U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-QSB/A
                                 Amendment No. 1

(MARK ONE)

[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                       For the quarter ended June 30, 1997

[   ] TRANSITION REPORT UNDER SECTION 13 OR A5(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934  (no fee required)



                         Commission file number 0-23544

                                EROX CORPORATION
                 ----------------------------------------------
                 (Name of small business issuer in its charter)


<TABLE>
<CAPTION>
<S>                                                                    <C>    
                        California                                                 94-3107202
-------------------------------------------------------------          -----------------------------------
(State or other jurisdiction of incorporation or organization)        (I.R.S. employee Identification No.)


           4034 Clipper Court, Fremont, California                                     94538
-------------------------------------------------------------          -----------------------------------
         (Address of principal executive offices)                                   (Zip code)
</TABLE>


                    Issuer's telephone number: (510) 226-6874


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




                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. 10,289,488 shares of Common
Stock as of July 31, 1997.



                                                                 Total Pages: 26


<PAGE>


<TABLE>

                                EROX CORPORATION

                                      INDEX
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                               <C>
PART I
FINANCIAL INFORMATION

         Item 1. Financial Statements

                  Condensed Balance Sheets (Unaudited)
                  as of June 30, 1997
                  and December 31, 1996...........................................................................2

                  Statements of Operations (Unaudited)
                  for the Three Months and Six Months Ended
                  June 30, 1997 and 1996..........................................................................3

                  Statements of Cash Flows  (Unaudited)
                  for the Six Months
                  Ended June 30, 1997 and 1996....................................................................4

                  Notes to Condensed Financial Statements (Unaudited).............................................5

         Item 2. Management's Discussion and Analysis

                  Management's Discussion and Analysis of Financial Condition and Results of Operations...........6

PART II
OTHER INFORMATION

         Item 4. Submission of Matters to Vote of Security Holders................................................9

         Item 6. Exhibits and Reports on Form 8-K.................................................................9

SIGNATURES.......................................................................................................10

</TABLE>


<PAGE>



                                     PART I
                              FINANCIAL INFORMATION


Item 1.  Financial Statements

<PAGE>
<TABLE>

                                         EROX CORPORATION

                                      Condensed Balance Sheets
                                           (unaudited)

<CAPTION>

                                                                             June 30,                December 31,
                                                                               1997                       1996
                                                                         -----------------          -----------------
                                                                            (Restated)
<S>                                                                    <C>                        <C>               
Assets

Current assets:
  Cash and cash equivalents                                            $            7,886         $        2,059,084
  Accounts receivable, net of allowances of $541,383                            1,379,620                  2,813,135
   and $501,677 in 1997 and 1996, respectively
  Inventory                                                                     4,806,498                  2,906,517
  Other current assets                                                             94,253                     74,414
                                                                         -----------------          -----------------
Total curren assets                                                             6,288,257                  7,853,150

Property and equipment, net                                                       131,749                     71,516
                                                                         -----------------          -----------------

                                                                       $        6,420,006         $        7,924,666
                                                                         =================          =================


Liabilities and Shareholders' equity

Current liabilities:
  Accounts payable                                                     $        1,113,759         $        1,218,741
  Loan payable, bank                                                            1,943,706                    500,000
  Other accrued expenses                                                        1,488,881                    876,320
                                                                         -----------------          -----------------
Total current liabilities                                                       4,546,346                  2,595,061

Commitments                                                                                          
                                                                                -                          -

Shareholders' equity:
  Convertible preferred stock, issuable in series, no par value,
    10,000,000 shares authorized, no shares issued and outstanding              -                          -
  Common stock, no par value, 40,000,000 shares authorized,
    10,289,488 and 10,156,905 shares issued and outstanding
    at June 30, 1997 and December 31, 1996, respectively                       17,667,023                 17,374,734
  Accumulated deficit                                                         (15,793,363)               (12,045,129)
                                                                         -----------------          -----------------
Total shareholders' equity                                                      1,873,660                  5,329,605
                                                                         -----------------          -----------------

                                                                       $        6,420,006         $        7,924,666
                                                                         =================          =================

<FN>
See accompanying notes
</FN>
</TABLE>
<PAGE>


<TABLE>
                                                          EROX CORPORATION

                                                 Condensed Statements of Operations
                                                             (unaudited)
<CAPTION>

                                                                        Three months ended June 30,       Six months ended June 30,
                                                                    ----------------------------------------------------------------
                                                                         1997               1996            1997           1996
                                                                    ---------------   --------------- --------------  --------------
                                                                      (Restated)                        (Restated)
<S>                                                                   <C>              <C>             <C>              <C>         
Net sales                                                             $  3,817,542     $  5,142,144    $  8,913,831     $  9,193,002
Cost of goods sold                                                         981,957        1,451,520       1,889,643        2,511,362
                                                                      ------------     ------------    ------------     ------------

Gross profit                                                             2,835,585        3,690,624       7,024,188        6,681,640

Expenses:
   Research and development                                                 73,086           78,269         164,856          161,306
   Selling, general and administrative                                   6,677,523        3,515,559      10,584,801        6,372,716
                                                                      ------------     ------------    ------------     ------------

Total expenses                                                           6,750,609        3,593,828      10,749,657        6,534,022
                                                                      ------------     ------------    ------------     ------------

Income (loss) from operations                                           (3,915,024)          96,796      (3,725,469)         147,618

Interest income                                                                491              206          12,471           12,828
Interest expense                                                            34,285            1,023          36,828            2,459
Other income                                                                   918            3,624           2,392            1,627
                                                                      ------------     ------------    ------------     ------------

Income (loss) before taxes                                              (3,947,900)          99,603      (3,747,434)         159,614

Provision/(benefit) for income taxes                                        (9,983)             --              800              --
                                                                      ------------     ------------    ------------     ------------

Net income (loss)                                                     $ (3,937,917)    $     99,603    $ (3,748,234)    $    159,614
                                                                      ============     ============    ============     ============


Net income (loss) per share                                           $      (0.38)    $       0.01    $      (0.37)    $       0.02
                                                                      ============     ============    ============     ============

Shares used in calculation of net income (loss) per share               10,284,323       10,499,030      10,252,966       10,375,896
                                                                      ============     ============    ============     ============

</TABLE>
<PAGE>
<TABLE>

                                                          EROX CORPORATION

                                                      Statements of Cash Flows
                                                             (unaudited)
<CAPTION>
                                                                                                      Six months ended June 30,
                                                                                                   1997                    1996
                                                                                             -----------------    -----------------
                                                                                                (Restated)
<S>                                                                                            <C>                      <C>        
Cash Flows from Operating Activities
Net income (loss)                                                                              $(3,748,234)             $   159,614
Adjustments to reconcile net income (loss) to net cash
  used in operating activities:
  Depreciation and amortization                                                                     31,695                   65,824

  Changes in operating assets and liabilities:
    Accounts receivable                                                                          1,433,515                 (934,481)
    Inventory                                                                                   (1,899,981)              (1,132,924)
    Other current assets                                                                           (19,839)                 120,748
    Accounts payable and accrued liabilities                                                       507,579                  697,751
                                                                                               -----------              -----------
Net cash used in operating activities                                                           (3,695,265)              (1,023,468)

Cash Flows from Investing Activities
Purchase of property and equipment                                                                 (91,928)                 (50,953)
                                                                                               -----------              -----------
Net cash used in investing activities                                                              (91,928)                 (50,953)

Cash Flows from Financing Activities
Proceeds from issuance of common stock                                                             292,289                  134,966
Proceeds from (payments on) bank borrowings                                                      1,443,706                 (500,000)
                                                                                               -----------              -----------
Net cash provided by (used in) financing activities                                              1,735,995                 (365,034)

Net decrease in cash and cash equivalents                                                       (2,051,198)              (1,439,455)
Cash and cash equivalents at beginning of the period                                             2,059,084                2,186,828
                                                                                               -----------              -----------
Cash and cash equivalents at end of the period                                                 $     7,886              $   747,373
                                                                                               ===========              ===========


</TABLE>

<PAGE>


                                EROX Corporation

                     Notes to Condensed Financial Statements
                                   (Unaudited)

                                  June 30, 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

         The accompanying  unaudited  condensed  financial  statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Rule 10-01 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included.  Operating results for the six months ended June 30, 1997 are not
necessarily indicative of the results that may be expected for the calendar year
ending  December  31,  1997.  For further  information,  refer to the  financial
statements and footnotes thereto included in the Company's annual report on Form
10-KSB for the year ended December 31, 1996.

<TABLE>
Restatement of Financial Statements

         Prior to  filling  the form 10QSB for the third  quarter  of 1997,  the
Company  determined that its previously  reported  operating results and balance
sheet  data for the three  month  and six  month  periods  ended  June 30,  1997
required  adjustment.  Revisions to these  periods have been made as a result of
previously  unknown   chargebacks  for  cooperative   advertising   expenditures
applicable  to the  second  quarter's  operations  of 1997 but not  reported  or
charged to the Company by  department  stores  until the third  quarter of 1997.
These charges  result in the  restatement  of the Company's net loss as shown in
the table below:
<CAPTION>

                                       Three Months Ended                         Six Months Ended
                                               June 30                                 June 30
                                    1997                  1997                   1997                 1997
                                 (Reported)            (Restated)             (Reported)           (Restated)

<S>                              <C>                   <C>                    <C>                  <C>          
Net (loss)                       $ (2,953,638)         $  (3,937,917)         $ (2,763,955)        $ (3,748,234)
                               ================     ==================     =================    =================
Net (loss) per share             $      (0.29)         $      (0.38)          $      (0.27)        $      (0.37)
                               ================     ==================     =================    =================
Shares used in calculation
of (loss) per share                 10,284,323             10,284,323            10,252,966           10,252,966
</TABLE>

The financial statements included herein reflect this restatement.

Inventory

         Inventories  are  stated  at the  lower of cost  (first  in - first out
method) or market.  The  inventory at June 30, 1997  consists of finished  goods
inventory valued at $2,200,319, work in process of $350,725 and raw materials of
$2,255,454.  At December 31, 1996, these balances were $1,188,882,  $154,347 and
$1,563,288, respectively.

Net Income (Loss) Per Share

         Net income per share is computed  using the weighted  average number of
shares of common  stock  outstanding  and common  equivalent  shares  from stock
options.  The latter are excluded from the  computation of net loss per share as
their effect is antidilutive.

<PAGE>


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Pronouncements

         In February,  1997,  the Financial  Accounting  Standards  Board issued
Statement  No. 128,  Earnings Per Share,  which is required to be adopted by the
Company on December  31,  1997.  At that time,  the Company  will be required to
change the method  currently used to compute  earnings per share and restate all
prior periods.  Under the new requirements for calculating  primary earnings per
share, the dilutive effect of stock options will be excluded.  There is expected
to be no impact on primary  earnings per share for either the three or six month
periods ended June 30, 1996 or June 30, 1997. The impact of Statement 128 on the
calculation  of fully  diluted  earnings  per share for  these  quarters  is not
expected to be material.

Subsequent Events

         On July 1, 1997, the Company  renegotiated  its Business Loan Agreement
with Mid Peninsula Bank of Palo Alto,  California.  The Company may borrow up to
$3.0  million at an interest  rate equal to the bank's prime rate plus .75% with
borrowings  secured  primarily by the Company's trade receivables and inventory.
The agreement,  which expires on April 1, 1998, contains certain  debt-to-equity
and working capital covenants.

         Subsequent to June 30, 1997, the Company reached an agreement to obtain
additional  equity capital from  affiliates of a current  shareholder by issuing
1,433,333 shares of convertible  preferred  stock.  This investment will provide
the Company with  $2,150,000 in equity  capital that will be used to reduce bank
borrowings and finance accounts receivable.



<PAGE>


Item 2. Management's Discussion and Analysis

         This report contains  forward-looking  statements within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities  Exchange  Act  of  1934,  as  amended.  Except  for  the  historical
information contained in this discussion and analysis of financial condition and
results  of  operations,  the  matters  discussed  herein  are  forward  looking
statements.  These forward looking statements include but are not limited to the
Company's  plans for sales  growth and  expansion  into new  channels  of trade,
expectations  of gross  margin,  expenses,  new  product  introduction,  and the
Company's   liquidity  and  capital  needs.  These  matters  involve  risks  and
uncertainties  which  include  but  are not  limited  to the  acceptance  of new
products, the credit risk associated with consolidation in the retail trade, the
costs of components and advertising  associated with product retail roll-out and
new product  introductions,  supply  constraints or difficulties,  the impact of
competitive pricing or government regulation and the risk of diverted goods in a
slow retail  environment.  These and other  factors may cause actual  results to
differ materially from those anticipated in forward-looking statements.  Readers
are cautioned not to place undue reliance on these  forward-looking  statements,
which speak only as of the date hereof.

Risk Factors

         The  Company's  future  results  may be affected to a greater or lesser
degree by the following factors among others:

         Competition:  The prestige  fragrance  market is volatile and extremely
competitive.  Consumer preferences and demands can shift dramatically reflecting
changes in fashion and current fads. There are numerous fragrance products which
are better known than the products marketed by the Company.  There are also many
companies which have  substantially  greater  resources than EROX and which have
the ability to invest heavily in new product  development and introduction.  The
Company can expect that its competitors will attempt to compete with the Company
through the introduction of new products and promotion of existing products.

         In  addition,  the  product  life cycle of  fragrances  is  shortening.
Traditional  fragrance  companies now introduce a new fragrance every one to two
years  compared  to every four to five years as in the past.  This  increase  in
competing  fragrances  makes  it  difficult  for any one  fragrance  to hold the
consumer's  attention on a long-term  basis.  Although the Company  believes the
inclusion  of  human  pheromones  as  a  component  clearly  differentiates  its
products,  other fragrances are competing for space with the Company's  products
at both the store level and in print and media advertising.

         Marketing: The failure to establish and maintain the necessary sales or
distribution  channels  could have a material  adverse  effect on the  Company's
business.  Although the Company believes its marketing strategy is the most cost
effective  way  to  introduce  its  products,  there  can be no  assurance  that
broader-scale  retail launches will be successful.  The Company cannot guarantee
that retail outlets or catalogues  will continue to carry the EROX products.  If
the current strategy is unsuccessful,  marketing of the Company's products would
require a new  strategy and may require a  significantly  more  expensive  sales
effort for which the Company may not have sufficient funds.

         Retail environment: Continued consolidation in the retail trade has led
to the emergence of four major retail players who control the major share of the
market.  Federated  Department Stores, The May Company,  Dayton  Hudson/Marshall
Fields and Dillard  Department  Stores now comprise the majority of U.S.  better
priced department stores. This consolidation could lead to price and promotional
pressure and increased credit risk for the Company.

         The major U.S.  retailers  are also  moving  away from the  traditional
service  oriented  environment  toward one that is based on "value  pricing" and
self  service.  This change in emphasis  away from trained  sales  personnel and
retailer  support of  manufacturer's  products has created an  environment  that
values "newness" and price above quality and value. In light of these changes in
the retail  environment,  the Company may find it  necessary  to seek  alternate
channels of distribution to sell their products.

         Seasonality:  Sales in the fragrance  industry are generally  seasonal,
with generally  higher sales in the second half of the calendar year as a result
of increased  demand for fragrance  products in  anticipation  of and during 


<PAGE>

the Christmas holiday season. The anticipated seasonality of the Company's sales
could cause a significant variation in its quarterly operating results.

         Patent protection:  There can be no assurance that any patent or patent
application  owned  or  controlled  by the  Company  will  continue  to  provide
commercially  significant  protection of the Company's technology or ensure that
the  Company  may not be  determined  to infringe  valid  patents of others.  No
assurance can be given that others will not independently  develop substantially
equivalent  proprietary  information  or otherwise  gain access to the Company's
trade  secrets or that the Company  can  meaningfully  protect  its  technology,
proprietary information or trade secrets.

         Attraction and retention of key employees: The success of the Company's
future operations  depends in large part on the Company's ability to recruit and
retain key employees and  consultants  with research,  product  development  and
marketing  experience,  as well as other  professionals  who are in considerable
demand.  There  can be no  assurance  that the  Company  will be  successful  in
retaining or recruiting such key personnel.

         Dependence  on third  parties for  manufacturing:  The Company does not
have  facilities to manufacture its products and relies on Pherin to manufacture
its  pheromones and third parties to supply  components  and to blend,  fill and
package its fragrance  products.  The Company  believes that such  manufacturing
services are the most  effective  method of  producing  its  products.  Contract
fillers are used by the majority of the fragrance industry,  and the Company has
no current  plans to set up its own  filling  facilities.  However,  as with any
business that is not vertically  integrated,  if the Company is unable to obtain
or  retain  fragrance   suppliers,   component   manufacturers  or  third  party
manufacturing  on  acceptable  terms,  it may not be able to  obtain  commercial
quantities of its products, which would adversely affect results.

Results of Operations

Three  Months ended June 30, 1997 as compared to the Three Months ended June 30,
1996

         Net sales for the second  quarter of 1997 were  $3,817,542  compared to
$5,142,144  for the  second  quarter  of  1996.  Three  factors  were  primarily
responsible  for the decline:  first,  retailers began the year 1997 with higher
than  expected  overall  fragrance  inventories,   second,  1997  witnessed  the
beginning of an industry  wide trend in department  store  retailing to increase
inventory  turns from 3 to 6 times per year,  and lastly,  the industry has been
experiencing overall negative growth in the department store fragrance category.
These  factors  adversely  affected  the demand for the  Company's  products  as
retailers  adjusted fragrance stocks in-line with new inventory level directives
and delayed making purchases until chain-wide fragrance  department  inventories
achieved desired levels.

         During the second  quarter of 1996,  the Company  continued to open new
regional department stores. Castner Knott, Elder Beerman, McCrae's,  Parisian's,
Profitt's, Von Maur, and Younkers were opened during the second quarter of 1996.
The Company  also doubled its  presence in the  California  market by opening an
additional 45 doors of the Macy's West division of Federated  Department Stores.
Also  in the  second  quarter  of  1996,  opening  orders  were  shipped  to two
distributors in the Middle East. The comparison of sales for these periods is as
follows:

-------------------------------------------------------------------------------
Class of Trade                                 1997                       1996
-------------------------------------------------------------------------------

  US Department Store/Retail     $        3,495,408        $         4,674,278
  Duty Free and International               318,283                    447,121
  Direct Marketing                            3,851                     20,745
                                    ----------------          -----------------

  Net Sales                      $        3,817,542        $         5,142,144


         Gross margin  increased 2 points in the first  quarter of 1997 from the
prior  year's  quarter  (to 74% in 1997 from 72% in 1996)  due to the  Company's
success at lowering cost of goods of the primary and secondary  packaging of its
Realm(R) fragrance products. Overall gross margins have increased as the Company
has reduced costs on both in-line and promotional products.  Future quarters may
have a different gross margin  depending on the demand for promotional  products
and the  percentage  of higher  margin  department  store sales in comparison to


<PAGE>

sales through third party  distributors.  Gross margin in the second  quarter of
1996, reflected the Company's previous overall higher cost of goods structure.

         Research and  Development  expenses for the second quarters of 1997 and
1996 were $73,086 and $78,269,  respectively.  These costs  principally  reflect
payments and costs under the Company's contract with Pherin Corporation.

         Selling and marketing  expenses increased to $6,031,420 (158% of sales)
in the three  months ended June 30, 1997 from  $3,171,093  (62% of sales) in the
period ended June 30, 1996.  This dollar  increase is the result of  advertising
and  promotional  activities to support the launch of inner  Realm(TM) and Realm
Women  and Realm  Men in  domestic  department  store  retailers.  Many of these
expenditures  had been  committed to as far back as the fourth  quarter of 1996,
and the Company  was unable to change or alter these  programs in the short term
when  sales  did  not  materialize  to  support  these  levels  of  expenditure.
Additionally,   the  Company  subsequently  received  unanticipated  chargebacks
against accounts receivable payments from many of its department store customers
that were not authorized within Company established procedures.  The Company has
increased its controls on  cooperative  advertising  expense  authorization  and
communicated these tightened policies to all employees, customers and suppliers.
During the second quarter of 1997,  General and  Administrative  costs increased
due  to  headcount,  consulting  and  legal  expenditures.   Clerical  headcount
additions  were made in the later  half of 1996 to  process  the  administrative
aspects  of the  Company's  larger  customer  base.  Up front  legal  costs were
incurred for foreign  trademark  and patent work to prepare for  expansion  into
additional foreign markets.

         Interest  income was $491 and $206 for the second  quarters of 1997 and
1996,  respectively.  The Company paid $34,285 in interest expense in the second
quarter of 1997 on balances on its revolving bank line of credit.  This compares
to $1,023 interest expense in the second quarter of 1996.

         The provision for income taxes for the three months ended June 30, 1997
reflects  a  benefit  of  $9,983.  This  benefit  effectively  reverses  the tax
provision  recorded  in the first  quarter  as a result of  decreased  estimated
pretax income for the year.

Six Months ended June 30, 1997 as compared to the Six Months ended June 30, 1996

         Net sales for the six months ended June 30, 1997 were $8,913,831.  This
was a 3% decrease over net sales of $9,193,002  for the first half of 1996,  the
result of  decreased  purchases of fragrance  products by its  customers  due to
inventory  contraction  policies  imposed by the major  department store chains.
During the first six months of 1997,  the Company  launched  its second  women's
fragrance,  inner  Realm.  This  fragrance  was rolled out by a majority  of the
Company's retailers  including the Federated chains,  Dillard Department Stores,
Mercantile and several independent local retailers.  The Company did not achieve
anticipated  levels of initial  sell-in with the launch of inner Realm,  in part
because its retail  customers  have  initiated a process of  decreasing  overall
inventories to increase  inventory  turns from 3 per year to 6 per year.  During
the first  six  months  of 1997,  the  Company  made its  first  shipments  to a
distributor servicing alternative distribution channels.

-------------------------------------- -----------------------------------------
Class of Trade                                    1997                      1996
-------------------------------------- -----------------------------------------

  US Department Store/Retail        $        8,242,518        $        8,619,982
  Duty Free and International                  662,471                   523,123
  Direct Marketing                               8,842                    49,897
                                       ----------------         ----------------

  Net Sales                         $        8,913,831        $        9,193,002


         Gross margin for the first half of 1997 was 79% compared to 73% for the
same period in 1996.  This  increase is the result of decreases in the Company's
cost of goods structure.  The Company has aggressively  sought new suppliers and
manufacturing processes in order to decrease the cost of its distinctive primary
packaging.  These changes have resulted in more  competitively  costed products.
The  Company  has  also  created  gift  and  promotional   sets  using  cosmetic
modifications of its signature bottles. The lower cost of these sets has allowed
the Company to achieve  targeted  gross  margins at the same time as providing a
perceived value to the consumer.
<PAGE>

         Research and  Development  expenses for the first half of 1997 and 1996
were  $164,856  and  $161,306,  respectively  and are  principally  comprised of
payments under the Company's contract with Pherin Corporation.

         Selling and  marketing  expenses  increased  to  $9,290,583  in the six
months ended June 30, 1997 from $5,658,489 in the period ended June 30, 1996. In
1997,  the Company  incurred  expenses to launch its second  women's  fragrance:
inner REALM.  Due to the  differing  advertising  requirements  of the Company's
department  store  customers,  future  advertising  plans will be evaluated  and
targeted to suit specific regional and consumer  preferences.  On going expenses
in the sales and marketing area are radio advertising and fragrance  modeling to
support  local  in-store  promotions  and to support the REALM brand in general,
headcount and commissions.  The Company's  general and  administrative  expenses
increased due to additional  headcount in distribution and accounting to support
the Company's larger customer base.

         Interest  income was $12,471 and $12,828 for the first half of 1997 and
1996,  respectively.  In 1997,  the Company  paid  $36,828 in  interest  expense
related  to  advances  under its bank line of  credit.  During the first half of
1996, the Company had interest expense of $2,459.


LIQUIDITY

         At June 30, 1997, the Company had working  capital of  $1,741,911.  Net
cash used in operating  activities  was $3,695,265 for the six months ended June
30, 1997.

         On July 1, 1997, the Company  renegotiated  its Business Loan Agreement
with Mid-Peninsula Bank of Palo Alto,  California.  The Company may borrow up to
$3,000,000  at an  interest  rate equal to the bank's  prime rate plus .75% with
borrowings  primarily  secured by the Company's trade receivables and inventory.
The agreement,  which has a one year term,  contains  certain debt to equity and
working capital  covenants.  Under the terms of the renegotiated  bank line, the
Company may borrow  against  both  eligible  accounts  receivable  and  eligible
inventory.  There were borrowings totaling $1,943,706 at June 30, 1997. Assuming
the Company's  activities  proceed  substantially as planned and if there are no
new  brand  introductions,  the  Company's  current  cash,  line of  credit  and
anticipated  revenues  from product sales should be adequate to meet its working
capital needs over the next twelve months.  Working  capital  requirements  will
primarily  be for the  supply of  inventory,  staffing,  product  promotion  and
training and accounts receivable financing.

         If the  Company  fails to achieve  significant  revenues  from its 1997
marketing  efforts or if ongoing  business  proves to be more capital  intensive
than  planned  or if the  Company  elects to  develop  and  launch a new  brand,
additional funding may be required. Furthermore,  additional working capital may
be required  should the Company  experience a greater than planned  success with
its retail  distribution and new product  development.  In such instance,  funds
would be needed for inventory build,  accounts receivable financing and staffing
purposes.  The Company has been presented with several  opportunities  to obtain
additional working capital from current investors.

         Subsequent to June 30, 1997, the Company reached an agreement to obtain
additional  equity capital from  affiliates of a current  shareholder by issuing
1,433,333 shares of convertible  preferred  stock.  This investment will provide
the Company with  $2,150,000 in equity  capital that will be used to reduce bank
borrowings and finance accounts receivable.


<PAGE>



                                     PART II
                                OTHER INFORMATION

Item 4.  Submission of Matters to Vote of Security Holders

         Registrant  held  its  annual  meeting  of  shareholders  (the  "Annual
Meeting") on May 15, 1997. At the Annual Meeting,  the shareholders elected five
directors,  Bernard I. Grosser,  MD, William P. Horgan,  Helen C. Leong,  Robert
Marx and  Michael  V. Stern to serve  until the next  annual  meeting  and their
successors are elected.

<TABLE>
         The  number of votes  cast for,  against  or  withheld,  as well as the
number of  abstention  and broker  non-votes  as to each  director are set forth
below:
<CAPTION>
                                                                                                 Broker
                                            For               Against           Abstained        Non-Votes
                                            ---               -------           ---------        ---------
<S>                                      <C>                  <C>                  <C>             <C>
Bernard I. Grosser, MD                   8,639,193            15,700               0               0
William P. Horgan                        8,639,193            15,700               0               0
Helen C. Leong                           8,639,193            15,700               0               0
Robert Marx                              8,636,893            18,000               0               0
Michael V. Stern                         8,639,193            15,700               0               0
</TABLE>

<TABLE>
<CAPTION>
Item 6.  Exhibits and Reports on Form 8-K
<S>                                                                                                <C>
         (a)   Exhibit 10.14 Business Loan Agreement dated July 1, 1997                            E- 14
               Exhibit 11-Statement re: Computation of Per Share Earnings                          E- 25
               Exhibit 27.01-Financial Data Schedule                                               E- 26
</TABLE>

         (b)   The Company did not file any reports on Form 8-K during the three
               months ended June 30, 1997.



<PAGE>


                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  had duly  caused  this  Report  to be  signed  on behalf by the
undersigned thereunto duly authorized.


                              EROX CORPORATION
                              Registrant




Date:  November 10, 1997      /s/ William P. Horgan
                              --------------------------------------------------
                              William P. Horgan
                              Chairman of the Board and Chief Executive Officer




Date:  November 10, 1997      /s/ Maxine C. Harmatta
                              --------------------------------------------------
                              Maxine C. Harmatta
                              CFO, Vice President Finance and Administration