFORMATION

The following were paid during the year ended June 30, 1997:

          Income taxes             $404

INCOME TAXES

As of June 30, 1997, the Company had a $39,397 net operating  loss  carryforward
available to offset future taxable income through 2006.

NOTE 2: GOING CONCERN

As shown in the financial statements, the Company incurred a net loss of $9,607,
$6,938  and  $6,165  for  the  years  ended  June  30,  1997,   1996  and  1995,
respectively. Combined with the fact that the Company has no working capital and
an  accumulated  deficit of $39,397,  it is  management's  assertion  that these
circumstances  may hinder the Company's  ability to continue as a going concern.
As of the date of this  report,  management  has not  developed a formal plan to
raise funds for the Company's short or long term needs.


                                       16


<PAGE>




Item 8.   Changes  in and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure.

          N/A


                                    PART III

Item 9.   Directors,   Executive   Officers,   Promoters  and  Control  Persons;
          Compliance with Section 16(a) of the Exchange Act.

     The following table sets forth certain  information  concerning the current
directors  and  executive  officers of the  Company,  who have served  since the
inception  of the Company and will serve for one year or until their  respective
successors are elected and have qualified:

NAME                                AGE                   POSITION
----                                ---                   --------

Linda Green                         51                    President, Secretary,
                                                          and Director

Seth Green                          28                    Director

     Linda Green has been the  Secretary  and a Director  of the  Company  since
August 1990 and President and Treasurer  since January 6, 1997.  Mrs.  Green has
owned and operated Cards and Critters South, a Hallmark Card and Gift Shop, from
1986 until  September  1996.  From  September  1996 until  February 1997 she was
employed as a store manager for Bruce Allen Bags, Riverhead, New York. From 1981
to 1983, she was employed as a personnel  manager and cash office supervisor for
Filenes Department Store, a New York based department store. Mrs. Green attended
National College of Education for one year.

     Seth Green has been a Director of the Company  since  August  1990.  He has
been  employed as a manager of Cards and  Critters  South,  a card and gift shop
owned by Linda Green,  his mother,  since 1986, Mr. Green also attended  Dowling
College during 1990.

     Linda Green is the mother of Seth Green.

     The Company has no significant employees.

Item 10.  Executive Compensation.

     No officer or director of the Company has  received  remuneration  from the
Company  in  fiscal  1996  or  prior  years,  and  it is  not  anticipated  that
remuneration will be paid prior to the Company's acquisition of a business.  The
Company has no current  intent to issue shares of its common stock to management
in connection with a Business Acquisition. However, the Company may subsequently
deem the issuance of shares to  management  for services  rendered in connection
with such an Acquisition to be fair and reasonable to the Company and its public
shareholders  in light of the  services  rendered.  In the event any  shares are
issued  for  services  rendered  by  management  they shall be issued in such an
amount as the Board of Directors deems fair and reasonable to the


                                       17


<PAGE>



Company  and  its  public  shareholders  and  in  compliance  with  management's
fiduciary duties under state law.  Officers and directors will be reimbursed for
actual  out-of-pocket  expenses incurred on behalf of the Company as approved by
the Board of Directors.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.

     The  following  table sets forth  certain  information  as to the number of
shares of the  Company's  Common Stock deemed to be owned  beneficially  by each
person known by the Registrant to be deemed to be the  beneficial  owner of more
than 5% of the  outstanding  Common Stock,  each of its  executive  officers and
directors,  and all of its  executive  officers  and  directors  as a group,  at
September  22, 1997.  Except as indicated  in the  footnotes to this table,  the
Company  believes that the named persons have sole voting and  investment  power
with respect to the shares indicated:

Name and Address of               Position With      Number of      Percentage
Beneficial Owner                  Company            Shares         of Class
----------------                  -------------      ---------      ----------
                                                                   
Linda Green1                      President,           12,000(2)       12%
67 Westchester Drive              Secretary,                       
Rocky Point, NY 11778             Treasurer                        
                                  and Director                     
                                                                   
Seth Green1                       Director                500           1
67 Westchester Drive                                               
Rocky Point, NY 11778                                              
                                                                   
Edwin Green                                            12,000(2)       12
67 Westchester Drive                                               
Rocky Point, NY 11778                                              
                                                                   
Lawrence E. Kaplan1                                    20,000          20
150 Vanderbilt Motor Parkway                                       
Hauppauge, NY  11788                                               
                                                                   
Andrew M. Kaplan1                                      20,000          20
6 Seward Drive                                                     
Dix Hills, NY  11746                                               
                                                                   
Mario Branchinelli                                      6,000(3)        6
6 Andrew Street                                                    
Port Jefferson Sta., NY 11776                                      
                                                                   
Executive Officers and                                 12,500(2)       12
Directors as a Group                                               
(2 Individuals)                                                    

----------

1    These  individuals  may  be  deemed  "parents"  and  the  promoters  of the
     Registrant  as  those  terms  are  defined  in the  Rules  and  Regulations
     promulgated under the Securities Act of 1933, as amended.

2    Includes 6,000 shares owned by the spouse of the named  shareholder,  as to
     which the named shareholder disclaims beneficial ownership.

3    Includes  2,000  shares  owned by Mr.  Branchinelli's  spouse,  as to which
     shares he disclaims beneficial ownership.


                                       18


<PAGE>




Item 12. Certain Relationships and Related Transactions

     No  member  of  management  nor   controlling   shareholder   has  had  any
transactions with the Company during its past fiscal year, nor proposes any such
transactions, in which the amount involved exceeds $60,000.

     In  connection  with its initial  capitalization,  the Company  sold 12,500
shares  of its  Common  Stock  to its  founding  shareholders  for an  aggregate
consideration of $2,500 in cash.

     In September  1997,  the Company sold 20,000  shares to each of Lawrence E.
Kaplan and Andrew M. Kaplan (who are not related) for $5,000 in cash ($10,000 in
total).

     Agreement  for  Clerical  Services -  Promoter.  In fiscal 1994 the Company
retained  Stanley  Kaplan  Management  Consultants,  Inc.  ("SKMC")  to  provide
clerical  and  bookkeeping  services to the  Registrant  for a fee of $50.00 per
month.  The  agreement  between  Mr.  Kaplan  and the  Company  was oral and was
terminable at will by either party.  SKMC  terminated  such agreement  effective
November 23, 1994.  Stanley A. Kaplan,  the  president and sole  shareholder  of
SKMC, referred the Company to its legal counsel and auditor. Mr. Kaplan is not a
parent or control party of the Company.  (Mr.  Kaplan is the father of Andrew M.
Kaplan,  who  purchased 19% of the  Company's  Common Stock in September  1997.)
Inasmuch as Mr. Kaplan offered  certain advice to management in connection  with
the  formation of the Company,  he may be deemed a "promoter"  of the Company as
that  term  is  defined  in  Rule  405 of  Regulation  C as  promulgated  by the
Securities and Exchange Commission.

     Mr.  Kaplan  has  been  the  president  and sole  shareholder  of SKMC,  an
accounting firm, for at least the past ten years. Since January 1987, Mr. Kaplan
has also been an officer and director of Gro-Vest, Inc., a management consulting
firm.

     On August 12, 1994, Mr. Kaplan  settled,  without  admitting or denying any
allegations,  a civil action brought  against him by the Securities and Exchange
Commission relating to Atratech, Inc. The action charged Mr. Kaplan with certain
violations of the Securities Act of 1933 and the Securities Exchange Act of 1934
(the "Exchange  Act").  As part of the  settlement,  Mr. Kaplan was  permanently
restrained and enjoined from future  violations of the  securities  laws and was
permanently  barred from acting as an officer or director of any issuer that has
a class of securities registered under Section 12 of the Exchange Act or that is
required to file reports pursuant to Section 15(d) of the Exchange Act.

     The  Company  neither  had  nor  has  any  written  or  oral  agreement  or
understanding with Mr. Kaplan or SKMC regarding his services or participation in
connection  with future  mergers or  acquisitions.  Mr.  Kaplan's  firm had been
retained solely to provide clerical and


                                       19


<PAGE>



bookkeeping  services.  If Mr. Kaplan  becomes aware of a merger or  acquisition
possibility he may or may not refer such possibility to the Company's management
for  consideration.  If Mr.  Kaplan  becomes  aware of a merger  or  acquisition
possibility and refers it to the Company,  the Company's  management will review
such  merger or  acquisition  possibility  in the same  manner and with the same
efforts as it reviews  merger and  acquisition  possibilities  referred to it by
other persons. The Company may agree to pay a finder's fee to any non-management
"finder",  including Mr.  Kaplan,  in connection  with an acquisition or merger.
Although there is no current intent, agreement,  understanding or expectation to
do so, there exists the possibility  that the Company may ultimately  acquire or
merge with a business  or  property  in which Mr.  Kaplan or his  affiliates  or
associates have a beneficial interest. There is no business or property in which
Mr. Kaplan or his affiliates or associates  have a beneficial  interest which is
under  consideration  by  the  Company  as a  potential  acquisition  or  merger
candidate.


Item 13. Exhibits and Reports on Form 8-K.

     (a) Exhibits.

         3(i)   Certificate of  Incorporation  - incorporated
                by referenced to Exhibit 3.1 to  Registration
                Statement   on  Form   S-18   (SEC  File  No.
                33-37674-NY)
               
         3(ii)  By-Laws  -  incorporated   by  referenced  to
                Exhibit 3.2 to Registration Statement on Form
                S-18 (SEC File No. 33-37674-NY)
                
         27     Financial Data Schedule

     (b) No reports on Form 8-K were filed during the last quarter of the period
covered by this report.


                                       20


<PAGE>



                                   SIGNATURES


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


                                                  EDG CAPITAL, INC.
                                             ----------------------------------
                                                     (Registrant)


                                        By   /s/ Linda Green
                                             ----------------------------------
                                             Linda Green
                                             Principal Executive Officer and
                                             Principal Financial Officer


                                             Date:  September 22, 1997



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



                                             /s/ Linda Green
                                             ----------------------------------
                                             Linda Green
                                             Director

                                             Date:  September 22, 1997



                                             /s/ Seth Green
                                             ----------------------------------
                                             Seth Green
                                             Director

                                             Date:  September 22, 1997


                                       21


<PAGE>



     Supplemental  Information  to be Furnished  With Reports Filed  Pursuant to
Section 15(d) of the Exchange Act By Non-reporting Issuers

     (1) No annual report to security  holders  covering the  registrant's  last
fiscal year; and

     (2) No proxy statement,  form of proxy or other proxy soliciting,  material
has been sent to more than ten of the registrant's security holders with respect
to any annual or other meeting of security holders.


                                       22