42
                                  UNITED STATES
                       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 March 31, 1997 OR [ ] 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 0-20654

                         HEALTHTECH INTERNATIONAL, INC.
                Nevada                                          36-3797495
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)

                           1237 South Val Vista Drive
                               Mesa, Arizona 85204
                    (Address of principal executive offices)

                                  602-396-0660
              (Registrant's telephone number, including area code)

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

         Indicate by check mark whether the  registrant  has filed all documents
and reports  required to be filed by Sections 12, 13 or 15(d) of the  Securities
Act of 1934 subsequent to the  distribution of securities under a plan confirmed
by a court. Yes____ No____

APPLICABLE ONLY TO CORPORATE ISSUERS:

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common  stock,  as of the latest  practicable  date:  As of March 31,
1997,  Registrant  has a total of 8,740,000  common stock and 7,654,961  class A
warrants outstanding.


<PAGE>


PART I - FINANCIAL INFORMATION

ITEM I - Financial Statements

                         HEALTHTECH INTERNATIONAL, INC.
                           CONSOLDIATED BALANCE SHEETS
                                    Unaudited
                      March 31, 1997 and September 30, 1996
<TABLE>
<CAPTION>


                                                  ASSETS
                                                                              3/31/97            9/30/96

<S>                                                                         <C>               <C>
Current assets:
     Cash and cash equivalents                                              $     383,072     $      9,018
     Cash restricted (Note 1)                                                     425,000
     Accounts receivable - net of allowance for doubtful accounts               4,498,795        1,176,244
     Notes receivable                                                              29,003
     Prepaid expenses and deposits                                                215,961          133,573
                                                                            -------------     ------------
        Total current assets                                                    5,551,831        1,318,835

Property, plant and equipment at cost, net of accumulated
   depreciation of $1,068,168 and $456,656 for 1997 and 1996,
   respectively                                                                13,322,353       13,023,246
Land held for resale                                                               60,000           60,000
Prepaid expenses (Note 4)                                                       1,992,802        7,320,597
Costs in excess of net assets acquired, net of accumulated
   amortization of $90,438 and 18,934 for 1997 and 1996,
   respectively                                                                 7,082,211        1,385,932
Long-term certificate of deposit                                                  100,000          100,000
Non-current marketable equity securities
Deferred tax asset                                                                                 336,584
Notes receivable - long-term                                                      750,000          750,000
Other assets, at cost, net                                                         48,004          219,696
                                                                            -------------     ------------

        Total assets                                                        $  28,907,201     $ 24,514,890

</TABLE>

   The accompanying notes are an integral part of these financial statements



<PAGE>



                         HEALTHTECH INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEETS
                                    Unaudited
                      March 31, 1997 and September 30, 1996

<TABLE>
<CAPTION>

                                   LIABILITIES AND SHAREHOLDERS EQUITY
                                                                                3/31/97           9/30/96
<S>                                                                          <C>              <C>
Current liabilities
     Current portion of notes payable and capitalized lease
        obligations                                                          $  1,303,880     $  1,130,640
     Accounts payable trade                                                       571,404          769,573
     Accounts payable related parties                                             368,786          259,981
     Accrued expenses - other                                                     438,829          135,089
     Deferred revenues                                                          1,453,402          871,755
     Other current liabilities                                                    319,175          429,299

        Total current liabilities                                               4,455,476        3,596,337

Notes payable and capitalized lease obligations, less
   current maturities                                                           1,616,826        2,081,707

        Total liabilities, commitments and contingencies                        6,072,302        5,678,044

Shareholders' equity
     Series D Preferred stock,  $.001 par value,  10,000,000 shares  authorized,
        21,200 shares issued and 19,200 shares
        outstanding                                                                    19               19

Common stock,  $.001 par value,  500,000,000  shares  authorized,  8,740,000 and
   4,023,751 shares issued and outstanding for
   3/31/97 and 9/30/96, respectively                                                8,740            4,024
Additional paid in capital                                                     28,675,344       25,860,070
Net unrealized loss on non-current marketable equity securities                  (625,000)        (625,000)
Accumulated deficit                                                            (5,224,205)      (6,402,267)

        Total shareholders' equity                                             22,834,899       18,836,846

                                                                            $  28,907,201     $ 24,514,890

</TABLE>


    The accompanying notes are an integral part of these financial statements


<PAGE>



                         HEALTHTECH INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                    Unaudited
                  For the periods ended March 31, 1997 and 1996
<TABLE>
<CAPTION>


                                                      Quarter         Year to        Quarter     Year to Date
                                                       Ended            Date          Ended
                                                     3/31/97          3/31/97        3/31/96        3/31/96
<S>                                                 <C>               <C>            <C>            <C>
Revenues
   Health center revenues                            $ 5,282,305      $ 6,743,780    $  830,456     $1,627,772
   Equipment sales                                       723,301        1,236,162       491,595        885,878
                                                     ------------     ------------   -----------    -----------
      Total revenues                                   6,005,606        7,979,942     1,322,051      2,513,650
      Less reserves and allowances                    (1,961,174)      (2,203,940)     (117,950)      (155,437)
                                                     -----------      ------------   -----------    -----------
         Net revenues                                  4,044,433        5,776,002     1,204,101      2,358,213

Costs and operating expenses:
Cost of sales                                            498,286          849,703       321,856        618,031
Selling, general and administrative                    1,778,232        2,561,177     1,030,418      2,133,446
Depreciation and Amortization                            163,082          377,042       138,006        276,189
                                                     ------------    ------------    ----------     ----------
     Total costs and operating
         expenses                                      2,439,599        3,787,921     1,490,280      3,027,666

Gain (loss) from operations                            1,604,833        1,988,080      (286,179)      (669,453)

Other income (expenses):
   Interest income                                        16,785           33,750           -              -
   Interest expense                                      (72,807)        (136,705)      (44,389)       (84,423)
                                                     ------------     -----------    -----------    -----------
Total other income (expense)                             (56,022)        (102,955)      (44,389)       (84,423)

Gain (loss) before income taxes and
extraordinary items                                    1,548,811        1,885,125      (330,568)      (753,876)

Provision (benefit) for income taxes                     526,596          640,943      (112,393)      (256,318)
                                                     ------------     ------------   -----------    -----------

Net Loss Before Extraordinary Item                     1,022,215        1,244,182      (218,175)      (497,558)

Forgiveness of Debt                                          -                -         300,000         300,000
                                                     ------------     -----------    ----------      -----------

Net Income (Loss)                                    $1,022,215       $1,244,182     $  81,825        $(197,558)

</TABLE>





    The accompanying notes are an integral part of these financial statements



<PAGE>


                         HEALTHTECH INTERNATIONAL, INC.
                CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
                                    Unaudited
                  For the periods ended March 31, 1997 and 1996

<TABLE>
<CAPTION>

                                                        Quarter        Year to        Quarter       Year to
                                                         Ended           Date          Ended          Date
                                                        3/31/97        3/31/97        3/31/96        3/31/96
<S>                                                     <C>            <C>            <C>            <C>
Primary earnings per common share and
 common share equivalents

 Gain (loss) from continuing operations                 $ 0.16         $ 0.19         $ (0.06)       $ (0.13)

 Net income from extraordinary items                        -              -          $  0.08        $  8.08

 Net Income (Loss)                                      $ 0.16         $ 0.19         $  0.02        $ (0.05)

Weighted average number of common
   shares outstanding                                   6,528,346      6,528,346      3,748,671      3,748,671


Fully diluted earnings per common share and common share
equivalents


 Gain (loss) from continuing operations                 $ 0.12         $ 0.15         $ (0.04)          -

 Net income from extraordinary items                        -              -          $  0.05           -

 Net income                                             $ 0.12         $ 0.15         $  0.01           -

Weighted average number of fully diluted common
   shares outstanding                                   8,448,346      8,448,346      5,668,671         -

</TABLE>

    The accompanying notes are an integral part of these financial statements


<PAGE>



                         HEALTHTECH INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    Unaudited
                  For the periods ended March 31, 1997 and 1996
<TABLE>
<CAPTION>

                                                                                3/31/97          3/31/96

<S>                                                                             <C>               <C>
Cash flows from operating activities:
Net income (loss)                                                               $ 1,244,182       $ (197,558)
   Adjustments  to reconcile net income (loss) to net cash provided by (used in)
   operating activities:
         Depreciation and amortization                                              377,042          462,142
         Provision for doubtful accounts                                          2,203,940              -
         Issuance of common stock for consulting fees                               784,685          290,536
         Change in operating assets and liabilities:
            Increase (decrease) in deferred tax asset                              (336,584)         256,318
            (Increase) in accounts receivable                                    (3,178,612)        (322,268)
            (Increase) in notes receivable                                          (29,003)
            Decrease in inventory                                                       -              4,177
            (Increase) in prepaid expense and other                                 (77,135)         (81,617)
            (Increase) in deposits                                                   (5,253)          (6,381)
            Increase (decrease) in accounts payable                                 (89,364)        (132,203)
            Increase (decrease) in accrued expenses                                 303,740         (252,377)
            Increase (decrease) in other current liabilities                       (110,124)          23,987
            Increase (decrease) in deferred revenues                                581,647          (47,886)
            Increase (decrease) in advance vendor deposits                           61,214              -
                                                                                ------------      -----------
Net cash provided by (used in) operating activities                               1,730,375           (3,130)

Cash flows from investing activities:
   Acquisition of certificates of deposit                                          (425,000)             -
   Acquisition of property, plant and equipment                                    (370,000)             -
   Acquisition of accounts receivable                                              (370,000)             -
                                                                                ------------      -----------
Net cash provided by (used in) investing activities                              (1,295,000)             -

</TABLE>

    The accompanying notes are an integral part of these financial statements


<PAGE>



                         HEALTHTECH INTERNATIONAL, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                                    Unaudited
                  For the periods ended March 31, 1997 and 1996
<TABLE>
<CAPTION>


                                                                                 3/31/97           3/31/96
<S>                                                                             <C>               <C>
Cash flows from financing activities:
   Retirements and payments of debt                                                 (785,988)       (1,196,159)
   Forgiveness of debt                                                              -                  300,000
   Issuance of common stock for cash                                                 200,000           425,000
   Issuance of common stock for settlements & debt payments                          524,667           134,053
                                                                                -------------     ------------
Net cash provided by (used in) financing activities                                  (61,321)         (337,106)

Net increase (decrease) in cash                                                      374,054          (340,236)
                                                                                -------------     -------------

Cash and cash equivalents at beginning of year                                         9,018           372,836
                                                                                -------------     -------------

Cash and cash equivalents at 3/31/97 and 3/31/96, respectively                  $    383,072      $     32,600
                                                                                =============     =============

Supplemental disclosure of cash flow information:

   Cash paid for:
      Interest                                                                  $   136,705       $     44,548
      Income tax                                                                        -                  -
</TABLE>


   The accompanying notes are an integral part of these financial statements


<PAGE>




                         HEALTHTECH INTERNATIONAL, INC.
                CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
                                    Unaudited
                  For the periods ended March 31, 1997 and 1996


1997

Supplemental schedule of non-cash and financing activities:

Issuance of 721,378 shares of common stock in exchange for
services.                                                          $    784,685

Issuance of 230,000 shares of common stock in exchange for
cash and other current assets.                                     $    230,000

Issuance of 2,753,871 shares of restricted (R-144) common stock
in settlement of debt.                                             $    524,667

Purchase  of 100% of the  outstanding  shares of  Primus  Health
Care  Systems, Incorporated and the payment of associated
commissions  through the issuance of 1,000,000  shares  of
restricted  (R-144)  common  stock and  48,000  shares of
free-trading common stock.                                         $  1,220,000



1996

Issuance of 281,268 shares of free-trading  common stock (S-8) 
and 163,280 class A warrants for payment of salaries and services  $    696,304

Issuance of 400,000 shares of restricted (R-144) common stock and
400,000 shares of  restricted  (R-144)  class A warrants in partial  
settlement of current note payable to Freeway 405, Inc.            $  1,000,000

Issuance of 79,084 shares of restricted (R-144) common stock in
partial settlement of senior debentures                            $    129,587

Issuance  of 17,583  shares  of  restricted  (R-144)  common  stock  
and  17,583 restricted  (R-144) class A warrants in settlement of 
wholly owned  subsidiary's current note payable                    $     64,980

Issuance of 1,400 shares of restricted  (R-144)  common stock and 
790 restricted (R-144)  class A  warrants  in  settlement  of 
current  accounts  payable of the Company                          $      6,466

    The accompanying notes are an integral part of these financial statements


<PAGE>





                         HEALTHTECH INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 1997 AND 1996
                           ---------------------------------------------

NOTE 1.  BUSINESS ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Organization -

HealthTech International,  Inc. (the Company), a Nevada corporation,  was formed
February 8, 1995,  for the purpose of being a holding  company for  subsidiaries
engaged in fitness,  pre-employment testing, physical therapy and rehabilitation
businesses.

Currently  HealthTech  International,  Inc. and its wholly  owned  subsidiaries;
Results Sports and Fitness,  Inc., IFM Investments,  Inc., Fitness  Performance,
Inc., Results Riverbend, Inc., Results Stark Street, Inc. and Primus Health Care
Systems,  Inc.  (collectively  "the  Company")  develop and  operate  health and
fitness clubs,  provide medical  services  through clinics within its clubs, and
market and sell fitness equipment.
Per Share Information -

Primary  earnings  or loss per  common  share has been  computed  based upon the
weighted average number of common  equivalent  shares  outstanding.  Primary and
fully diluted  earnings per share have been presented  separately for the period
ended March 31,  1997,  whereas for March 31,  1996,  primary and fully  diluted
earnings per share have been only been presented for the quarter ended March 31,
1996.  Primary and fully  diluted  earnings per share for the year to date as of
March  31,  1996 are the same  since the  Company  experienced  losses  for that
period;  dilutive common stock  equivalents are excluded from the calculation of
loss per share as the  effect  would be  antidilutive.  The number of common and
common equivalent  shares utilized in the per share  computations were 6,528,346
and 3,748,671 for March 31, 1997 and 1996, respectively.

Accounting Estimates -

The preparation of financial  statements in conformity  with generally  accepted
accounting   principles  (GAAP)  requires   management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.

Cash restricted -

During the quarter  ended March 31,  1997,  the Company  opened  lines of credit
which are secured by $425,000 in certificates of deposit. The Company borrowed a
total of $380,000 during the quarter on these credit lines.


<PAGE>


Income Taxes  -

The Company adopted the provisions of Financial  Accounting  Standards Board No.
109 (FAS 109) effective as of October 1, 1994.  Under FAS 109,  deferred  income
taxes are recognized for the future tax consequences attributable to differences
between  the  financial  statement  carrying  amounts  of  existing  assets  and
liabilities and their respective tax bases.  Deferred tax assets and liabilities
are measured  using enacted tax rates expected to apply to taxable income in the
years in which those  temporary  differences  are  expected to be  recovered  or
settled.  The effect on deferred taxes of a change in tax rates is recognized in
income in the period that includes the enactment  date.  The  application of FAS
109 did not have a  material  effect  on the  Company's  consolidated  financial
statements.

Non-current Marketable Equity Securities -

The  non-current  portfolio of  marketable  securities is stated at the lower of
aggregate  cost or market  at the  balance  sheet  date and  consists  of common
stocks.

Realized  gains or losses are determined on the specific  identification  method
and are reflected in income.  Net unrealized  losses on  non-current  marketable
securities  are recorded  directly in a separate  shareholders'  equity  account
except those unrealized losses that are deemed to be other than temporary, which
losses are reflected in income.

On December 2, 1994, the Company  acquired  5,000,000  shares of common stock of
the Equitas Group, a related party controlled by the Chairman of the Board.

Due to the restrictive  nature of these securities and  unavailability of market
quotes to determine  the present  market  value,  the Company has  reflected the
total  carrying value of $625,000 as unrealized  loss on non-current  marketable
equity securities as a separate component in shareholders' equity.

NOTE 2.   CHANGES IN SUBSIDIARIES BEING CONSOLIDATED

The consolidated  financial statements presented for the periods ended March 31,
1996 and 1997  included the results of  operations of the Company and its wholly
owned subsidiaries. The following indicates which subsidiaries were consolidated
for the appropriate periods:

         March 31, 1996

         Subsidiaries:   Results Sports and Fitness, Inc.
                         Fitness Performance, Inc.
                         IFM Investments, Inc.
                         Results Riverbend, Inc.

         March 31, 1997

         Subsidiaries:   Results Sports and Fitness, Inc. (Tucson, Arizona club)
                         Fitness Performance, Inc. (seller of fitness equipment)
                         IFM Investments, Inc. (Midland, Texas club)
                         Results Riverbend, Inc. (Ft. Worth, Texas club)
                         Results Stark Street, Inc. (Portland, Oregon club)
                         Primus Health Care Systems, Inc.

Due to a changes in consolidated  subsidiaries and their  respective  activities
for each of the periods reported,  the consolidated financial statements are not
comparable between periods.


<PAGE>


NOTE 3.   ACQUISITIONS

Effective January 1, 1997, the Company acquired Primus Health Care Systems, Inc.
(Primus). The acquisition consisted of the following consideration:

         Common stock issued -                                     $  1,220,000
         Transfer of prepaid advertising credits                      5,400,000
                                                                      ---------
                                                                   $  6,620,000
                                                                      =========
The  acquisition  was recorded  using the purchase  method of accounting and was
allocated to the assets acquired as follows:

         Medical receivables                                        $   500,000
         Equipment                                                      330,000
         Furniture and fixtures                                          40,000
         Costs in excess of net assets acquired                       5,750,000
                                                                      ---------
                                                                    $ 6,620,000
                                                                      =========
The following pro forma  financial  data presents the Company's  unaudited,  pro
forma  statements of operations for the six months ended March 31, 1997,  giving
effect to the  consummation of the Primus  acquisition as if the transaction had
occurred on October 1, 1996.  The  unaudited  pro forma  condensed  statement of
operations  do not purport to represent  what the  Company's  actual  results of
operations  would have been had such  transaction in fact occurred on that date.
The unaudited pro forma  condensed  statements of operations also do not purport
to project the results of operations of the Company for any future period.

                Revenue, less reserves and allowances         $  7,400,000
                Net income                                    $  2,400,000

                Primary earnings per share                        $   0.37

NOTE 4.   PREPAID ADVERTISING CREDITS

The Company  acquired  deferred  advertising  and  broadcast  air-time  credits,
primarily  in  exchange  for common  stock,  from  related  parties  aggregating
$7,300,000.   The  advertising  and  broadcast  credits  were  recorded  at  net
realizable  value,  based upon the seller's  published rate cards at the date of
acquisition  or the  historical  founder's  cost as it relates to related  party
transactions, whichever was lower. These credits have expirations ranging from 5
to 10 years from date of issuance of September  29,  1995,  and January 1, 1994,
respectively.

During the quarter  ended March 31, 1997,  the Company  exchanged  $5,400,000 of
these  credits  as part of the  consideration  in the  Primus  acquisition.  The
details of the Primus  acquisition  were included in the  previously  filed Form
10-K/A,  incorporated  herein by  reference.  Management  intends to utilize the
balance of these credits totaling  $1,900,000 in similar  acquisitions and joint
ventures.


<PAGE>


NOTE 5.   INCENTIVE COMPENSATION PLANS

The  Company  has an  Incentive  Compensation  Plan  which  provides  awards  to
officers,  employees and consultants of the Company,  who,  individually or as a
group, contribute in a substantial degree to the success of the Company. The S-8
registration  dated June 1, 1996, allowed for the designation of 1,000,000 units
for awards  pursuant to this plan.  During the six months  ended March 31, 1997,
the Company issued 872,641 shares for a value of $1,017,217.

NOTE 6.   COMMITMENTS AND CONTINGENCIES

Contingent liabilities -

IFM acquisition contingency -

On June 5, 1995,  the Company  entered into a purchase  agreement for all of the
issued and  outstanding  stock of IFM,  Inc.  Pursuant to this  agreement  and a
related consulting  agreement,  the Company agreed to pay the former stockholder
of IFM a consulting fee of $10,000 per month and guaranteed  that in conjunction
with the consulting fees and sale of the stock,  after the restriction period of
24 months,  he would  realize a minimum of $900,000.  It is  estimated  that the
Company's  stock  would have to  decrease  to $1.94 per unit  before  additional
shares and/or consulting fees are due.

Notes payable stock commitment -

Under terms of the loan  agreement  refinancing  the Midland  club,  the Company
pledged, among other things, 50,000 fully paid and unrestricted shares of common
stock of  HealthTech.  If the value of these shares become less than $150,000 at
the end of any given calendar quarter,  the Company is obligated to deposit with
the bank within 10 business days,  additional fully paid and unrestricted shares
of common  stock of  HealthTech  such that the value of all shares  pledged is a
minimum of  $150,000.  During the second  quarter of fiscal  1997,  the  Company
pledged an  additional  51,351 shares to meet this  requirement  for the quarter
ended December 31, 1996. The Company is also a primary  guarantor under terms of
the note which at March 31, 1997 was approximately $781,000.

Results - Stark Street, Inc. Loan -

As part of the  acquisition of the Stark Street Club, the Company assumed a loan
originated through a local bank and the Small Business Administration.  The loan
agreements contain a "due on sale" clause if the property is transferred without
prior  written  approval  of the  lending  institution.  Such  approval  was not
obtained in conjunction  with the acquisition of the club.  While the Company is
currently  in  substantial  performance  with  other  provisions  and  covenants
contained in the loan agreements,  should the lending  institution  discover the
property was transferred without approval, the remaining unpaid balance could be
accelerated  and become  immediately due and payable.  The remaining  balance at
March 31, 1997, was approximately $361,000.

NOTE 7.   SUBSEQUENT EVENTS

In March,  1997,  the Company  entered  into an  agreement to acquire all of the
assets of Stronghold, Inc. in Bedford, Texas, effective as of April 1, 1997. The
Company  acquired  all of the assets in exchange for the  assumption  of certain
lease, service and tax obligations (see Exhibit 1).


<PAGE>


NOTE 8.  INDUSTRY SEGMENTS

The Company classifies its revenues into two divisions:  Health Care Centers and
Equipment Sales.

ITEM II - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
          CONDITION AND RESULTS OF OPERATION

In the first two quarters of fiscal 1997  HealthTech  International,  Inc.  (the
Company,  HealthTech or the  Registrant"),  through the operations of its Health
Care Centers,  substantially  grew in size (assets and revenues).  The financial
statements  presented  in  Item 1 of  Part I  hereof  are  incorporated  by this
reference and the following discussion should be read in conjunction  therewith.
When comparing the current  operating  results with  operating  results of prior
periods  it  must be  noted  that:  (i) the  Company  made  certain  operational
divestitures  prior to mid-fiscal  1995; (ii) the Company  acquired three health
clubs in various  periods in fiscal  1995;  (iii) the Company  acquired a fourth
health club during the third quarter of fiscal 1996,  (iv) the Company  acquired
Primus in the  first  quarter  of  fiscal  1997 and its  operations  were  first
recognized  in the  second  quarter  of fiscal  1997;  (v) the  Company  made an
operational  transition  from  health and  fitness to health  care by  providing
medical services;  and, (vi) the Company acquired its fifth health center in the
second  quarter of fiscal 1997 and which was  operational as of the date of this
report.  The newly acquired  facility will be fully operational as a Health Care
Center in the fourth quarter of fiscal 1997.

                       OVERVIEW AND CHANGES IN OPERATIONS:

COMPANY STRUCTURE AND HEALTH CENTER OPERATIONS:

As a result of the acquisitions of Primus Health Care Systems,  Inc.  ("Primus")
and a license  agreement with ULTI-MED Health  Centers,  Inc.  ("ULTI-MED")  the
management  of  HealthTech  reorganized  the  Company's  operations in the first
quarter of fiscal 1997. The Company's new  operational  organization is centered
around the formation and operation of "Health Care Centers"  which are comprised
of "Primary Care Medical  Clinics" and "Health  Centers".  Health  Centers offer
state  of the art  physical  fitness  equipment  that is used by  clientele  for
rehabilitation and general strength,  sports and fitness training.  HealthTech's
Primary Care Medical  clinics  provides  protocol based primary care medical and
chiropractic care, advanced diagnostic testing and therapeutic and post surgical
rehabilitation.  Each of the  clinics is  situated  within one of the  Company's
Health Centers in  approximately  a 2,000 square foot space.  The combination of
Primary Care Medical  Clinics and Health Centers  creates the Company's  primary
operating   unit  .  .  .  Health  Care  Centers.   Health  Care  Centers  offer
comprehensive  primary  care  medical and health and  fitness  services to their
clientele. HealthTech's expansion and acquisition strategy is to find management
distressed  facilities and acquire such by using the Company's (R-144) stock and
minimal cash or no cash or by leasing  facilities  on favorable  lease terms and
convert those facilities into Health Care Centers.

In  February  of 1997  the  Company  reported  the  details  of the  Primus  (as
subsequent  event) and ULTI-MED  transactions  in its annual report on Form 10-K
for the fiscal year ending  September  30, 1996 (the "1996 Form 10-K") which the
Company hereby  incorporates  and makes a part of this Quarterly  Report on Form
10-Q for the Company's second quarter of operations  ending March 31, 1997 (this
"Form 10-Q Report").


<PAGE>


HEALTH CENTER OPERATIONS:

HealthTech's  operational  plans and  strategy  for all of its present and to be
acquired  Health Centers is that they be converted into Health Care Centers.  At
March 31, 1997, the Company's Health Center  Operations  Division  operated four
facilities  at the locations set forth in the 1996 Form 10-K. At March 24, 1997,
the Company  acquired a 31,000 square foot center in the city of Bedford,  Texas
(part of the Dallas/Ft.  Worth metroplex area/the "Bedford" facility), which the
Company began operating in April,  1997. The Company's  Heath Center  operations
totaled  five  facilities  at March 31,  1997.  In keeping  with its strategy of
creating Health Care Centers by placing "Primary Care Medical" clinics in all of
the Company's Health Centers, HealthTech has renovations underway at the Bedford
facility for  conversion  of the  facility to a Health Care  Center.  The clinic
construction  at the Bedford  facility  will be  completed  in July,  1997.  The
purchase of the new Bedford  facility was achieved with no stock and no cash but
rather in exchange only for HealthTech's management expertise and the assumption
of certain leases and ad valorem tax obligations.

As of April 1,  1997,  HealthTech  took over the  management  of two  additional
facilities  in  Arlington  and  Sherman,  Texas which were  formerly  managed by
Primus.  The  Arlington and Sherman  facilities  have fully  operational  Health
Centers  (smaller than the Company's other  facilities ) and full size and fully
operational  Primary Care Medical  Clinics which operate as Health Care Centers.
With the addition of the Arlington  and Sherman  Health  Center  operations  the
Company  has  seven  Health  Centers  and  four  fully  integrated  health  care
facilities.

The Company's health and fitness management  consulting services and real estate
services are also part of the Health and Fitness Operations.

HEALTH AND FITNESS EQUIPMENT DISTRIBUTION:

At March 31,  1997 the Health and  Fitness  Equipment  distribution  Division is
operated through the Company's wholly owned subsidiary Fitness  Performance Inc.
which  distributes  equipment  and other  health  related  goods to health clubs
including the clubs owned by the Company.

MEDICAL OPERATIONS;

At March 31, 1997 the Company operated four "Primary Care Medical" clinics.  The
clinics are located in Midland, Texas, Fort Worth (Riverbend), Texas, Arlington,
Texas and Sherman,  Texas.  Certain of the  Company's  clinics are  operating at
close to full  capacity and in the third  quarter of 1997 the Company will begin
implementation  of an  acquisition  and  expansion  plan to  acquire  "Satellite
Clinics"  which will not be located in the  Company's  Health  Centers  but will
augment the clinics that have reached full  operating  capacity.  The  Satellite
Clinics will provide the same services as the clinics in the Health Care Centers
and will allow the Company to increase its customer  base,  create  neighborhood
access and fully  utilize  the  referral  capacity  of the Health  Centers.  The
Company plans to expand its operations into the Satellite Clinics using the same
expansion strategies that it has used for its other expansion and acquisitions.


<PAGE>



                               FINANCIAL ANALYSIS

EBITDA

The EBITDA analysis below is one method to measure the performance and status of
the Company at March 31, 1997. The EBITDA  analysis  should not be considered an
alternative  to any  measure  of  performance  or  liquidity  promulgated  under
generally accepted  accounting  principals (GAAP) nor should it be considered as
an indicator of the Company's overall financial performance.

EBITDA is calculated as follows:

                                          Quarter Ended          Year to Date
                                             3/31/97                3/31/97

Net income                                  $1,022,215              $1,244,182
Interest expense                                72,807                 136,705
Provision for taxes                            526,596                 640,943
Depreciation and amortization                  163,082                 377,042
                                             ---------                --------
Earnings before interest, taxes
depreciation and amortization               $1,784,700              $2,398,872
                                             =========               ========= 
Primary  earnings  per share are based on net  income  not  EBITDA.  Should  the
primary  earnings per share be calculated on EBITDA,  the results for the period
ended March 31,  1997 for the  quarter  would be $0.28 and year to date would be
$0.37.

INCOME TAX CREDITS

The  Company  has sold those  operations  that  previously  created  significant
operating losses;  however, the Company was able to preserve certain tax credits
associated  with the  divestiture  of these  operations in the form of NOL ("net
operating  losses") carry forwards.  HealthTech's  management  believes that the
Company has  approximately an eight million dollar credit of which a portion may
be able to be applied  in this  fiscal  year and future  years to reduce the tax
owed by the company.  In the event the NOL carry  forwards can be applied to the
Company's  current year as a credit to the Company's tax liability for the first
six months of operations in fiscal 1997, the Company's operating income would be
increased  by $641,000  to  $1,885,000  in after tax profit  from the  currently
reported  $1,244,000.  However,  the Federal Income Tax rules and guidelines for
the  application  of the NOL carry  forwards are complex and  stringent  and the
application  of this tax  credit may or may not be able to be used or fully used
by the  Company as a credit  against  tax  liability.  (See  notes to  financial
statement in the 1996 Form 10-K).


<PAGE>


LIQUIDITY

At March 31,  1997 the  Company's  debt to equity  ratio was 1:5 and its current
ratio was 1.25:1.  At September 30, 1996,  the Company's  current ratio was 1:3.
Management  attributes the  significant  positive change in the current ratio to
the fiscal year to the net income after taxes of $1,244,182. As set forth in the
Company's  1996 Form 10-K the Company has continued to  successfully  follow its
plan to restructure  short-term and long term debt. In the first two quarters of
fiscal  1997  the  Company   paid  down  the   outstanding   loan  on  the  Fort
Worth/Riverbend  facility by $100,000  and plans to continue to reduce short and
long-term debt to improve its debt to equity and current ratios for fiscal 1997.
(Note:  in April 1997 the Company  paid down the Ft.  Worth/  Riverbend  loan by
another  $50,000).  The Company  recognized 5.7 million Goodwill as an asset for
the Primus truncation and the income stream associated with Primus' operations.

Since  September  30, 1997  HealthTech  has  significantly  improved its working
capital  position  in that cash has  increased  from  $9,018  six  months ago at
September 30, 1996 to $383,000 and $425,000 in current  Certificates  of Deposit
at March 31,  1997.  The  Company  has  obtained  lines of credits  which it has
secured with cash the Company has invested in the certificates of deposit, which
are now  restricted  as  collateral.  As set forth in the 1996 Form 10-K and the
information  disclosed in this Form 10-Q Report,  the Company  believes its cash
flows are sufficient to meet its short-term cash  requirements.  During the past
two fiscal years and year to date fiscal 1997,  the Company has  satisfied  some
cash  requirements  through the  issuance of the  registrants  common  stock and
securities in accordance with SEC regulations.

RESULTS OF OPERATIONS

The Company's  revenues have grown  substantially over the last two fiscal years
through the acquisition of existing health clubs. In the first quarter of fiscal
1997 Company's revenues were  significantly  impacted by recognition of the full
operations  of one  "Primary  Care  Medical"  clinic and the  operations  of the
Company's  first  Health  Care  Center.  In the second  quarter  of fiscal  1997
HealthTech  added  three  Health  Care  Centers  by  integrating  and adding the
operations  of three  additional  "Primary  Care  Medical".  The  result of this
expansion was a significant  increase in the Company's primary earning per share
for the second  quarter  of fiscal  1997 to $0.16 and $0.19 for the year to date
(six months of operation)  compared to $0.10 in fiscal 1996 for twelve months of
primary earnings and ($0.66) in fiscal 1995. The Company's  management  believes
that the results  for fiscal 1997 year to date are in line with its  operational
projections set forth in the 1996 Form 10-K. Based upon the current  operations,
the plan to open three more  "Primary  Care  Medical"  clinics in the  Company's
existing  Health  Centers  as  well  as the  acquisition  of  additional  health
Facilities for conversion into Health Care Centers and Satellite  Clinics,  will
likely  produce  revenues  in excess of  $25,000,000  for the  twelve  months of
operation  in fiscal  1997 as  compared  to  $5,598,000  for fiscal  1996.  This
projection is based upon management  annualizing the Company's  current revenue,
past performance,  industry trends and management's  belief that its acquisition
and expansion plans are reasonable and achievable in fiscal 1997, however,  such
projections are speculative  since certain factors outside the Company's control
and/or other events may effect operational performance.

At March 31, 1997 HealthTech's  management has reserved approximately 38% of the
revenues  generated  through  the  clinic  operations.  HealthTech's  management
believes that it currently is realizing  approximately 65% payment of its clinic
accounts  receivables  and while the  current  reserves  may be  adjusted in the
future,  once  the  Company  has  historical  information  with  which  to  make
adjustments,  HealthTech's  management  believes  the  current  38%  reserve  is
appropriate. These reserves will enable the Company to recognize adequate income
from the medical operations without the uncertainty of future write-downs.


<PAGE>


Note - Debt to equity  ratio is  computed  above by the formula - Debt to Equity
Ratio = Debt/ Equity.  Current ratio is computed  above by the formula - Current
Ratio = Current Assets / Current Liabilities.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

Not Applicable

Item 2.  Changes in Securities

Not Applicable

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

Not Applicable

Item 6.  Exhibits and Reports on Form 8-K

Exhibit 1.     Stronghold, Inc. Asset Purchase Agreement


<PAGE>



SIGNATURES

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

HEALTHTECH INTERNATIONAL, INC.


By:   /s/ Gordon L. Hall            Date: April 28, 1997
Gordon L. Hall, Chief Executive Officer and
Chairman of the Board of Directors



By:   /s/ Tim Williams              Date: April 28, 1997
Tim Williams, President



By: /s/ Stephen L. Smith            Date: April 28, 1997
Stephen L. Smith, Chief Financial Officer and
Vice President



<PAGE>









                                     PART II


                                     ITEM 6

                                    EXHIBIT I



<PAGE>


                            ASSET PURCHASE AGREEMENT



         This Agreement is made by and among RESULTS BEDFORD, INC. ("Buyer"),  a
Texas corporation, STRONGHOLD, INC. ("Seller"), a Texas corporation, and TIMOTHY
MCKYER,  in the  capacity of a  guarantor,  for the purpose of  establishing  an
agreement of sale and purchase of certain assets between Buyer and Seller.


                                    RECITALS:


         WHEREAS,  Seller  owns and  operates  a health  club  under the name of
"Family Fitness Exchange," and all operations,  activities, and services related
to said club shall collectively be referred to as the "Business"; and

         WHEREAS,  Seller desires to sell to Buyer and Buyer desires to purchase
from Seller certain assets of the Business.

         NOW,  THEREFORE,  in  consideration  of the foregoing  premises and the
mutual covenants herein contained,  the parties,  intending to be legally bound,
agree as follows:

                                    AGREEMENT

                                   ARTICLE I.

                           Sale and Purchase of Assets

         Section  1.01.  Upon  the  terms  and  conditions  set  forth  in  this
Agreement,  Seller agrees to sell,  transfer,  convey,  and assign to Buyer, and
Buyer  agrees to purchase  from Seller,  at the time of the closing  hereinafter
provided for, all of the assets (the  "Assets") of Seller's  Business  which are
owned by Seller  and to be  transferred  to Buyer  free and clear of any and all
claims, liens, and encumbrances of any kind or nature whatsoever, other than the
liens held by (1) Republic  Leasing  Company  (Account No.  9495084 with monthly
payments of $560.83 and $43.46); (2) Standard Professional Services, LP (Account
no. 952-94 with a monthly payment of $887.00); (3) 3M Financing Services (with a
monthly




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<PAGE>


payment of $399.99); (4) Lanier Leasing (with a monthly payment of $208.00); (5)
ADT  Security  Systems  (Account  No.  010034505095  with a monthly  payment  of
$125.00);  (6) TCI Cable Television (with a monthly payment of $54.00);  and (7)
Southwestern   Bell  Yellow   Pages  (with  a  monthly   payment  of   $207.23);
(collectively,  the  "Contracts,"  with the  aggregate  monthly  payments in the
amount of $2,485.51 to be referred to herein as the  "Payments"),  and the liens
for ad valorem taxes in the approximate amount of $25,852.00 on Seller's Assets,
consisting of:

                  (a)  All of  Seller's  fixed  assets  located  on  the  leased
premises (the "Fixed  Assets"),  including,  but not limited to, all  furniture,
furnishings,  machines,  exercise  equipment,  massage tables,  physical therapy
equipment,  rehabilitation  equipment,  office  materials  and  supplies,  phone
systems,  computer systems, and other equipment.  Such Fixed Assets include, but
are not limited to,  those  assets  listed on Exhibit  "A"  attached  hereto and
incorporated  herein by reference for all purposes and all other tangible assets
not held by Seller for sale to the public in the ordinary course of the Business
and all assets of a  character  similar  to that  previously  described  in this
paragraph which were acquired by Seller between February 25, 1997, the effective
date of such list, and the date of closing.

                  (b)  All  of  Seller's   tenant   improvements   (the  "Tenant
Improvements") made to the leased premises on which the Business is conducted.

                  (c) All costs  and sales  records  and data,  customer  lists,
mailing lists, files,  advertising material and methods, all accounting records,
personnel records,  warranty records,  telephone numbers, and any files required
to be retained after the closing by any applicable law or government  regulation
(collectively, the "Records and Lists").

                  (d)      All  of  Seller's  health-related  products  for  use
                           on  and/or  sale  to  customers  (collectively,   the
                           "Miscellaneous Inventory").

                  (e)      All educational materials, such as books, video tapes
                           instructional manuals, etc.

                  (f)      Buyer  shall be the owner of any and all  accounts  
                           receivable  relating  to the Business as of the date 
                           of closing.




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<PAGE>


                  (g)      All of Seller's security and/or other type of 
                           deposits relating to any and all utilities.

                  (h)      All licenses, permits, and/or authorizations (the 
                          "Permits") held by Seller that relate to the Business.

         Section  1.02.  The only assets of the  Business  (or related  thereto)
owned the Seller not being purchased by Buyer are those certain assets described
on Exhibit 'B" attached  hereto and  incorporated  herein by  reference  for all
purposes.  An asset or property on the leased premises which is not set forth on
Exhibit "B" shall be considered to be part of the Assets purchased by Buyer from
Seller.  Further,  any assets  listed on Exhibit "B" which  still  remain on the
premises of the Business  after five (5) days from the date of closing  shall be
considered, and shall become, the property of Buyer.

                                   ARTICLE II.

                           Purchase Price and Payment

         Section 2.01. The total purchase price (hereinafter  referred to as the
"Purchase  Price")  for the  Assets  is the cost of  assuming  the full  balance
payable on the Contracts,  and taking  Seller's Assets subject to any ad valorem
taxes currently owed on the Assets.

         Section 2.02. The Purchase Price shall be paid as follows:

                  (a) Buyer shall assume the full balance payable on 
                      obligations of Seller under the Contracts; and

                  (b) Buyer accepts  Seller's  Assets  subject to any ad valorem
taxes owed thereon.  Buyer intends to attempt a compromise  settlement agreement
plan to try to settle with taxing authorities on the taxes.

         Section 2.03.  Buyer agrees to hold TIMOTHY MCKYER  harmless  regarding
the ad valorem taxes as provided in the indemnity provision of this Agreement.

         Section  2.04.  Seller and TIMOTHY  MCKYER  guarantee,  represent,  and
warrant to Buyer that there are no claims outstanding against Seller that may be
asserted  against  the  Assets  by any  party,  other  than  the  Contracts  and
applicable taxing authorities in connection




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<PAGE>



with ad valorem  taxes owed on the Assets.  Further,  Seller and TIMOTHY  MCKYER
hereby  agree to hold Buyer  harmless  from any such  claims as  provided in the
indemnity portion of this Agreement, excluding from this indemnity the Contracts
and the ad valorem taxes.  Buyer shall give Seller notice upon any claim arising
regarding this indemnity provision.

         Section  2.05.  Starting on April 1, 1997,  Buyer  agrees to escrow the
first $2,485.51 (or a lesser amount if applicable as contracts are paid in full)
of funds that are collected in each month from the operation of the Business and
to use such  escrowed  funds to pay any of the  Payments  due and owing upon the
Contracts. This shall be a continuing obligation. Each month such escrowed funds
shall be wired to Buyer's attorney,  T. Alan Owen, IN TRUST, and Mr. Owen shall,
immediately  upon  receipt of such funds pay any and all  Payments due and owing
upon the "Contracts."

                                  ARTICLE III.

                       Warranties, Claims, and Liabilities

         Section 3.01. It is hereby  stipulated and agreed that Seller is liable
for all financial  obligations of the Business up to and prior to April 1, 1997,
including,  but not limited to, claims sounding in tort, contract, or otherwise.
Further,  Seller and TIMOTHY MCKYER agree to indemnify  Buyer (and its assignees
and  successors  in  interest)  against  and hold Buyer (and its  assignees  and
successors  in interest)  harmless  from any claim,  action,  or cause of action
arising  prior to April 1, 1997,  according to the  indemnity  provision of this
Agreement.

                  Notwithstanding  the  above  and  foregoing,  Buyer  expressly
agrees to assume all sums due under the  Contracts  accruing or to accrue on and
after April 1, 1997, and accepts the Assets subject to the ad valorem taxes owed
thereon.  Buyer is liable for all financial  obligations of the Business arising
on or after April 1, 1997,  including,  but not limited to,  claims  sounding in
tort, contract, or otherwise, and Buyer agrees to hold Seller and TIMOTHY MCKYER
harmless  from any such  claim,  action,  or cause of  action  according  to the
indemnity provision of this Agreement.

         Section 3.02.  Buyer  assumes any and all  contracts and  agreements of
Seller to perform services for or on customers and/or their assignees  effective
April 1, 1997. Buyer agrees to indemnify Seller from any claim, action, or cause
of action on the contracts




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<PAGE>



or agreements of Seller assumed according to this provision,  such hold harmless
being in accordance with the indemnity provision of this Agreement.

         Section 3.03.  Except as expressly set forth in this  Agreement,  Buyer
does not assume any liabilities or contracts of Seller, nor take title to any of
the  Assets  subject  to any  liens  or  encumbrances  of  any  kind  or  nature
whatsoever,  other than the  Contracts and the ad valorem taxes owed on Seller's
Assets. Included in the foregoing, by way of illustration and not by limitation,
are mortgages, liens, encumbrances, liens or liabilities for unpaid taxes (other
than ad valorem taxes),  installment sales contracts,  leases, labor agreements,
payroll items,  vacation pay, sick pay,  disability  pay,  retirement  benefits,
medical benefits, and any and all other fringe benefits and the like. Buyer does
not agree to assume any past, current, or future  responsibility for such items,
whether  or not  Buyer  may  elect to hire or not hire any of  Seller's  current
employees.  Buyer does not agree to the continued  employment of any of Seller's
employees, except as Buyer may from the date of closing separately contract with
such employees,  agents,  consultants,  or independent  contractors.  Seller and
Buyer  specifically  acknowledge  that  Buyer  does  not  assume  in any  manner
whatsoever  any union  contracts  that may be  outstanding  with  respect to the
Business.

                                   ARTICLE IV.
                                     Closing
         Section  4.01.  The closing of the  purchase  and sale of the Assets of
Seller's  Business shall take place at the offices of Buyer's  counsel,  T. Alan
Owen, 2017 East Lamar, Suite 100, Arlington, Texas 76006, on or before March 19,
1997.  The closing will have an effective  date of April 1, 1997,  at which time
Seller will cause all funds  (dues)  from the  operation  of the  Business to be
deposited into Buyer's accounts (from and after April 1, 1997).

         Section 4.02. At the closing, Seller will cause all of the following to
be delivered to Buyer:

                  (a)  Executed  copies  of all  documents  reasonably  required
pursuant  to the  provisions  of this  Agreement  in  order to  consummate  this
transaction.




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<PAGE>



                  (b) Such instruments of conveyance,  negotiation,  assignment,
and/or  transfer as Buyer may  reasonably  request to accomplish the transfer of
the ownership of the purchased Assets to Buyer, including, but not limited to, a
bill of sale with  general  warranty  and any  other  documents  that  Buyer may
reasonably  request to fully and  completely  transfer  to Buyer  those  Assets,
rights,  deposits, and claims to which Buyer is entitled under the terms of this
Agreement.

                  (c)      All keys to the premises occupied by the Business in 
                           its possession or control.

                                   ARTICLE V.

                         Representations and Warranties

         Section 5.01. Seller represents, warrants, and agrees to and with Buyer
as follows:

                  (a)      Seller is a corporation duly organized,  validly 
                           existing, and in good standing under the laws of the 
                           State of Texas.

                  (b) Seller has the full and  unrestricted  right and power (i)
to make and give, and to bind itself by these representations,  warranties,  and
agreements;  and (ii) to sell, transfer, convey, and assign the Assets of Seller
to Buyer.

                  (c) Seller is duly authorized,  qualified,  and licensed under
any and all  applicable  laws and  regulations  to carry on the  Business in the
place and in the manner presently being conducted.

                  (d) Seller  has or will have at the date of  closing  good and
merchantable title (and complete right of possession) to all of the Assets to be
transferred  hereunder,  and will transfer and convey the Assets to Buyer,  free
and clear of any liens, claims, encumbrances, and charges whatsoever, other than
the Contracts and the ad valorem taxes owed on Seller's Assets.  The instruments
of  assignment  and transfer  delivered by Seller on the date of Closing will be
adequate  to  convey  all  rights  of  Seller  in and to  the  Assets  purchased
hereunder.  All of the Assets will be conveyed to Buyer by Seller on the date of
closing in an "AS IS" condition.

                  (e) There is no agreement  presently in effect  between  
Seller and any person,  organization,  corporation,  or other entity




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<PAGE>


(except with Buyer  pursuant  hereto)  pursuant to which  Seller will,  upon the
occurrence of certain conditions,  sell, transfer, convey, assign, or in any way
encumber the Assets.

                  (f) Neither the execution nor the delivery nor the performance
of this Agreement will violate any provisions of federal,  Texas,  or local law;
any  order of any  court or other  governmental  agency  or  authority,  whether
federal,  state, or local; or any agreement or other  instrument to which Seller
is a party or by which Seller is bound.  This Agreement  constitutes  the legal,
valid,  and binding  obligations of Seller,  enforceable in accordance  with its
terms.

                  (g) No  consent  or  approval  by any  governmental  agency or
authority or nongovernmental person or entity is required in connection with the
execution,  performance,  and  delivery  by  Seller  of  this  Agreement  or the
consummation by Seller of the transactions contemplated herein.

                  (h) Seller is not in violation of any federal, state, or local
law or  regulatory  requirement  applicable  to the  Business.  Seller  has  not
received any notice or complaint  from any  governmental  agency or authority in
respect  of any  claim or  violation  of any law,  regulation,  order,  license,
permit, or standard related to any such legal requirement.

                  (i) Seller will  indemnify  and hold Buyer  harmless  from any
loss resulting from a breach of any representation or warranty contained in this
Agreement.  The  representations  and  warranties  of Seller  shall  survive the
closing.

         Section 5.02. Buyer represents, warrants, and agrees to and with Seller
as follows:

                  (a)      Buyer is a corporation duly organized,  validly  
existing,  and in good standing under the laws of the State of Texas.

                  (b) The execution, delivery, and performance of this Agreement
by Buyer (including the execution of all documents  incident to the consummation
of  the  transactions  contemplated  herein)  will  be  duly  authorized  by all
necessary  corporate  action  and will not  violate  any  provision  of  Buyer's
Articles of  Incorporation  or Bylaws or any  agreement or other  instrument  to
which Buyer is a party or by which it is bound.




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                           (tjc/1173-5p3.agr) Page 7


<PAGE>


                  (c) Buyer will  indemnify  and hold Seller  harmless  from any
loss resulting from a breach or any representation or warranty contained in this
agreement.  The  representations  and  warranties  of Buyer  shall  survive  the
closing.

                                   ARTICLE VI.

                                    Covenants

         Section  6.01 Seller  covenants  and agrees  that,  except as may  
otherwise  be consented to or approved by Buyer in writing,
Seller:

                  (a) will  conduct its Business  only in the  ordinary  course,
retaining its Business  organization and using all reasonable  efforts to retain
the goodwill of its suppliers,  customers,  and others having business relations
with it and to keep available the services of its present employees, if any;

                  (b) will not  enter  into any  transaction  other  than in the
ordinary  course  of  business  or incur or agree  to incur  any  obligation  or
liability except  obligations or liabilities  incurred in the ordinary course of
business;

                  (c)      will not sell or otherwise dispose of any Fixed 
                           Assets, Records and Lists, or other Assets;

                  (d)      will comply with all laws affecting the operation of 
                           the Business; and

                  (e)      will not allow any Permits to lapse.

         Section 6.02.   Buyer covenants and agrees that it:

                  (a)      will obtain consents,  authorizations,  or approvals 
of any governmental or nongovernmental entity necessary for the consummation of
the transactions contemplated by this Agreement; and

                  (b) will  promptly  do all such  reasonable  acts and take all
such  reasonable  measures  as may be  appropriate  to enable it to perform  the
agreements, obligations, and covenants herein provided to be performed by it.




ASSET PURCHASE AGREEMENT
                           (tjc/1173-Sp3.agr) Page 8


<PAGE>


                                  ARTICLE VII.
                                   Assignment

         Neither  party shall have the right to assign all or any portion of the
obligations, duties, and benefits of this Agreement without the prior consent of
the other party.

                                  ARTICLE VIII.
                  Conditions Precedent to Obligations of Buyer

         Section 8.01. All obligations of Buyer under this Agreement are subject
to the fulfillment,  on or before the closing or funding (as applicable), of the
following conditions:

                  (a)Buyer shall have received from Seller the certificates and 
documents set forth in this Agreement; and

                  (b) No suit,  action,  proceeding,  or investigation  shall be
pending  or  threatened  before  any  court  or  other  governmental  agency  or
instrumentality  against, by, or affecting Seller or the Assets of the Business,
which would prevent the consummation of this Agreement or any of he transactions
contemplated hereby.
                                   ARTICLE IX.
                                    Indemnity

         Section  9.01 Seller and TIMOTHY  MCKYER  agree to  indemnify  and hold
Buyer harmless against and in respect of:

                  (a) Any and all claims, demands, expenses, losses, damages, or
deficiencies  of any  nature  whatsoever  resulting  from,  arising  out of,  or
attributable  to (i) any  misrepresentation  by  Seller,  (ii) any breach of any
representation or warranty made by Seller, (iii) non-fulfillment of any covenant
on the part of Seller,  (iv) any  inaccuracy or omission in any  certificate  or
other instrument furnished by Seller hereunder,  or (v) any debt, liability,  or
obligation of Seller relating to the Business that originated  prior to April 1,
1997, not expressly assumed by Buyer, whether or not such debt,  obligation,  or
liability is absolute, accrued, or contingent;




ASSET PURCHASE AGREEMENT
                           (tjc/1173-5p3.agr) Page 9


<PAGE>


                  (b)  Any and all actions, demands,  judgments,  costs, 
interests, and legal and other expenses incident to any of the foregoing; and

                  (c)  All  agreements  expressed  in this  contract  for a hold
harmless or indemnity shall be included in this indemnity provision.

         Section  9.02 Buyer  agrees to  indemnify  and hold  Seller and TIMOTHY
MCKYER harmless against and in respect of:

                  (a) Any and all claims, demands, expenses, losses, damages, or
deficiencies  of any  nature  whatsoever  resulting  from,  arising  out of,  or
attributable  to (i) any  misrepresentation  by  Buyer,  (ii) any  breach of any
representation or warranty made by Buyer, (iii)  non-fulfillment of any covenant
on the part of Buyer,  (iv) any  inaccuracy  or omission in any  certificate  or
other instrument furnished by Buyer hereunder,  or (v) any debt,  liability,  or
obligation  of Buyer  relating to the Business  that  originated  after April 1,
1997, whether or not such debt, obligation,  or liability is absolute,  accrued,
or contingent;

                  (b)  Any and all actions, demands,  judgments,  costs, 
interests, and legal and other expenses incident to any of the foregoing; and

                  (c)  All  agreements  expressed  in this  contract  for a hold
harmless or indemnity shall be included in this indemnity provision.

         Section  9.03.  Procedure  on  Indemnity.  In the  event  a  claim  for
indemnify or hold harmless arises according to this Agreement,  the party making
the claim for  indemnity  or hold  harmless  shall give notice in writing to the
other  party,  identifying  fully the basis for the claim,  action,  or cause of
action upon which an indemnity or hold harmless is sought.  The receiving  party
shall then determine in its exercise of good business judgment whether or not to
make immediate payment or resolution by settlement of the claim or action; or to
defend the action.

                  Notice in writing  shall then be given within ten (10) working
days after a demand for an  indemnify or hold  harmless as to the  determination
made by the  indemnifying  party to  resolve,  settle,  or  defend  the claim or
action. The costs of defense shall




ASSET PURCHASE AGREEMENT
                           (tjc/1173-5p3.agr) Page 10


<PAGE>


be borne and paid by the  indemnifying  party,  which shall  include the cost of
attorneys' fees and court costs.

                  The party seeking  indemnity  shall  cooperate  fully with the
indemnifying party in order to minimize  duplication of effort in the defense of
the claim or action,  and shall fully cooperate in allowing a defense to be made
in the name of the party seeking indemnity or seeking to be held harmless.

                  Upon a final  resolution  by final  judgment of a court of law
having jurisdiction of the dispute, the indemnifying party shall make payment in
full of any costs, and expenses, and any damages that may be finally adjudged in
the claim or action within ten (10) business days after the final judgment.

                                   ARTICLE X.

                              Brokers and Expenses

         Each party hereto  represents  to the other that it has not  authorized
any  broker  or  finder to act on its  behalf  in  connection  with the sale and
purchase  hereunder  and  that  it has not  dealt  with  any  broker  or  finder
purporting to act for any other party. Each party hereto agrees to indemnify and
hold harmless the other party from and against any and all  liabilities,  costs,
damages,  and  expenses  of any kind or  character  arising  from any claims for
brokerage or finder's  fees,  commissions,  or other  similar fees in connection
with the transactions  contemplated herein insofar as such claims shall be based
upon alleged arrangements or agreements made by such party or on its behalf.

                                   ARTICLE XI.

                              Default and Remedies

         Section  11.01.  Seller shall be deemed in default  hereunder  upon the
occurrence of any one or more of the following events:

                  (a)      Any of Seller's  warranties or  representations  set 
forth herein are untrue when made or at closing and are determined to be 
material; or

                  (b)  Seller  fails  to  meet,  comply  with,  or  perform  any
covenant,  agreement,  or obligation on its part required within the time limits
and in the manner required in this Agreement.




ASSET PURCHASE AGREEMENT
                           (tjc/1173-5p3.agr) Page 11


<PAGE>


         Section 11.02.

                  (a) Buyer shall be deemed to be in default  hereunder if Buyer
fails to deliver, at the closing,  any of the items specified in Section 2.02 of
this Agreement,  or if Buyer shall breach any other provision of this Agreement,
or if Buyer terminates this Agreement prior to closing without cause.

                  (b) In the event  Buyer  shall  default in the payment of "the
Contracts"  identified in Section 1.01,  Seller shall be entitled to give notice
of breach to Buyer.  Unless Buyer cures the breach within thirty (30) days after
receipt of notice,  Seller shall be entitled to  immediate  return of the Assets
transferred  and  conveyed  under  this  agreement  (including  all  replacement
property)  and to immediate  possession  of the  premises,  and to take over the
operation of the Business facility.

         Section 11.03 In the event Seller is deemed to be in default 
hereunder, Buyer may, at Buyer's sole option, do any one of the following:

                  (a)  Terminate this Agreement by written notice delivered 
to Seller on or before the closing; or

                  (b)  Enforce specific performance of this Agreement against 
Seller; or

                  (c)  Exercise  any other right or remedy  Buyer may have under
Section 11.02(b) of this Agreement and/or may have at law or in equity by reason
of such default,  including, but not limited to, the recovery of attorneys' fees
incurred by Buyer in connection herewith and the reasonable reliance on Seller's
promise to sell the Assets in accordance with the terms of this Agreement.

                                  ARTICLE XII.

                                  Miscellaneous

                  Section  12.01.  Any  notices,  requests,  demands,  or  other
communications  hereunder  shall be in writing  and shall be deemed to have been
duly given when mailed by United States mail,  postage  pre-paid,  registered or
certified mail, to the following addresses:




ASSET PURCHASE AGREEMENT
                           (tjc/1173-5p3.agr) Page 12


<PAGE>



         If to Buyer:                       RESULTS BEDFORD, INC.
                                            1237 Val Vista Drive
                                            Mesa, Arizona 85204
                                            Attn:  Gordon Hall

         If to Seller:                      STRONGHOLD, INC.
                                            2602 Harwood Road
                                            Bedford, Texas 76021
                                            Attn:    Jeff Parker

         If to Timothy McKyer:      Timothy McKyer
                                            18225 Kalabash Road
                                            Charlotte, North Carolina 28278

Either party hereto may change its address for  notification  purposes by giving
notice thereof in writing, as aforesaid.

         Section  12.02.  All  representations,   warranties,   covenants,   and
agreements  included  or  provided in this  Agreement  or any exhibit  hereto or
instrument  of transfer or other  certificate  or  document  delivered  pursuant
thereto, shall survive the closing.

         Section 12.03. Each party hereto shall from time to time after closing,
at the reasonable request of the other party and without further  consideration,
execute and deliver such further  instruments  of  conveyance,  assignment,  and
transfer and take such other action as the other may reasonably request in order
to more  effectively  convey and  transfer  the Assets  conveyed  hereunder  and
otherwise to effect the objectives hereof.

         Section 12.04. This Agreement  constitutes the entire agreement between
the parties and there are no representations, warranties, or covenants except as
provided herein.

         Section  12.05.   This  Agreement   supersedes  all  prior  agreements,
understandings,  negotiations,  and  discussions,  whether written or oral. This
Agreement  shall not be modified or amended  except by an  instrument in writing
signed by or on behalf of the parties  hereto.  This Agreement  shall be binding
upon and shall inure to the benefit of the parties  hereto and their  respective
successors,  assigns,  and heirs. Nothing in this Agreement is intended or shall
be construed to confer upon or give nay person other than the parties hereto and
their successors,  assigns,  and heirs any rights or remedies under or by reason
of this Agreement.




ASSET PURCHASE AGREEMENT
                           (tjc/1173-5p3.agr) Page 13


<PAGE>


         Section 12.06.  This  Agreement  shall be governed by and construed and
enforced in accordance with the laws of the State of Texas.  VENUE FOR ANY CAUSE
OF ACTION REIATING TO THIS AGREEMENT SHALL BE EXCLUSIVELY TARRANT COUNTY, TEXAS.

         Section 12.07.  Any waiver by any party of any violation of, breach of,
or default  under any provision of this  Agreement  shall not be construed as or
constitute a waiver of any  subsequent  violation,  breach of, or default  under
such  provision  or a waiver of any such party's  rights under any  provision of
this Agreement.

         Section  12.08.  This  Agreement  may  be  executed  in any  number  of
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

         Section 12.09.  The parties to this  Agreement  covenant to act in good
faith in the implementation of this Agreement.

         IN WITNESS  WHEREOF,  the  parties  have caused  this  Agreement  to be
executed to be effective as of the 25th day of February, 1997.

                                     BUYER:

                                     RESULTS BEDFORD, INC.
                                     a Texas corporation

                                     By:  /s/ T. Alan Owen
                                     T.   ALAN OWEN

                                     Agent and Attorney-in-Fact

                                     SELLER:

                                     STRONGHOLD, INC.
                                     a Texas corporation

                                     By:  /s/ Timothy McKyer
                                     TIMOTHY MCKYER
                                     President

                                     GUARANTOR:

                                     By:   /s/ Timothy McKyer
                                     TIMOTHY MCKYER




ASSET PURCHASE AGREEMENT
                           (tjc/1173-5p3.agr) Page 14


<PAGE>


                                   EXHIBIT "A"

                             FAMILY FITNESS EXCHANGE
                             INVENTORY CONTROL SHEET

ITEM NAME ............................................................. QUANTITY
     MAROON BLINDS/PER WINDOW ............................................    18
     CHAIRS ..............................................................    58
     COUCHES .............................................................     8
     ROUND TABLES ........................................................    13
     DESKS ...............................................................     9
     COMPUTERS ...........................................................     2
     TELEPHONES ..........................................................    12
     FILING CABINETS .....................................................     9
     TOWELS ..............................................................   203
     AEROBIC EQUIPMENT SHEET ATTACHED
     *STAIR STEPPERS .....................................................     6
     *TREADMILLS .........................................................     6
     *CARDIO BIKES .......................................................    12
     *AEROBIC STEPS & RISERS ........................................... 23 & 92
     REFRIGERATOR ........................................................     2
     FREEZER .............................................................     1
     PARAMOUNT EQUIPMENT SHEET ATTACHED
     FREE WEIGHTS SHEET ATTACHED

                             *CURRENTLY BEING LEASED
                      *NOT OWNED BY FAMILY FITNESS EXCHANGE
                                 MARCH 19, 1997

EXHIBIT "A"
FAMILY FITNESS EXCHANGE INVENTORY CONTROL SHEET
(TJC/1173.EKA)                                                          PAGE 1


<PAGE>


DUMBBELLS ................................................................     1
CEILING FANS .............................................................    13
REGISTER .................................................................     1
MICROWAVE ................................................................     1
STOVE ....................................................................     1
OVEN .....................................................................     1
BASKETBALLS ..............................................................    10
RACQUETBALLS & RACQUETS ................................................  50 & 3
SOCCER BALLS .............................................................     4
LADDERS ..................................................................     2
WOODEN SHELVES ...........................................................     4
DRY SAUNAS ...............................................................     2
LOCKER ROOM BENCHES ......................................................    14
LOCKERS ..................................................................   520
STEAM ROOMS ..............................................................     2
SHOWER CURTAINS ..........................................................     5
SOAP DISPENSERS ..........................................................    15
PAPER TOWEL HOLDERS ......................................................     5
RED LOCKER ROOM MATS .....................................................   200
NURSERY BEDS W/MATTRESSES ................................................     4
DRESSERS .................................................................     1
THUMB TACK BOARDS ........................................................     3

                             *CURRENTLY BEING LEASED
                      *NOT OWNED BY FAMILY FITNESS EXCHANGE
                                 MARCH 19, 1997

EXHIBIT "A"
FAMILY FITNESS EXCHANGE INVENTORY CONTROL SHEET
(TJC/1173.EXA)                                                          PAGE 2


<PAGE>


CHANGING TABLES ...........................................................    2
NURSERY READING BOOKS .....................................................   85
NURSERY MOVIE TAPES .......................................................   58
TRASH CANS ................................................................   13
POOL CHAIRS ...............................................................   18
CLOCKS ....................................................................    5
TELEVISIONS ...............................................................    2
PLANTS ....................................................................    7
SHOWER CHAIRS .............................................................    3
3-HOLE PAPER PUNCH ........................................................    1
WALL PICTURES .............................................................   15
WASHING MACHINE ...........................................................    1
DRYER .....................................................................    1
TIME CLOCK ................................................................    1
SILVER METAL SUPPLY SHELVES ...............................................    5
HANGING SHOWER CADDIES ....................................................    4
*COPY MACHINE .............................................................    1
*VIDEO GAMES ..............................................................    5
*COFFEE POT ...............................................................    1
*COLD DRINK MACHINES ......................................................    6
*BLACK FLOOR MATS/RUGS ....................................................   14
*CANDY MACHINES ...........................................................    9

                             *CURRENTLY BEING LEASED
                      *NOT OWNED BY FAMILY FITNESS EXCHANGE
                                 MARCH 19, 1997

EXHIBIT "A"
FAMILY FITNESS EXCHANGE INVENTORY CONTROL SHEET
(TJC/1173.EXA)                                                           PAGE 3


<PAGE>


    *SNACK/VENDING MACHINE .................................................   2
             PAPER CUTTER ..................................................   1
                STAPLER ....................................................   5
         TAPE DISPENSERS ...................................................   5
                  LAMPS ....................................................   2
    *CREDIT CARD TERMINAL ..................................................   1
      *CREDIT CARD PRINTER .................................................   1
           COMPUTER MOUSE ..................................................   1
ELECTRIC PENCIL SHARPENER ..................................................   1
  BLUE ROLLING DESK CHAIRS .................................................   7
              FLOOR MOPS ...................................................   2
                  BROOMS ...................................................   1
              DUST PANS ....................................................   1
       COMPUTER KEYBOARDS ..................................................   2
             POOL HEATER ...................................................   1
              POOL PUMP ....................................................   1
              SPA HEATER ...................................................   1
                SPA PUMP ...................................................   1
             INDOOR POOL ...................................................   1
       INDOOR SPA/HOT TUB ..................................................   1
             HIGH CHAIRS ...................................................   2
           BABY WALKERS ....................................................   5

                                    *CURRENTLY BEING LEASED
                             *NOT OWNED BY FAMILY FITNESS EXCHANGE
                                         MARCH 19, 1997
EXHIBIT "A"
FAMILY FITNESS EXCHANGE INVENTORY CONTROL SHEET
(TJC/1173.EXA)                                                           PAGE 4


<PAGE>


    WALL LENGTH COAT RACK
CHILDREN'S PICNIC TABLES ..................................................    4
    WHITE LOUNGE BENCHES ..................................................    3
            BABY SWINGS ...................................................    3
            WATER HOSE ....................................................    1
                PODIUM ....................................................    1
         WINDOW CURTAINS ..................................................    9
         ROCKING CHAIRS ...................................................    2
            POTTY CHAIR ...................................................    1
           DIAPER GENIE ...................................................    2
  CHILDREN'S SLIDE CENTER .................................................    1

    AEROBIC EQUIPNENT ................................................  QUANTITY
                  RADIO ...................................................    1
           BLUE AB MATS ...................................................   16
           YELLOW BANDS ...................................................    9
            GREEN BANDS ...................................................   12
           WEIGHT BELTS ...................................................    3
  RECHARGEABLE BATTERIES ..................................................    2
         1-LB. DUMBBELL ...................................................   22
         2-LB. DUMBBELL ...................................................   16
         5-LB. DUMBBELL ...................................................    8

                             *CURRENTLY BEING LEASED
                      *NOT OWNED BY FAMILY FITNESS EXCHANGE
                                 MARCH 19, 1997

EXHIBIT "A"
FAMILY FITNESS EXCHANGE INVENTORY CONTROL SHEET
(TJC/1173.EXA)                                                           PAGE 5


<PAGE>


  8-LB. DUMBBELL ...........................................................   1
  10-LB. DUMBBELL ..........................................................   5
  12-LB.  DUMBBELL .........................................................   2
  15-LB.  DUMBBELL .........................................................   2
  20-LB.  DUMBBELL .........................................................   2
  25-LB.  DUMBBELL .........................................................   2
  30-LB.  DUMBBELL .........................................................   2
  35-LB.  DUMBBELL .........................................................   4
  40-LB.  DUMBBELL .........................................................   3
  45-LB.  DUMBBELL .........................................................   2
  50-LB.  DUMBBELL .........................................................   2
  55-LB.  DUMBBELL .........................................................   2
  60-LB.  DUMBBELL .........................................................   2
  65-LB.  DUMBBELL .........................................................   2
  70-LB.  DUMBBELL .........................................................   2
  75-LB.  DUMBBELL .........................................................   2
  85-LB.  DUMBBELL .........................................................   2
100-LB. DUMBBELL ...........................................................   2

                          PARAMOUNT EQUIPMENT QUANTITY
                                  LEG SLED    1
                                  ROMAN BENCH 1

                             *CURRENTLY BEING LEASED
                      *NOT OWNED BY FAMILY FITNESS EXCHANGE
                                 MARCH 19, 1997

EXHIBIT "A"
FAMILY FITNESS EXCHANGE INVENTORY CONTROL SHEET
(TJC/1173.EXA)                                                           PAGE 6


<PAGE>


INNER THIGH ................................................................   1

OUTER THIGH ................................................................   1

MULTI HIP ..................................................................   1

ABDOMINAL ..................................................................   1

LEG CURL ...................................................................   1

LEG EXTENSION ..............................................................   1

CALF RAISE .................................................................   2

LEG PRESS ..................................................................   1

SEATED ROW .................................................................   1

LAT PULL ...................................................................   1

ROTARY TORSO ...............................................................   1

DELTOID ....................................................................   1

SHOULDER PRESS .............................................................   1

SEATED CHEST ...............................................................   1

VERTICAL BUTTERFLY .........................................................   1

BICEP CURL .................................................................   1

PULLEY SEATED ROW ..........................................................   1

SMITH MACHINE ..............................................................   1

ADJUSTABLE INCLINE BENCH ...................................................   1

ABDOMINAL LIFT .............................................................   1
DECLINE BENCH ..............................................................   1
INCLINE BENCH ..............................................................   1

                             *CURRENTLY BEING LEASED
                      *NOT OWNED BY FAMILY FITNESS EXCHANGE
                                 MARCH 19, 1997
EXHIBIT "A"
FAMILY FITNESS EXCHANGE INVENTORY CONTROL SHEET
(TJC/1173.EXA)                                                         PAGE  7


<PAGE>


              BENCH PRESS .................................................    2
            PREACHER CURL .................................................    1
 ADJUSTABLE DECLINE BENCH .................................................    1
            SQUAT MACHINE .................................................    1
        ADJ. SIT-UP BOARD .................................................    1

          WEIGHT PLATES ................................................QUANTITY
              POWER RACK ..................................................    1
VERTICAL WEIGHT PLATE RACK ................................................    2
        DOUBLE D.B. RACK ..................................................    2
               2-1/2 LB ...................................................    8
                   5-LB ...................................................   16
                 10-LB ....................................................   25
                 25-LB ....................................................   10
                 35-LB ....................................................    6
                 45-LB ....................................................   14
                 100-LB ...................................................    4





                             *CURRENTLY BEING LEASED
                      *NOT OWNED BY FAMILY FITNESS EXCHANGE
                                 MARCH 19, 1997


EXHIBIT "A"
FAMILY FITNESS EXCHANGE INVENTORY CONTROL SHEET
(TJC/1173.EXA)                                                          PAGE 8


<PAGE>


                                    EXHIBIT B
                          PERSONAL ASSETS OF TIM MCKYER
486 Compudyne Personal Computer
Laser printer
Fax machine
Credit card swipe machines
Photographs of Tim McKyer and family


EXHIBIT B                                                            SOLO PAGE
(TJC/1173.B)