UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C.  20549
                                    FORM 10-QSB

(Mark One)

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

For the quarterly period ended June 30, 1997

[ ]  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:  2-35700

                          Wasatch Pharmaceutical, Inc.
                          ----------------------------
               (Exact name of registrant as specified in charter)

           Utah                                      84-0854009
           ----                                      -----------
State or other jurisdiction of               (I.R.S. Employer I.D. No.)
incorporation or organization

714 East 7200 South, Midvale, Utah                         84047
----------------------------------                    --------------
(Address of principal executive offices)                 (Zip Code)

                                 (801) 566-9688
                                 --------------
                 Issuer's telephone number, including area code

                                 Not Applicable
                                 ---------------
(Former name, former address, and former fiscal year, if changed since last
report)

     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).  Yes [X] No [ ] and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] 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 last practicable date.

     Class A Common Stock, $.001- 9,167,956 Outstanding as of June 30, 1997


<PAGE>


                  PART I - FINANCIAL INFORMATION

                  ITEM 1.  FINANCIAL STATEMENTS


     The  Registrant's  unaudited  financial  statements  have been  prepared in
accordance  with the  instructions  to Form  10-QSB  pursuant  to the  rules and
regulations of the Securities and Exchange  Commission  and,  therefore,  do not
include all information and footnotes  necessary for a complete  presentation of
the financial  position,  results of operations,  cash flows, and  stockholder's
equity in conformity  with  generally  accepted  accounting  principles.  In the
opinion  of  management,   all  adjustments  considered  necessary  for  a  fair
presentation  of the results of  operations  and  financial  position  have been
included and all such adjustments are of a normal recurring nature.

     The unaudited  balance sheet of the Registrant as of June 30, 1997, and the
related  audited  balance sheet of the  Registrant as of December 31, 1996,  the
unaudited  related  statements of operations  and cash flows for the three month
and six month periods ended June 30, 1997 and 1996 and from inception (September
7, 1989) through June 30, 1997, are attached hereto and  incorporated  herein by
this reference.

     Operating  results for the  quarter and six months  ended June 30, 1997 are
not  necessarily  indicative  of the results  that can be expected  for the year
ending December 31, 1997.


<PAGE>
<TABLE>
<CAPTION>
                                WASATCH PHARMACEUTICAL, INC.
                               (A Development Stage Company)
                                Consolidated Balance Sheets
                                                               JUNE 30,             DECEMBER 31,
                                                                 1997                   1996
                                                           ---------------         ------------- 
                                                               (Unaudited)
CURRENT ASSETS
<S>                                                       <C>                   <C>           
     Cash                                                 $         3,369       $       11,991
     Accounts receivable - trade                                    4,513                2,925
     Notes receivable - officers                                   28,733                6,600
     Product and supplies inventories                              12,943                8,586
                                                          ---------------       --------------
          Total Current Assets                                     49,559               30,102
                                                          ---------------       --------------  
PROPERTY AND EQUIPMENT
     Oil and gas properties,
          successful efforts method                             3,790,478            3,719,536
     Furniture and office equipment                                41,599               39,749
                                                          ---------------       --------------
                                                                3,832,076            3,759,285
          Less accumulated depreciation                           (21,141)             (15,668)
                                                          ---------------       --------------
     Net Property and Equipment                                 3,810,936            3,743,617
                                                          ---------------       --------------
OTHER ASSETS                                                       29,177                l,350
                                                          ---------------       --------------    
          TOTAL ASSETS                                    $     3,889,671       $    3,775,069
                                                          ===============       ==============
</TABLE>

  The accompanying footnotes are an integral part of these financial statements

<PAGE>
<TABLE>
<CAPTION>
                                                   WASATCH PHARMACEUTICAL, INC.
                                                   (A Development Stage Company)
                                                    Consolidated Balance Sheets

                                                                            JUNE 30,             DECEMBER 31,
                                                                              1997                    1996
                                                                      ---------------          -------------- 
                                                                          (Unaudited)
CURRENT LIABILITIES
<S>                                                                   <C>                      <C>         
     Accounts payable - trade                                         $        192,478         $    168,159
     Accrued interest                                                          198,085              161,226
     Other accrued expenses                                                     76,585               44,108
     Current portion of notes payable
        Vendors                                                                112,333              117,333
        Stockholders                                                           849,388              794,388
                                                                       ---------------         ------------
     Total Current Liabilities                                               1,428,869            1,285,214

LONG-TERM DEBT
     Notes payable (less current portion)                                        5,000                5,000
                                                                       ---------------         ------------     
     Total Liabilities                                                       1,433,869            1,290,214
                                                                       ---------------         ------------
STOCKHOLDERS' EQUITY
     Preferred stock, $0.001 par value, 1,000,000
        shares authorized with 49,258 issued
        and outstanding                                                             49                   49
     Common stock, $0.001 par value, 50,000,000
        shares authorized with 9,167,956 shares
        and 6,635,956 shares issued                                              9,168                6,636
     Additional paid-in capital                                              5,098,462            4,362,549
     Accumulated development stage deficit                                  (1,881,877)          (1,584,379)
                                                                       ---------------         ------------
                                                                             3,225,802            2,784,855
     Less amounts subscribed but unpaid of
       2,420,000 shares and 300,000 shares                                    (770,000)            (300,000)
                                                                       ---------------         ------------    
     Total Stockholder's Equity                                              2,455,802            2,484,855
                                                                       ---------------         ------------
         TOTAL LIABILITIES AND
          STOCKHOLDERS' EQUITY                                         $     3,889,671         $  3,775,069
                                                                       ===============         ============

</TABLE>

  The accompanying footnotes are an integral part of these financial statements

<PAGE>
<TABLE>
<CAPTION>

                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
                      Consolidated Statement of Operations
                                   (Unaudited)

                                                                       FOR THE                      FOR THE            INCEPTION
                                                                   SIX MONTHS ENDED           THREE MONTHS ENDED         THROUGH
                                                                       JUNE 30,                     JUNE 30,              JUNE 30,
                                                                  1997            1996          1997         1996          1997
                                                            ------------    -----------      ---------     ---------    -----------
REVENUES
<S>                                                         <C>             <C>              <C>            <C>          <C>       
  Professional fee income                                   $    16,738     $   16,604       $    9,490     $   8,396    $  162,604
  Product sales                                                  31,247         46,406           16,248        21,115       337,325
  Oil and gas sales                                               3,456              -            1,961             -         6,477
                                                            -----------     ----------        ---------     ---------    ----------
        TOTAL REVENUES                                           51,440         63,010           27,698        29,511       506,405
                                                            -----------     ----------        ---------     ---------    ----------
OPERATING EXPENSES
  Cost of products sold                                           2,667          3,640            1,648         1,833        39,961
  Salaries                                                       59,140         56,215           40,637        21,320       242,219
  Employee leasing                                                    -              -                -                     218,745
  Payroll taxes                                                   6,035          6,408            3,660         2,604        25,972
  Physicians fees                                                21,000         33,830           10,800        19,430       175,468
  Rent                                                           16,264         22,270            8,229        12,301       117,562
  Advertising                                                     1,944          6,302                -         4,250       208,246
  Depreciation                                                    3,385          3,577            1,698         1,799        20,585
  Other                                                           2,140          4,398             (275)            -         2,140
                                                            -----------     ----------       ----------     ---------    ----------
       Total Operating Expenses                                 112,575        136,640           66,398        63,537     1,050,898
GENERAL & ADMINSTRATIVE  EXPENSE                                183,548        144,321          100,991        74,261     1,044,179
OIL AND GAS EXPENSES                                             11,963              -            5,818             -        23,800
                                                            -----------     ----------       ----------     ---------    ----------
       TOTAL EXPENSES                                           308,087        280,961          173,207       137,798     2,118,878
                                                            -----------     -----------      ----------    ----------   -----------
INCOME (LOSS) BEFORE OTHER
 INCOME (EXPENSE) AND THE
 PROVISION  FOR INCOME TAXES                                   (256,647)      (217,951)        (145,509)     (108,287)   (1,612,473)
                                                            -----------     ----------       ----------    ----------   -----------
OTHER INCOME (EXPENSES)
 Interest expense                                               (47,004)       (36,121)         (25,183)      (18,977)     (225,030)
 Other - Net                                                      6,153         (1,541)            (305)          241       (44,374)
                                                            -----------     ----------       ----------    ----------   -----------
   Total Other Expenses                                         (40,851)       (37,662)            (488)      (18,736)     (269,404)
                                                            -----------     ----------       ----------    ----------   -----------
NET INCOME (LOSS) BEFORE 
 PROVISION FOR INCOME TAXES                                    (297,498)      (255,613)        (170,997)     (127,023)   (1,881,877)

  Provision  for Income Taxes

NET INCOME (LOSS)                                           $  (297,498)    $ (255,613)      $ (170,997)   $ (127,023)  $(1,881,877)
                                                            ===========     ==========       ==========    ==========   ===========
NET INCOME (LOSS) PER SHARE
 OF COMMON STOCK                                            $    (0.046)    $   (0.084)      $   (0.026)   $   (0.042)  $    (0.635)
                                                            ===========     ==========       ==========    ==========   =========== 
WEIGHTED  AVERAGE
 SHARES OUTSTANDING                                           6,496,829      3,028,962        6,655,934     3,035,519     2,964,559
                                                            ===========     ==========       ==========    ==========   ===========
</TABLE>

  The accompanying footnotes are an integral part of these financial statements

<PAGE>
<TABLE>
<CAPTION>
                                                                 WASATCH PHARMACEUTICAL, INC.
                                                                (A Development Stage Company)
                                              Consolidated Statement of Changes in Shareholders' Equity
                                                                        (Unaudited)

                                                                                                                           TOTAL  
                                                  PREFERRED                                 ADDITIONAL    ACCUMULATED       STOCK-
                                                    STOCK            COMMON STOCK            PAID-IN      DEVELOPMENT      HOLDERS
                                                    AMOUNT          SHARES        AMOUNT      CAPITAL    STAGE DEFICIT      EQUITY
                                                 ----------    ------------     ---------   ------------  -------------  ----------

<S>                                              <C>           <C>              <C>        <C>          <C>            <C>       
Balance December 31, 1996                          $2,463        6,635,956        $6,636     $ 4,360,135  $(1,584,379)   $2,784,855
  Retroactive adjustment to the merged
  Preferred Stock Amount                           (2,414)               -             -           2,414            -
                                                 ---------      ----------        ------     -----------  -----------    ----------
Stockholders equity-per committed contracts            49        6,635,956         6,636       4,362,549   (1,584,379)    2,784,855

  Stock subscription notes outstanding                  -         (300,000)         (300)        299,700)                  (300,000)
                                                 --------       ----------        ------     -----------  -----------    ---------- 
Net equity December 31, 1996 - Restated             $  49        6,335,956        $6,336      $4,062,849  $(1,584,379)   $2,484,855 
                                                 ========       ==========        ======     ===========  ===========    ==========
Stockholders equity-per committed contracts
  Balance December 31, 1996                         $  49       $6,635,956        $6,636      $4,362,549  $(1,584,379)   $2,784,855

  Cash proceeds from the exercise
   of stock options                                     -         125,000            125         124,875            -       125,000

  Stock issued in connection with:
   Past services of officers and directors              -       2,200,000          2,200        547,800             -       550,000
   Acquisition of West Virgina oil &
    gas properties                                      -         151,000            151         37,599             -        37,750
   Services rendered in connection with
    raising development stage funds                     -         106,000            106         26,394             -        26,500

   Shares returned with cancelled contract              -         (50,000)           (50)                                       (50)

   Cost of funds raised                                                                             (755)                      (755)

   Net loss for the six months ended
     June 30, 1997                                                                                            (297,498)    (297,498)
                                                 --------     ------------       ---------     -----------  -----------   ----------
Stockholders equity-per committed contracts           49        9,167,956          9,168        5,098,462   (1,881,877)   3,225,802

   Stock subscription notes outstanding                -       (2,420,000)        (2,420)        (767,580)           -     (770,000)
                                                 -------     ------------        --------     -----------   ----------   -----------
Balance June 30, 1997                               $ 49        6,747,956         $6,748       $4,330,882   (1,881,877)  $2,455,802 
                                                 =======     ============        =======      ===========   ===========  ==========
</TABLE>

  The accompanying footnotes are an integral part of these financial statements

<PAGE>
<TABLE>
<CAPTION>
                                                                   WASATCH PHARMACEUTICAL, INC.
                                                                 (A Development Stage Company)
                                                              Consolidated Statement of Cash Flows
                                                                        (Unaudited)
                                                                                                                 FROM
                                                              FOR THE                    FOR THE              INCEPTION
                                                         SIX MONTHS ENDED            THREE MONTHS ENDED        THROUGH
                                                             JUNE 30,                    JUNE 30,              JUNE 30,
                                                      1997             1996         1997        1996             1997
                                                  -----------    ------------     ---------   ---------     ------------   
CASH FLOWS FROM OPERATING
  ACTIVITIES

<S>                                               <C>             <C>            <C>          <C>          <C>         
  Net Income (Loss)                               $     (297,498) $   (255,613)  $  (170,997) $  (127,023) $(1,881,877)

Adjustments to Reconcile Net Income
  (Loss) to Net Cash Provided (Used)
  by Operating Activities
    Depreciation and amortization                          5,473         3,576         2,882        1,799       21,141
    Depreciation on retired assets                                                                      -        2,698
    Expenses paid by shareholder                               -           756             0                    46,737
    (Increase) decrease in receivables                    (1,588)        4,850        (2,517)      (4,192)      (4,513)
    (Increase) decrease in related party receivable      (22,133)            -       (22,133)           -      (28,733)
    (Increase) decrease in product and                                                     -
       supplies inventories                               (3,982)       (2,647)        1,555        1,833      (12,568)
    (Increase) decrease In deposits                            -           135             -          135            -
    Increase (decrease) in accounts payable               24,319        14,345         3,052       (9,229)     192,478
    Increase (decrease) in accrued Interest               36,859        34,976        15,182       17,832      198,085
    Increase (decrease) In other accruals                 32,477             -             -            -       76,585
    Loss on asset disposal                                     -             -             -            -        3,513
                                                      ----------     ----------    ---------    ---------   ----------  
Net Cash Provided (Used) by
    Operating Activities                                (226,072)     (199,622)     (172,976)    (118,845)  (1,386,453)
                                                      ----------     ---------     ---------    ---------   ---------- 
CASH FLOWS FROM INVESTING
  ACTIVITIES
  Purchase of fixed assets                               (35,041)         (755)       (9,945)        (755)    (61,001)
  (Increase) decrease in other assets                     (7,202)            0           245            0      (7,802)
                                                      ----------     ---------     ---------    ---------    --------
Net Cash Provided (Used) by
    Investing Activities                                 (42,243)         (755)       (9,700)        (755)    (68,803)
                                                      ----------     ---------     ---------    ---------    --------- 
CASH FLOWS FROM FINANCING
  ACTIVITIES
    Proceeds from loans                                   55,000        82,100                      2,100   1,089,452
    Repayment of loans                                    (5,000)            -             -            -    (130,947)
    Expenses paid with common shares                       5,450             -         5,450            -      11,416
    Proceeds from sale of common shares                        -       117,500             -      117,500     137,500
    Capital contributed by shareholder                         -             -             -            -     154,800
    Collection of share subscriptions                     80,000             -        50,000            -      80,000
    Common shares exchanged for debt                           -             -             -            -      12,319
    Exercised stock options                              125,000             -       125,000            -     125,250
    Redemption of common  shares                               -             -             -            -     (20,409)
    Costs of raising funds                                  (755)            -         2,762            -        (755)
                                                    ------------     ----------    ---------    ---------   ---------
Net Cash Provided (Used) by
    Investing Activities                                 259,694       199,600       183,212      119,600   1,458,625
                                                    ------------     ---------     ---------    ---------   --------- 
NET INCREASE (DECREASE) IN
  CASH AND CASH EQUIVALENTS                               (8,622)         (777)        2,166            -       3,369

CASH AND CASH EQUIVALENTS
  AT BEGINNING OF PERIOD                                  11,991           777         1,203            -           -
                                                    ------------     ---------    ----------    ---------  ----------
CASH AND CASH EQUIVALENTS
  AT END OF PERIOD                                  $      3,369     $       -    $    3,369    $       -  $    3,369
                                                    ============     =========    ==========    =========  ==========
</TABLE>


  The accompanying footnotes are an integral part of these financial statements




<PAGE>






                          WASATCH PHARMACEUTICAL, INC.
                        (A Development Stage Registrant)
                 Notes to the Consolidated Financial Statements
                       June 30, 1997 and December 31, 1996

NOTE 1 - NATURE AND HISTORY OF THE BUSINESS

         These   consolidated   financial   statements   are  those  of  Wasatch
Pharmaceutical,  Inc.  (A  Development  Stage  Registrant)  (the  Registrant  or
Company),  and its wholly owned  subsidiaries,  Medisys Research Group, Inc. and
American  Institute of Skin Care,  Inc. The Registrant was initially  engaged in
oil and gas  exploration  and  development and returned to that line of business
with an investment in oil and gas properties in November 1996. The  Registrant's
primary  business  segment is described  below. In December 1995, the Registrant
(formerly Ceron Resources  Corporation;  a dormant Delaware  Corporation) merged
with Medisys  Research  Group,  Inc. and its wholly  owned  subsidiary  American
Institute of Skin Care,  Inc. In January 1996 the Registrant was  reincorporated
in Utah.

         On December 29, 1995 Wasatch Pharmaceutical, Inc. (Wasatch) and Medisys
Research Group, Inc. (Medisys) completed an Agreement and Plan of Reorganization
whereby Wasatch issued 10,312,216 shares (on a 1 share for 1 share basis) of its
common stock in exchange for all of the issued and  outstanding  common stock of
Medisys. Pursuant to the reorganization,  the name of the Registrant was changed
to Wasatch Pharmaceutical,  Inc. The acquisition was accounted for as a purchase
by  Medisys  of  Wasatch,  because  the  shareholders  of  Medisys  control  the
Registrant  after the  acquisition  and,  therefore,  Medisys  is treated as the
acquiring entity. Wasatch is the acquiring entity for legal purposes and Medisys
is the surviving entity for accounting purposes.

         Medisys Research Group, Inc.  (Medisys),  was incorporated on September
7,  1989  (the  inception  of  the  Registrant's  development  stage)  as a Utah
Corporation  for the purpose of developing  treatment  programs for various skin
disorders.  American  Institute of Skin Care, Inc.  (AISC),  was incorporated on
January 21, 1994 as a Utah corporation to administer the skin treatment programs
developed by Medisys.

NOTE 2 - SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>


                                                        SIX MONTHS          THREE MONTHS ENDED JUNE      INCEPTION
                                                      ENDED JUNE 30,                  30,               TO JUNE 30,
                                                     1997        1996          1997         1996           1997
                                                  ----------- ------------ ------------- ------------ ----------------
Supplemental disclosure of cash flow
<S>                                                  <C>       <C>           <C>             <C>           <C>     
        Cash paid for interest                       $10,144                   $ 10,000                      $ 21,748
        Cash paid for taxes
Supplemental schedule for non-cash
   investing and financial activities
   Common shares issued for assets acquired
        Clinical equipment                                                                                     13,790
        Oil and gas properties                        37,750                     37,750                     3,757,286
        Deferred offering costs                       20,625                     20,625                        20,625
        Prepaid marketing costs                          375                        375                           375
        Preferred stock                                                                                           750
        Common share subscriptions and notes         470,000                    (80,000)                      770,000
   Common shares issued for services                   4,850                      4,850                         4,850
                                                  ----------- ------------ ------------- ------------ ----------------
                                                    $543,744          -0-      $  6,400          -0-      $ 4,589,424
                                                  =========== ============ ============= ============ ================
</TABLE>

<PAGE>

                          WASATCH PHARMACEUTICAL, INC.
                        (A Development Stage Registrant)
                 Notes to the Consolidated Financial Statements
                       June 30, 1997 and December 31, 1996


NOTE 3 - COMMON STOCK

         During the second  quarter the following  common share and common share
option  transactions  occurred (See the 10Q for the quarter ended March 31, 1997
for transactions occurring during that period):
         a. $125,000 was received by the  Registrant  upon the exercise of stock
options for 125,000 shares of unrestricted common stock.
         b. 200,000  restricted  common  shares were issued to  consultants  for
services rendered.
         c. 50,000  restricted  common shares were canceled  concurrent with the
cancellation of a consultant's contract.
         d. The Registrant  terminated contracts with an insurance company which
resulted in the  cancellation  of 12,000,000  common shares that had been issued
subject to certain performance  criteria. At 12/31/96 year end, these 12,000,000
shares  were  not  included  in the  outstanding  shares  because  of  the  many
contingencies on the payment of the issue price.
         e. The  Registrant  issued 57,000  restricted  common shares to various
consultants for services rendered.
         f. Common share  subscription  obligations  of $50,000 were paid during
the quarter.

NOTE 4 - GENERAL AND ADMINISTRATIVE EXPENSES
         General and  administrative  expenses for the  comparative  three month
period and from inception through June 30, 1997 are:
<TABLE>
<CAPTION>


                               SIX MONTHS               THREE MONTHS              INCEPTION
                             ENDED JUNE 30,            ENDED JUNE 30,             TO JUNE 30,
                            1997         1996         1997         1996              1997
                        ------------- ----------- ------------- ------------ -------------------
<S>                       <C>         <C>           <C>          <C>               <C>       
Officer's Compensation      $ 81,092    $ 57,130      $ 48,267     $ 22,550          $  463,676
  Legal and accounting        43,267      24,079        27,491       10,879             218,024
                Travel        10,070      10,627         5,075        6,013              44,430
             Telephone         7,660       4,398         3,399        1,612              40,994
             Insurance           357       3,378           195        2,144              10,596
                 Other        41,103      44,709        16,564       31,063             266,459
                        ============= =========== ============= ============ ===================
                           $ 183,549   $ 144,321     $ 100,991     $ 74,261        $  1,044,179
                        ============= =========== ============= ============ ===================
</TABLE>

NOTE 5 - GOING CONCERN

         The  Registrant's  financial  statements are prepared  using  generally
accepted accounting  principles applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal course of
business.  However,  the  Registrant  is in the  development  stage  and has not
established  a source of revenues  sufficient to allow it to continue as a going
concern.  The Registrant is negotiating an agreement to raise short-term funding
and  plans  to seek  long-term  funding  through  a stock  offering.  Management
believes that  sufficient  funding will be raised to meet the operating needs of
the Registrant during the remainder of development stage.

<PAGE>


                          WASATCH PHARMACEUTICAL, INC.
                        (A Development Stage Registrant)
                 Notes to the Consolidated Financial Statements
                       June 30, 1997 and December 31, 1996



NOTE 6 - CHANGES IN PRESENTATION

         Certain  financial  presentations  for the second quarter and first six
months of 1996 have been reclassified to conform to the 1997 presentation.







                 THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK






<PAGE>



ITEM 2. MANAGEMENT  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITIONS AND RESULTS
        OF OPERATIONS

Skin Care Business

         The Registrant has proprietary  technology for the treatment of various
common skin disorders,  including acne, eczema, and psoriasis . After completing
successful clinical studies, prototype clinics were established with the goal of
duplicating  the success  rates  achieved  in the  clinical  environment  and to
establish  medical,   business  and  administrative  procedures  that  could  be
duplicated  in a network of Company  clinics  across the country.  Two prototype
treatment  clinics are currently in operation in Utah.  Although the  Registrant
has confirmed the  technology  through the  successful  treatment of hundreds of
patients   over  the  last  three  years  and  has  set  up  the   business  and
administrative  procedures,  the clinics have not reached a profitable level due
to the lack of funds for advertising and marketing.

         To this  date,  the  Registrant  has not had  the  resources  to  fully
implement its plan for the  development  and expansion of its clinic  operation.
Due to the  lack of  working  capital,  the  Registrant's  financial  statements
contain a "going concern" disclosure which places into question the Registrant's
ability to continue  without  substantial  increases  in revenues or  additional
long-term financing.

         The Company is seeking funding to open two additional  clinics in major
metropolitan  areas and to launch a major advertising and marketing  campaign to
support each of its clinics. Management feels that through advertising,  working
with  health  insurance  companies  and HMOs  and  supplemented  by a  physician
referral program revenues could be increased substantially thereby improving the
10% to 15% of clinic capacity currently being experienced.

         During  the  first  six  months of 1997,  skin  care  revenues  for the
prototype  clinics were down 12% and expenses  decreased 9% when compared to the
same locations in the prior year. The remaining  revenue and expense decrease is
attributable to the Pocatello, Idaho clinic that was closed in the first quarter
of 1996.

Oil and Gas Operations

         In the fourth quarter of 1996,  the  Registrant  acquired a substantial
interest  of proven  reserves  in West  Virginia.  In order to realize  the full
potential  for this  asset,  substantial  resources  will be required to improve
production  and  to  recomplete  previously  drilled  oil  and  gas  wells.  The
Registrant's  joint interest  operator is in the process of raising the funds to
commence the  redevelopment  process  that is  scheduled  for the latter part of
1997.

LIQUIDITY AND CAPITAL RESOURCES

         At June 30,  1997,  the  Registrant  had a working  capital  deficit of
$1,379,310,  which is approximately  what it was at the end of the first quarter
and a 10% increase from the prior year. The Registrant's  operating loss for the
six months  ending June 30, 1997 was  $297,498.  The loss was funded  through an
extension of credit terms by the Registrant's vendors and noteholders ($45,000),
the sale of stock ($205,000), and additional net borrowing ($50,000).

         For the three months ended June 30, 1997,  the clinics'  operating loss
increased  $6,634 to $40,660 when  compared to the same quarter last year.  From
inception to date,  the majority of the expenses have been  associated  with the
development of the treatment process for the clinics.

         During  the  first  six  months  of  1997,  the   Registrant   expended
approximately  $99,000 in completing the oil and gas  acquisition and in efforts
to raise additional operating capital.


<PAGE>

RESULTS OF OPERATION

Skin Care Business

         During the first six months ending June 30, 1997,  the  Registrant  had
revenues  of $51,440  compared  to  $63,010  during the same six months of 1996.
There are two  reasons  for this  decrease  in  revenue.  During the first three
months of 1996, the Registrant had three prototype  clinics  generating  revenue
from  operations.  The  Registrant  closed  its  clinic in  Pocatello,  Idaho in
February,  1996. The Registrant's  clinic operating  expenses decreased by 6% in
the first three  months of 1997 as compared to the three months of 1996 due to a
reduction in salaries and other overhead expenses. During the three months ended
June 30, 1997,  expenses  increased $2,800 after substantial  reduction in costs
from the  restructured  clinic operation which was more than offset by increased
personnel training costs in anticipation of opening additional clinics.

     The Registrant  anticipates  that the losses will continue until funding is
obtained which will be used to launch the marketing program.

Oil and Gas Operations

         During the first half of 1997, there was no significant progress in the
redevelopment of the Registrant's West Virginia oil and gas properties. Revenues
and expenses  from  producing  wells were  minimal and the loss from  operations
totaled  approximately $8,500 for the six months ended June 30, 1997. Investment
in the oil and gas property increased $70,942 during the first six month period.
General and Administrative Expenses

         Increases  in  General &  Administrative  Expenses  during  the  second
quarter were $26,730 when compared to the prior year and are attributable to the
reasons  set  forth  in the  discussion  below.  The  increase  in  general  and
administrative expenses during the six months ended June 30, 1997, when compared
to the same period in the prior year, is attributable to the increased legal and
audit costs  associated  with  acquiring the West Virginia oil and gas interest,
approximately  $18,000,  and increased  officer's  compensation ,  approximately
$21,000, that was inordinately low in the prior year. The Registrant's corporate
expenses  increased   substantially  due  to  increased  legal,  accounting  and
administrative  expenses  that were  associated  with  raising  capital  and the
additional cost of being a fully reporting public entity.


ITEM 1.  LEGAL PROCEEDINGS


         None.


ITEM 2.  CHANGES IN SECURITIES


         None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES


         None.


<PAGE>


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS


         None.


ITEM 5.  OTHER INFORMATION

         None.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


        (a)  Exhibits.

                  Attached is the financial data schedule  required by paragraph
(b)(27) of this item.



        (b)   Reports on Form 8-K

                    None


<PAGE>
                            SIGNATURES

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

                              WASATCH PHARMACEUTICAL, INC.
                              [Registrant]


Dated: August 14, 1997


/S/David K. Giles
Principal Accounting Officer