SECURITIES EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  -------------
                                   FORM 10-KSB
                            Annual Report Pursuant to
                       the Securities Exchange Act of 1934
                                  -------------

                     For the fiscal year ended June 30, 1996
                         Commission file number 0-13313

                  TELECONFERENCING SYSTEMS INTERNATIONAL, INC.
                  --------------------------------------------
             (Exact name of registrant as specified in its charter)

                        Colorado                36-3296861
                        --------                ----------
                (State of incorporation)     (I.R.S. Employer
                                            Identification No.)

                     P.O. Box 4197, Englewood, CO 80155-419
                     --------------------------------------
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code: (303)761-8829
           Securities registered pursuant to Section 12(b) of the Act:

                            Title of each class: None
                                                 ----

                 Name of each exchange on which registered: N/A
                                                            ---

               Securities registered pursuant to Section 12(g) of
                                    the Act:

                 Title of each class: Common Stock, No par value

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 the  filing
requirements for at least the past 90 days.

                      Yes  X        No
                          ---          ---

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

State issuer's revenues for its most recent fiscal year. $50,327



<PAGE>



Transitional Small Business Disclosure Format:

                    Yes                  X   No
              ----                     ----
         
Aggregate  market  value  of the  voting  stock  held by  non-affiliates  of the
registrant  as of June 30,  1996 was $0,  based  upon the  closing  price of the
common stock on June 30, 1996.

Number of outstanding  shares of the  registrant's no par value common stock, as
of June 30, 1996: 41,733,000.


DOCUMENTS INCORPORATED BY REFERENCE

     List hereunder the following documents if incorporated by reference and the
Part of this Form 10-K into which the document is  incorporated:  (1) Any annual
report to  security  holders - None;  (2) Any proxy or  information  statement -
None;  (3) Any  prospectus  filed  pursuant  to Rule  424(b)  or (c)  under  the
Securities Act of 1933 - None.


<PAGE>



                                     PART 1

Item 1. DESCRIPTION OF BUSINESS

(a) Business Development
    --------------------

(1)  Teleconferencing  Systems  International,  Inc.  ("Company"  or  "TSI"),  a
Colorado  corporation,  was  incorporated  on  December  19,  1983,  to  design,
manufacture and market a wireless audio  teleconferencing  system called the TSI
Conferencer.

     Until 1987,  marketing  of the wireless TSI  Conferencer,  accessories  and
various  versions  of  the  Conferencer  was  accomplished  by  dealer  enrolled
resellers,  as well as, by direct  sales  efforts in areas  where  there were no
Company  representatives.  In early 1987, a plan was implemented which initiated
direct selling of wireless TSI  Conferencers  by inside sales  associates of the
Company.  Within a period of  approximately  one year, the Company  reversed the
source of sales from predominately resellers to end users.

     In the  Fall of 1990,  the  Company  began to  market  and  distribute  NEC
VoicePoint  speakerphones,  in addition to its wireless TSI Conferencer Systems.
The reason for becoming a distributor  of the NEC product was to increase  sales
and revenue  opportunities for the Company.  This product was not in competition
with the wireless TSI  Conferencer  and was,  therefore,  an  enhancement to the
Company's product line.

     The following is information  pertaining to major activities of the Company
during the last four  fiscal  years.  The Company  became a dealer for  Coherent
ConferenceMaster  Systems in 1991.  Coherent's  product was a feature rich small
room system.  For  approximately  a two year period,  Coherent  ConferenceMaster
Systems provided sales revenue for the Company. With the evolution of small room
systems  available in the industry,  another small room system appeared in 1993,
the Polycom  Sound  Station.  The Company  became a dealer for the Polycom Sound
Station and has sold the system in 1994.  At fiscal  year end 1995,  the Company
ceased active operation.

     During 1991 and 1992, TSI developed a version of the wired TSI  Conferencer
System, the Court/Line system, to provide an audio interface to multi-tract tape
recorders,  and sound systems which are present in most  courtrooms.  Sales were
made  during  1993 and 1994 fiscal  years to both  Federal  and State  Courts in
various locations  throughout the country.  Due to competition in the market and
new systems introduction,  the Company's business declined dramatically in 1995,
and the Company ceased active operations.

     The Company was forced to lay off its sales staff and close  operations due
to the decline in sales.  Although the Company has a small inventory of outdated
equipment, it is not engaged in active sales operations at year end.

(2) The Company has not been involved in any bankruptcy, receivership or similar
proceeding during its existence.



<PAGE>



(3)  TSI  has  not  been  involved  in any  material  reclassification,  merger,
consolidation  or purchase or sale of a significant  amount of assets not in the
ordinary course of business during the Company's last three fiscal years.

(b) Business of Issuer
    ------------------

     The Company no longer has any primary products. It has a small inventory of
products manufactured by others.

(2) Marketing and Distribution Methods
    ----------------------------------

     Products,  Services  and  Marketing.  The  Company  no longer  manufactures
products or sells  products  manufactured  by others,  although it holds a small
inventory of conferencing product that is outdated.

(3) Status of Products
    ------------------

     None in process.

(4) Competition
    -----------

     None currently, due to no operations.

(5) Raw Materials
    -------------

     None.

(6) Customer Dependence
    -------------------

     No one customer  accounted for more than 10% of the Company's  sales during
the fiscal year ended June 30, 1996.


(7) Patents, Trademarks and Licenses
    --------------------------------

     A United States patent was granted on May 26, 1987,  and a Canadian  patent
was  granted  in  November  1986,  covering  the  wireless  features  of the TSI
Conferencer. Such patent is outdated.

(8) Government Approval
    -------------------

     None Pending.

(9) Governmental Regulations
    ------------------------

     Governmental  regulations  (FCC)  require  that  all  frequencies  used  in
wireless  devices be approved by the agency.  The Company's  former main product
line, the Wireless Conferencer Systems, was approved by the FCC.



<PAGE>




(10) Research and Development
     ------------------------

     The Company  spent $0 on research  and  development  activities  during the
fiscal year ended June 30, 1995 and $0 in 1996.

(11) Environmental Regulations
     -------------------------

     Compliance  with  federal,   state  and  local  provisions  regulating  the
discharge of materials into the environment does not have any material effect on
the on the  capital  expenditures,  earnings  and  competitive  position  of the
Company.

(12) Employees
     ---------

     As of June  30,  1996,  the  Company  had no full  time  employees  and one
part-time employee, its President.

ITEM 2. DESCRIPTION OF PROPERTY

(a) Properties
    ----------

     The Company maintains no  administrative  offices but receives mail at P.O.
Box 4197, Englewood, CO 80155-4197.

(b) Investment Policies
    -------------------

     The Company does not invest in, have interests in, have investments in real
estate or real estate  mortgages,  nor does the Company  have  securities  of or
interests in persons engaged in real estate activities.

(c) Description of Real Estate (owned) and Operative Data
    -----------------------------------------------------

     The Company does not own real estate or property.


ITEM 3. LEGAL PROCEEDINGS

     There are no pending legal  proceedings  to which the Company is a party of
to which any of its property is subject.

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

     No matter was submitted to a vote of the Company's  shareholders during the
last quarter of the Company's fiscal year ended June 30, 1996.


<PAGE>




                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a) Market Information
    ------------------

     The following  table shows the range of high and low bid  quotations of the
shares of the Company's  common stock for the eight fiscal  quarters  ended June
30, 1996.

                                                         BID
                                                         ---
Period                                     High                       Low
-------------------                        -----                      ------

01/01/94 - 03/31/94                        $0.005                     $0.001
04/01/94 - 06/30/94                        $0.005                     $0.002
07/01/94 - 09/30/94                        $0.005                     $0.002
10/01/94 - 12/31/94                        $0.005                     $0.002
01/01/95 - 03/31/95                        $0.005                     $0.002
04/01/95 - 06/30/95                        $0.005                     $0.002
07/01/95 - 09/30/95                        N/A                        N/A
10/01/95 - 12/31/95                        N/A                        N/A
01/01/96 - 03/31/96                        N/A                        N/A
04/01/96 - 06/30/96                        N/A                        N/A

     The shares are traded in the over-the-counter  market. The above quotations
were furnished by the National  Quotation Bureau  Incorporated.  Such quotations
represent prices between dealers and do not include retail mark-ups, mark-downs,
or commissions and may not represent actual transactions.

(b) Holders
    -------

     As of June 30, 1996,  the Company had  approximately  383  shareholders  of
record.

(c) Dividends
    ---------

     The Company has not declared  cash  dividends on its common stock since its
inception and the Company does not  anticipate  paying any cash dividends in the
foreseeable future.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

         Management's Discussion and Analysis of Financial Condition
         and Results of Operations
         -----------------------------------------------------------

     The  following  is   management's   discussion   and  analysis  of  certain
significant factors which affected the Company's financial condition and results
of  operation  during the  periods in the  accompanying  consolidated  financial
statements.


<PAGE>




Liquidity
---------

     The Company had cash of $840 at June 30, 1996.

     The Company has ceased active operations and has no business at the present
time. It anticipates seeking acquisition or merger candidates in the future.

     During the course of the fiscal  year ended June 30,  1996,  the  Company's
outstanding  debt level increased to $141,502 from $138,000 in fiscal year ended
June 30, 1995. This debt was used to fund the net loss incurred.

     Working  capital  increased from deficit  ($128,135) at June 30, 1995, to a
deficit of ($134,039) at June 30, 1996.

Capital Resources
-----------------

     None.

     The  Company  has  no  other  known   material   commitments   for  capital
expenditures.  The Company has no additional plans,  agreements,  or commitments
concerning any transaction  which would require the Company to use a significant
amount of capital.

Results of Operations
---------------------

     Comparison  of year Ended June 30,  1996 to year Ended June 30,  1995.  The
Company  ceased  operations  in June  1995.  A small late  collection  of income
occurred  in the year  ended  June 30,  1996 in the  amount  of  $50,327,  which
compared  to  revenues  for the year  ended June 30,  1995,  of  $589,504.  This
amounted to a decrease of 90+% in revenues.

     The Company  had a cost of sales of $44,343  for year ended June 30,  1996,
compared to cost of sales of $429,059 in year ended June 30,  1995.  General and
administrative  for the years  ended  June 30,  1996 and 1995 were  $19,787  and
$285,494 respectively.

     The operating  losses for years ended June 30, 1996 and 1995 were ($13,803)
and  ($125,049),  respectively.  The net loss for year ended  June 30,  1996 was
($5,904) after $7,899 of miscellaneous  income. For year ended June 30, 1995 the
net loss was ($499,207) after other losses and write downs of ($374,158).

     Loss per share for year ended June 30,  1996 was less than $.001 per share,
compared to approximately $.01 per share for year ended June 30, 1995.

     The  management of the Company does not believe that  inflation has had any
material effect on the Company during the year ended June 30, 1996.




<PAGE>



ITEM 7.           FINANCIAL STATEMENTS

(a)1.  The following  Financial  Statements  are filed as part of this report.

         Name of Document                                        Page
         ----------------                                        ----
                                    
Signature Page of this Report.                                   13
                                                         

INDEPENDENT AUDITOR'S REPORT                                     F-2

CONSOLIDATED BALANCE SHEET - June 30, 1996                       F-3

CONSOLIDATED STATEMENTS OF OPERATIONS - for
the years ended June 30, 1996 and June 30, 1995                  F-4

CONSOLIDATED STATEMENTS OF CASH FLOWS - for
the years ended June 30, 1996 and 1995                           F-5

CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDER'S EQUITY for the Period from
July 1, 1995 through June 30, 1996                               F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                       F-7

(a)2. There are no Financial  Statements  Schedules required to be filed as part
of this Report.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
        FINANCIAL DISCLOSURE

     Hein + Associates LLP,  formerly CPA's for the Company,  were terminated by
the Company as auditor in 1997.  Gaylen R. Hansen,  CPA was engaged in June 1997
as auditor for Company.

     In  connection  with audits of two most recent fiscal years and any interim
period preceding resignation,  no disagreements exist with any former accountant
on any  matter  of  accounting  principles  or  practices,  financial  statement
disclosure, or auditing scope of procedure,  which disagreements if not resolved
to the  satisfaction  of the former  accountant  would  have  caused him to make
reference  in  connection   with  his  report  to  the  subject  matter  of  the
disagreement(s).

     The audit report by Hein + Associates LLP for the year ended June 30, 1994,
contained an opinion which included a paragraph discussing uncertainties related
to continuation of the Registrant as a going concern.

     The decision to change  accountants  was approved by the Board of Directors
as the registrant has no audit committee.


<PAGE>




                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
         WITH SECTION 16(a) OF THE EXCHANGE ACT.

(a) Identification of Directors.

     The present term of office of each  director will expire at the next Annual
Meeting  of  Shareholders.  The name,  position  with the  Company,  age of each
director and the period during which each director has served are as follows:

Name and Position in the Company            Age               Director Since
--------------------------------            ---               --------------  

Keith R. Shwayder                           57                1983
(Chairman of the Board, President
and Chief Executive Officer)

     There was no  arrangement  or  understanding  between any  director and any
other person pursuant to which any director was selected as such.

Identification of Executive Officers.
-------------------------------------

     Each executive officer will hold office until his successor is duly elected
and  qualified  or until his  resignation  or until he shall be  removed  in the
manner provided by the Company's bylaws. The Company's executive officers, their
ages, position with the Company and periods during which they have served are as
follows:

Name and Position in the Company             Age               Officers Since
--------------------------------             ---               --------------
Keith R. Shwayder                            57                1984
(Chairman of the Board, President
and Chief Executive Officer)

     Business  Experience  (1) The  following is a brief account of the business
experience  for at least  the last five  years of each  director  and  executive
officer of the Company:

Name of Director or
Executive Officer      Principal Occupation the Last Five Years
--------------------   ----------------------------------------

Keith R. Shwayder   President of the Company since July,  1991;  Director of the
                    Company since December 1983; Chairman of the Board and Chief
                    Executive  Officer of the  Company  since  September,  1984;
                    Director of Masada, Ltd., which owns a radio station,  since
                    March 1985; President and director of SRF Investments,  Inc.
                    d/b/a  West  Coast  Tel-Data,   Inc.  since  August,   1989;
                    President and director of South West  Tel-Data,  Inc.  since
                    October, 1989.


<PAGE>

                    President,   director  and  sole  shareholder  of  Telephone
                    Systems  International,  Inc., a holding  company for wholly
                    owned subsidiaries of which are SRF Investments,  Inc. d/b/a
                    West Coast  Tel-Data,  Inc.  and South West  Tel-Data,  Inc.
                    since  January  1993;  President  of  Teletek,   Inc.  which
                    installs  cable  for  telephone  systems  and  operates  pay
                    telephones,  from September, 1982 to January, 1993, and from
                    1979  to  1981;  director  of  Teletek,  Inc.  from  1979 to
                    January, 1993.

     To the  Company's  knowledge,  all  directors and officers or more than 10%
shareholder  of the Company  failed to timely file a Form 5 during the Company's
fiscal year ended June 30, 1996.

     (b) Identification of Certain Significant Employees. Not applicable.

     (c) Family  Relationships.  There are no family  relationships  between the
executive officers and directors of the Company.


     (d) Involvement in Legal Proceedings. Not Applicable.

ITEM 10. EXECUTIVE COMPENSATION

     The following table sets forth for the Company's fiscal year ended June 30,
1996,  the  compensation  paid  by the  Company  for  services  rendered  in all
capacities  to the  Company to the person  who at June 30,  1996,  was the chief
executive  officer of the Company.  No other  executive  officers of the Company
received  salary and bonus from the  Company in excess of  $100,000  during such
fiscal year.
<TABLE>
<CAPTION>


                                            SUMMARY COMPENSATION TABLE
=========================================================================================================
Name and Principal Position                             Year                         Annual Compensation
                                                                                     Salary
---------------------------------------------------------------------------------------------------------
<S>                                                     <C>                          <C>
Keith R. Shwayder                                       07/01/95-06/30/96            $0
(Chairman of the Board, President, and                  07/01/94-06/30/95            $0
Chief Executive Officer)                                07/01/93-06/30/94            $66,000
=========================================================================================================
</TABLE>

Stock Options

     No stock options were granted or exercised Company's last fiscal year ended
June 30,  1996,  and the Company has no stock  options  outstanding  at June 30,
1996.

Compensation of Directors

     No director  received  compensation  for serving on the Company's  Board of
Directors.



<PAGE>



ITEM 11. SECURITY, OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a) and (b) Security Ownership of Certain Beneficial Owners and Management.  The
following  table  sets  forth as of June 30,  1996,  the number of shares of the
Company's no par value common stock owned by each person who owned of record, or
was  known to own  beneficially,  more  than 5% of the  number  of shares of the
Company's  outstanding  common  stock,  sets  forth the  number of shares of the
Company's  outstanding  common stock beneficially owned by each of the Company's
current  directors  and  officers,  and sets  forth the  number of shares of the
Company's  common  stock  beneficially  owned  by all of the  Company's  current
directors and officers as a group:
<TABLE>
<CAPTION>


Name of Beneficial                     Position with               Amount and Nature of              Class
Owner                                  Company                     Beneficial Ownership
---------------------------------------------------------------------------------------------------------------

<S>                                    <C>                         <C>                               <C>
Keith R. Shwayder                      Chairman of the             32,504,600                        77.89%
10200 E. Girard Avenue                 Board, Chief
Suite 309A, Building A                 Executive Officer
Denver, CO  80231                      and Director

All Directors and Officers                                         32,504,600                        77.89%
as a Group (1 Person)
</TABLE>


(c) Changes in Control.  There were at June 30, 1996 no arrangements of any kind
which may at a  subsequent  date  result in a change of control of the  Company,
however,  the Company is actively  seeking an acquisition,  or merger,  or to be
acquired, which could involve a change of control.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     (a) and (b)  Transactions  with Management and Others and Certain  Business
Relationships.  Keith R. Shwayder allocates  approximately 1% of his time to the
Company's business.

(c) Indebtedness of Management.  No director or executive officer of the Company
and no associate of any such  director or executive  officer was indebted to the
Company at any time since the beginning of the Company's  last fiscal year in an
amount in excess of $60,000.

(d) Transactions with Promoters. Not applicable.

     ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Lists of Exhibits Required by Item 601 of Regulation S-B

(3.1)    Articles of Incorporation,  as amended,  which are hereby  incorporated
         herein by reference to Exhibit (3.1) to the Company's  Annual Report on
         Form 10-K for the fiscal year June 30, 1993.


<PAGE>




(3.2)    Bylaws  as  amended  through   October  14,  1987,   which  are  hereby
         incorporated  herein by  reference  to Exhibit  (3.2) to the  Company's
         Annual Report on form 10-K for the fiscal year ended June 30, 1993.

(10.1)   Thomas J. O'Malley  compensation Plan effective March 1, 1993, which is
         hereby  incorporated  herein  by  reference  to  Exhibit  (10.4) to the
         Company's  Annual Report on Form 10K for the fiscal year ended June 30,
         1989.

(10.2)   Agreement  dated April 1, 1991,  for  management  services  between the
         Company  and  Summit  Mortgage   Investments,   Inc.  which  is  hereby
         incorporated  herein by  reference to Exhibit  (10.2) to the  Company's
         Annual Report on Form 10-K for the fiscal year ended June 30, 1991.

(10.4)   Secured  Promissory Note dated June 25, 1993, from South West Tel-Data,
         Inc. to the  Company,  which is hereby  incorporated  by  reference  to
         Exhibit 10.4 to the Company's  Annual Report on Form 10K for the fiscal
         year ended June 30, 1993.

(10.5)   Secured Promissory Note (Revolving Line of Credit) dated June 25, 1993,
         from  South  West  Tel-Data,  Inc.  to the  Company,  which  is  hereby
         incorporated  by  reference  to Exhibit  10.4 to the  Company's  Annual
         Report on Form 10K for the fiscal year ended June 30, 1993.

(b)      Reports on Form 8-K.  No reports on Form 8-K were filed during the
         fiscal quarter ended June 30, 1996.




<PAGE>


                                   SIGNATURES


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


Dated:   , 1997



                                  TELECONFERENCING SYSTEMS INTERNATIONAL, INC.
                                  a Colorado corporation


                                  By:  /s/
                                       -----------------------------------------
                                       Keith R. Shwayder, Chairman of the Board,
                                       President, and Chief Executive Officer


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


Dated:               , 1997             /s/  
                                           -------------------------------------
                                           Keith R. Shwayder



<PAGE>


<PAGE>

--------------------------------------------------------------------------------
TELECONFERENCING SYSTEMS INTERNATIONAL, INC.
Consolidated Financial  Statements
Table of Contents

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

                                                                   PAGE

Report of Independent Public Accountant                             F-2

Consolidated Financial Statements

        Consolidated Balance Sheet                                  F-3

        Consolidated Statement of Operations                        F-4

        Consolidated Statement of Cash Flows                        F-5

        Consolidated Statement of Changes in
        Stockholders' Equity (Deficit)                              F-6

        Notes to Consolidated Financial Statements                  F-7



                                      F-1


<PAGE>
                                                                GAYLEN R. HANSEN
                                                     CERTIFIED PUBLIC ACCOUNTANT
                                              6061 South Willow Drive, Suite 230
                                               Greenwood Village, Colorado 80111
                                                                  (303) 770-2595

REPORT OF INDEPENDENT PUBLIC ACCOUNTANT

June 18, 1997

To the Board of Directors
Teleconferencing Systems International, Inc.
Denver, Colorado

I have audited the accompanying  consolidated  balance sheet of Teleconferencing
Systems International, Inc. and subsidiary (the "Company,") as of June 30, 1996,
and the related consolidated statements of operations, cash flows and changes in
stockholders'  equity (deficit) for the year ended June 30, 1996 and 1995. These
financial  statements are the  responsibility  of the Company's  management.  My
responsibility  is to express an opinion on these financial  statements based on
my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material   respects,   the  financial  position  of   Teleconferencing   Systems
International,  Inc. and  subsidiary at June 30, 1996,  and the results of their
operations  and cash  flows  for the years  ended  June 30,  1996 and  1995,  in
conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will  continue  operation as a going  concern,  which  contemplates  the
realization  of assets and  liquidation  of  liabilities in the normal course of
business.  As discussed in Note A to the financial  statements,  the Company has
incurred significant recurring losses, and in fiscal 1995 defaulted on its notes
payable to a financial  institution.  Subsequent to June 30, 1995, the Company's
activities have been primarily liquidation of operating assets and settlement of
obligations to employees and  creditors.  These issues raise  substantial  doubt
about the Company's ability to continue as a going concern.  Management's  plans
in  regard  to  these  matters  are  also  described  in Note A.  The  financial
statements do not include any  adjustments to reflect the possible future effect
on  the   recoverability  and  classification  of  assets  or  the  amounts  and
classifications  of  liabilities  that  may  result  from  the  outcome  of this
uncertainty.


/s/  GAYLEN R. HANSEN





                                       F-2


<PAGE>


<PAGE>

--------------------------------------------------------------------------------
TELECONFERENCING SYSTEMS INTERNATIONAL, INC.
Consolidated Balance Sheet

================================================================================
                                                                        June 30,
                                                                            1996
--------------------------------------------------------------------------------
ASSETS

CURRENT ASSETS
         Cash                                                       $       840
         Accounts receivable                                                576
         Inventories                                                      5,851
         Prepaid expenses                                                   196
--------------------------------------------------------------------------------
                                                                    $     7,463
================================================================================


LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
         Payable to affiliates                                      $    20,707
         Accounts payable                                               120,795
--------------------------------------------------------------------------------
                  Total current liabilities                             141,502
--------------------------------------------------------------------------------

STOCKHOLDERS' DEFICIT
         Common stock, stated value $.001 per share;
         authorized 100,000,000 shares; issued and
         outstanding 41,733,000 shares                                   41,733
         Additional paid-in capital                                     925,124
         Accumulated deficit                                         (1,100,896)
--------------------------------------------------------------------------------
                  Total stockholders' deficit                          (134,039)
--------------------------------------------------------------------------------
                                                                    $     7,463
================================================================================


                                      F-3
See accompanying notes.

<PAGE>


<PAGE>

--------------------------------------------------------------------------------
TELECONFERENCING SYSTEMS INTERNATIONAL, INC.
Consolidated Statement of Operations

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


                                                             Year Ended
                                                              June 30,
                                                   -----------------------------
                                                       1996            1995
--------------------------------------------------------------------------------

NET SALES                                          $     50,327    $    589,504

COST OF SALES                                           (44,343)       (429,059)
--------------------------------------------------------------------------------

GROSS PROFIT                                              5,984         160,445

SELLING, GENERAL AND ADMINISTRATIVE                     (19,787)       (285,494)
--------------------------------------------------------------------------------

OPERATING LOSS                                          (13,803)       (125,049)
--------------------------------------------------------------------------------

OTHER INCOME (EXPENSE)

         Gain on vendor settlements                       5,780            --
         Other income and (expenses)                      2,119          (1,933)
         Write down of inventory                           --          (314,829)
         Management fees, affiliates                       --           (44,000)
         Interest expense                                  --           (10,935)
         Interest income                                   --             2,491
         Loss on abandonment of equipment                  --            (4,952)
--------------------------------------------------------------------------------

                  Total other income (expense)            7,899        (374,158)
--------------------------------------------------------------------------------

NET LOSS                                           $     (5,904)   $   (499,207)
================================================================================


NET LOSS PER SHARE                                 $       --      $       (.01)
================================================================================


WEIGHTED AVERAGE SHARES OUTSTANDING                  41,733,000      41,733,000
================================================================================



                                      F-4

See accompanying notes.




<PAGE>
<TABLE>
<CAPTION>


----------------------------------------------------------------------------------------------------------
TELECONFERENCING SYSTEMS INTERNATIONAL, INC.
Consolidated Statement of Cash Flows

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

                                                                                       Year Ended
                                                                                         June 30,
                                                                             ------------------------------
                                                                                 1996               1995
                                                                             ------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                          <C>                  <C>       
         Net loss                                                            $  (5,904)           $(499,207)
         Adjustments to reconcile net loss to net cash
                  provided by operating activities:
                           Depreciation and amortization                          --                  5,269
                           Loss on abandonment of equipment                       --                  4,952
                  Changes in operating assets and liabilities:
                           Accounts receivable                                  39,387               63,830
                           Trade credits due from vendor                          --                 41,000
                           Inventories                                          44,149              327,309
                           Prepaid expenses                                      2,754               19,970
                           Payable and receivable, affiliates                   51,207               (1,973)
                           Accounts payable and accrued liabilities            (40,042)              33,947
-----------------------------------------------------------------------------------------------------------

                  Net cash flows from (used for) operating activities           91,551               (4,903)
-----------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
         Sale of other assets                                                     --                  2,165
-----------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
         Principal payments to financial institution                          (138,382)                --
         Borrowings from financial institution                                    --                 32,014
-----------------------------------------------------------------------------------------------------------

                  Net cash flows from (used for) financing activities         (138,382)              32,014
-----------------------------------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN CASH                                                (46,831)              29,276

CASH - BEGINNING OF PERIOD                                                      47,671               18,395
-----------------------------------------------------------------------------------------------------------
CASH - END OF PERIOD                                                               840            $  47,671
===========================================================================================================


SUPPLEMENTAL DISCLOSURE OF CASH
         FLOW INFORMATION

                  Cash paid for interest                                     $     --             $  10,935

</TABLE>


                                                             F-5

See accompanying notes.

<PAGE>
<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------
TELECONFERENCING SYSTEMS INTERNATIONAL, INC.
Consolidated Statement of Changes in Stockholders' Equity (Deficit)

====================================================================================================
                                                                
                                      Common Stock      Additional
                                -----------------------   Paid-in         Accumulated
                                Shares           Amount   Capital           Deficit          Total
----------------------------------------------------------------------------------------------------
<S>                            <C>              <C>       <C>             <C>             <C>       
Balances, July 1, 1994         41,733,000       $41,733   $925,124        $  (595,785)    $  371,072

         Net loss                       -             -          -           (499,207)      (499,207)
----------------------------------------------------------------------------------------------------

Balance at June 30, 1995       41,733,000       41,733     925,124         (1,094,992)      (128,135)

         Net loss                       -            -           -             (5,904)        (5,904)
----------------------------------------------------------------------------------------------------

Balance at June 30, 1996       41,733,000       $41,733   $925,124        $(1,100,896)     $(134,039)
====================================================================================================
</TABLE>


                                                         F-6

See accompanying notes.



<PAGE>


--------------------------------------------------------------------------------
TLECONFERENCING SYSTEMS INTERNATIONAL, INC.
Notes to Consolidated Financial Statements

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

Note A - Summary of Significant Accounting Policies

Organization
------------

Teleconferencing  Systems  International,  Inc.  (TSI,  or the  "Company,")  was
incorporated  on December 19, 1983.  Through  June 30,  1995,  TSI's  operations
included the design,  manufacture  and  marketing  of an audio  teleconferencing
product as well as the distribution of certain non-manufactured conferencers. On
June 30, 1995, the Company  discontinued these activities except as discussed in
the following paragraph.

Continued Operations
--------------------

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will  continue  operation as a going  concern,  which  contemplates  the
realization  of assets and  liquidation  of  liabilities in the normal course of
business.  The Company has incurred significant  recurring losses, and in fiscal
1995 defaulted on its notes payable to a financial institution.  As a result, on
April 21,  1995,  the  financial  institution  notified  the Company that if the
business was not sold,  or a plan for an orderly  liquidation  of the assets not
submitted by May 31, 1995, it would exercise its rights or remedies according to
the loan documents.  Accordingly, the Company has taken steps and adopted a plan
to liquidate  its assets in order to repay the  obligations  owed the  financial
institution.  During fiscal 1996, the obligations owed the financial institution
were repaid from proceeds collected on outstanding accounts receivable and other
assets.  Subsequent  to June  30,  1995,  the  Company's  activities  have  been
primarily  liquidation  of operating  assets and  settlement of  obligations  to
employees and creditors.

The Company's  ability to continue as a going concern is dependent  upon several
factors,  including  identification  of a new business  activity,  achieving and
maintaining  profitable  operations from engaging in the new business  activity,
and obtaining  sufficient  significant  additional  long-term debt and/or equity
financing to meet its obligations.

Principles of Consolidation
---------------------------

During  1992,  Alpha  Communications  Service  Company  (Alpha),  a wholly owned
subsidiary,  was formed, but is currently inactive.  The consolidated  financial
statements include the accounts of TSI and Alpha. All intercompany  transactions
have been eliminated.

Use of Estimates
----------------

Preparation  of financial  statements  in  conformity  with  generally  accepted
accounting principles requires Management to make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
Actual results inevitably will differ from those estimates, and such differences
may be material to the financial statements.


                                      F-7

<PAGE>


--------------------------------------------------------------------------------
TELECONFERENCING SYSTEMS INTERNATIONAL, INC.
Notes to Consolidated Financial Statements

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


Inventories
-----------

Inventories  are  stated  at the  lower  of  cost  determined  by the  first-in,
first-out method or market.

Net Loss Per Common Share
-------------------------

Net loss per  common  share is based on the  weighted  average  number of common
shares outstanding during the period.

Income Taxes
------------

The Company  accounts  for income  taxes  under the  liability  method,  whereby
current and  deferred tax assets and  liabilities  are  determined  based on tax
rates and laws  enacted  as of the  balance  sheet  date  applied  to  temporary
differences  between the book and tax basis of assets and liabilities.  Deferred
tax expense represents the change in the deferred tax asset/liability balance.


Note B - Related Party Transactions

As of June  30,  1996,  the  Company  has  obligations  of  $20,707  payable  to
affiliated entities.

During fiscal 1996, $6,950 of inventory was sold to an affiliate at cost.

The Company paid management fees, salaries and royalties to an entity owned by a
stockholder/director/officer  of the  Company  totaling  $10,000 and $44,000 for
fiscal 1996 and 1995, respectively.

Note C - Commitments

During  fiscal  1996  and  1995,   the  Company   rented  its  facilities  on  a
month-to-month  basis.  Rent  expense was $2,950 and $38,623 for the years ended
June 30, 1996 and 1995, respectively.

In 1991,  the  Company  entered  into a  commitment  to  purchase  approximately
$149,000 in distributable  product from a vendor over an indefinite time period.
The agreement also allows the Company to cancel the remaining purchase for a fee
based upon the amount of purchase  commitments  unused.  At June 30,  1996,  the
Company had approximately  $71,200 in purchase commitments  remaining under this
agreement.

Note D - Income Taxes
As of June 30, 1996, the Company had net operating loss  carryforwards  totaling
approximately $870,000 that may be offset against future taxable income, if any.
These loss  carryforwards  expire in varying  amounts  from 1998  through  2011.
Furthermore,  use of the loss carryforwards is limited by certain changes in the
Company's ownership.


                                      F-8

<PAGE>

--------------------------------------------------------------------------------
TELECONFERENCING SYSTEMS INTERNATIONAL, INC.
Notes to Consolidated Financial Statements

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


A tax benefit has not been reported in the accompanying financial statements for
the  operating  loss  carryforwards  because the Company is  uncertain as to the
likelihood of utilization.  Accordingly, the approximate tax benefit of $322,000
of the loss  carryforward  has been offset by a valuation  allowance of the same
amount.






                                      F-9