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, 1995
                         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       80155-4197
                --------------------------------------------------
               (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. $589,504



<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, 1995 was $27,685,  based upon the closing price of the
common stock on June 30, 1995.

Number of outstanding  shares of the  registrant's no par value common stock, as
of June 30, 1995: 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 small room conferencer
system with several  features.  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 sold the system beginning in 1994.

     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.

     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.

(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.


<PAGE>

(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
    ------------------

     In 1995,  the  Company  was in the final  stages of  development  of a full
duplex,  scrambled wireless system. This product was to utilize an existing full
duplex speakerphone  system manufactured by Gentner  Communications of Salt Lake
City. This new system could not be manufactured cheaply enough to be saleable in
the retail market against competitive products.

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

     In marketing the TSI Conferencer, the Company faced significant competition
from other  companies such as AT&T  Information  Systems and Shure Brothers that
market  conventional  wired  systems.  The  Company's  competitors  have greater
financial and personnel resources to market their systems.

(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, 1995.


(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.




<PAGE>



(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.

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

     The Company  spent $0 on research  and  development  activities  during the
fiscal years ended June 30, 1995 and $12,559 in 1994.

(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,  1995,  the  Company  had no full  time  employees  and one
part-time employee, its President.

ITEM 2. DESCRIPTION OF PROPERTY

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

     The Company maintains  administrative  offices at P.O. Box 4197, Englewood,
CO 80155-4197 on a shared basis with other businesses  operated by the Company's
President.

(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.

<PAGE>


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, 1995.


                                     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, 1995.

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

07/01/93 - 09/30/93                      $0.005                     $0.001
10/01/93 - 12/31/93                      $0.005                     $0.001
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

     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, 1995,  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.





<PAGE>



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. The Company ceased active operations at year end, June 30, 1995. The
Company  intends to seek business  acquisition  or merger  opportunities  in the
future.

Liquidity
---------

     The Company had cash of $47,671 at June 30, 1995.

     During the course of the fiscal  year ended June 30,  1995,  the  Company's
outstanding  debt level increased to $138,000 from $106,000 in fiscal year ended
June 30, 1994. This debt was used to fund the net loss incurred.

     Working  capital  decreased  $391,829  from $263,686 at June 30, 1994, to a
deficit of ($128,135)  at June 30, 1995.  Inventory was written down by $314,829
due to obsolescence.

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

     None.  Operations  were  suspended  in 1995 and the  Company has no capital
resources from which to fund operations.

     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 Fiscal 1995 to Fiscal 1994. The Company's  sales revenues for
fiscal 1995 were $589,500 as compared to $753,500 for fiscal 1994, a decrease of
$164,000  or  22%.  This  decrease  is  attributable  to  lower  sales  in  both
manufactured  and distributed  products.  The Company  suspended active business
operations in June 1995.

     Cost of sales  were  $429,000  or 73% of net sales,  for  fiscal  year 1995
compared  to  $546,900  or 73% of net  sales,  for fiscal  year 1994.  All sales
operations were suspended in June 1995.

     Selling,  general and administrative expenses were $285,500 for fiscal year
1995  compared to $391,500  for fiscal year 1994, a decrease of $106,000 or 27%.
This decrease is attributable to suspension of operations.

     The Company  had a net loss of  $499,200 in fiscal year 1995  compared to a
net loss of $183,300 in fiscal year 1994.


<PAGE>

     The  management of the Company does not believe that  inflation has had any
material effect on the Company during the fiscal year ended June 30, 1995.

ITEM 7. FINANCIAL STATEMENTS

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

         Name of Document                                       Page
         ----------------                                       ----

Signature Page of this Report.                                   14

INDEPENDENT AUDITOR'S REPORT                                     F-2 & F-3

CONSOLIDATED BALANCE SHEET - June 30, 1995                       F-4

CONSOLIDATED STATEMENTS OF OPERATIONS - for
the years ended June 30, 1995 and June 30, 1994                  F-5

CONSOLIDATED STATEMENTS OF CASH FLOWS - for
the years ended June 30, 1995 and 1994                           F-6

CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDER'S EQUITY for the Period from
July 1, 1994 through June 30, 1995                               F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                       F-8

(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).



<PAGE>



     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.

                                    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                             56                1983
(Chairman of the Board, President
and Chief Executive Officer)

Gerard J. Deinzer*                            72                1993
(Vice President of Engineering)

Thomas J. O'Malley*                           52                1987
(Vice President of Sales)

* Resigned at June 30, 1995

     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:




<PAGE>



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

Keith R. Shwayder                             56                1984
(Chairman of the Board, President
and Chief Executive Officer)

Gerard J. Deinzer*                            72                1984
(Vice President of Engineering)

Thomas J. O'Malley*                           52                1984
(Vice President of Sales)

*Resigned at June 30, 1995

     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.
                              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.

Gerard J. Deinzer*            Director of the  Company  since  September,  1993;
                              Vice President of Engineering of the Company since
                              September, 1984.

Thomas J. O'Malley*           Director of the Company since October,  1987; Vice
                              President of Sales of the Company since September,
                              1984.

*Resigned as of June 30, 1995

     To the  Company's  knowledge  all  directors  and officers or more than 10%
shareholder  of the Company  failed to timely  file Form 5 during the  Company's
fiscal year ended June 30, 1995.


<PAGE>

     (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,
1995,  the  compensation  paid  by the  Company  for  services  rendered  in all
capacities  to the  Company to the person  who at June 30,  1995,  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                        07/01/94-06/30/95     See "Certain Transactions"
(Chairman of the Board, President,       07/01/93-06/30/94     $66,000
and Chief Executive Officer)             07/01/92-06/30/93     $88,000
=========================================================================================
</TABLE>


Stock Options

     No stock options were granted or exercised during the Company's fiscal year
ended June 30, 1995,  and the Company has no stock options  outstanding  at June
30, 1995.

Compensation of Directors

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


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,  1995,  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

Gerard J. Deinzer                      Vice President of           0                                 00.00%
                                       Engineering and
                                       Director

Thomas J. O'Malley                     Vice President of           5,000                             00.01%
                                       Sales and Director

All Directors and Officers                                         32,509,600                        77.90%
as a Group (3 Persons)

</TABLE>


(c) Changes in Control.  There are presently 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.  In June 1993, the Company  loaned South West Tel-Data,  Inc., an
affiliate of Keith R. Shwayder,  $15,000 and provided South West Tel-Data,  Inc.
with a $20,000  line of credit.  The Company had advanced  South West  Tel-Data,
Inc. $30,500 as of June 30, 1995.

     Keith R. Shwayder,  President, CEO and Director, allocates approximately 3%
of his  time to the  Company's  business.  Keith  R.  Shwayder  controls  Summit
Mortgage  Investments,  Inc.,  which was paid $44,000 of management  fees by the
Company  during the  Company's  fiscal  year ended June 30,  1995.  The  Company
believes  that the  management  fees to Summit  Mortgage  Investments,  Inc. are
reasonable and equitable between the companies.

     On November  5, 1993,  the Company  and SRF  Investments,  Inc.  ("SRF") an
affiliate of the Company, as co-borrowers,  obtained a term loan of $400,000 and
a revolving  line of credit of $300,000  from LaSalle Bank Lake View,  Illinois,
that is 85% guaranteed by the Small Business Administration. The Company and SRF
have a common majority shareholder,  and a common officer and director, Keith R.
Shwayder.  The  repayment  of such funds will be  allocated  appropriately.  The
Company and SRF are jointly and severally liable as co-borrowers for the amounts
borrowed  and  Mr.  Shwayder  is a  personal  guarantor  for the  entire  amount
borrowed.  As of June 30, 1995, the total due on the term loan from LaSalle Bank
Lake View was approximately $186,279 of which $138,382 was directly attributable
to the  Company.  This is a seven  year  loan  at a  fixed  rate of 8.5%  annual
interest,  payable in monthly installments of $1,020 principal and approximately
$650 in interest.  As of June 30, 1995,  the total due on the revolving  line of
credit was $329,824 of which nothing was directly attributed to the Company.


<PAGE>




(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.

(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, 1995.




<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:   July 9, 1997



                                 TELECONFERENCING SYSTEMS INTERNATIONAL, INC.
                                 a Colorado corporation


                                 By:  /S/  KEITH R. SHWAYDER
                                      ------------------------------------------
                                      Keith R. Shwayder, Chairman of the Board,
                                      President, and Chief Executive Officer,
                                      Principal Executive Officer, Chief
                                      Financial Officer, Principal Accounting
                                      Officer and Director


<PAGE>

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

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

                                                              PAGE
                                                              ----

Reports of Independent Public Accountants                  F-2 & F-3

Consolidated Financial Statements

        Consolidated Balance Sheet                               F-4

        Consolidated Statement of Operations                     F-5

        Consolidated Statement of Cash Flows                     F-6

        Consolidated Statement of Changes
          in Stockholders' Equity (Deficit)                      F-7

        Notes to Consolidated Financial Statements               F-8


                                       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

May 30, 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, 1995,
and the related consolidated statements of operations, cash flows and changes in
stockholders'  equity  (deficit)  for  the  year  then  ended.  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 audit.

I conducted my audit 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 audit provides a reasonable basis for my opinion.

In my opinion,  the financial statement referred to above present fairly, in all
material   respects,   the  financial  position  of   Teleconferencing   Systems
International,  Inc. and  subsidiary at June 30, 1995,  and the results of their
operations  and cash flows for the year ended June 30, 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 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>



                          INDEPENDENT AUDITOR'S REPORT
                          ----------------------------





To the Stockholders and Board of Directors
Teleconferencing Systems International, Inc.


We have  audited the  consolidated  balance  sheet of  Teleconferencing  Systems
International,  Inc. and  subsidiary as of June 30, 1994,  and the  accompanying
related consolidated  statements of operations,  changes in stockholders' equity
and cash flows for the year then ended. These consolidated  financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an  opinion  on these  consolidated  financial  statements  based on our
audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of  Teleconferencing
Systems International,  Inc. and subsidiary as of June 30, 1994, and the results
of their  operations and their cash flows for the year then ended, in conformity
with generally accepted accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the  Company  will  continue 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 consolidated  financial statements,  the
Company has incurred  recurring  losses and is currently not in compliance  with
the  financial  covenants  of its  notes  payable  of  which  the  Company  is a
co-borrower  with an affiliated  entity.  These issues raise  substantial  doubt
about the Company's ability to continue as a going concern.  Management's  plans
in  regards  to these  matters  is also  discussed  in Note A. The  consolidated
financial  statements do not include any  adjustment  that might result from the
outcome of these uncertainties.





HEIN + ASSOCIATES LLP


Denver, Colorado
August 26, 1994

                                      F-3


<PAGE>

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

================================================================================
                                                                  
                                                                     June 30,
                                                                       1995
--------------------------------------------------------------------------------

ASSETS

CURRENT ASSETS
         Cash                                                       $    47,671
         Accounts receivable, less $3,800
          allowance for doubtful accounts                                39,963
         Note receivable from related party                              30,500
         Inventories                                                     50,000
         Prepaid expenses                                                 2,950
--------------------------------------------------------------------------------
                                                                    $   171,084
================================================================================


LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
         Note payable to financial institution (in default)         $   138,382
         Accounts payable                                               144,347
         Accrued expenses                                                16,490
--------------------------------------------------------------------------------
                  Total current liabilities                             299,219
--------------------------------------------------------------------------------

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                                         (1,094,992)
--------------------------------------------------------------------------------
                  Total stockholders' deficit                          (128,135)
--------------------------------------------------------------------------------
                                                                    $   171,084
================================================================================


                                      F-4
See accompanying notes.

<PAGE>

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

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

                                                          Year Ended
                                                           June 30,
                                                   --------------------------
                                                     1995             1994
--------------------------------------------------------------------------------
NET SALES                                          $ 589,504        $ 753,527

COST OF SALES                                       (429,059)        (546,915)
-----------------------------------------------------------------------------

GROSS PROFIT                                          160,445         206,612

SELLING, GENERAL AND ADMINISTRATIVE                 (285,494)        (391,529)
-----------------------------------------------------------------------------

OPERATING LOSS                                      (125,049)        (184,917)
-----------------------------------------------------------------------------

OTHER INCOME (EXPENSE)

         Write down of inventory                    (314,829)               -
         Management fees, affiliates                 (44,000)         (65,651)
         Interest expense                            (10,935)               -
         Interest income                               2,491                -
         Loss on abandonment of equipment             (4,952)               -
         Other income and (expenses), net             (1,933)           2,705
         Gain on vendor settlement                         -           64,516
-----------------------------------------------------------------------------

                  Total other income (expense)      (374,158)           1,570
-----------------------------------------------------------------------------

NET LOSS                                           $(499,207)       $(183,347)
=============================================================================


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

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

                                       F-5
See accompanying notes.


<PAGE>
<TABLE>
<CAPTION>

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

================================================================================================================
                                                                                            Year Ended
                                                                                             June 30,
                                                                                 ------------------------------
                                                                                      1995              1994
                                                                                 ------------------------------
<S>                                                                              <C>                <C>    
CASH FLOWS FROM OPERATING ACTIVITIES
         Net loss                                                                $  (499,207)       $  (183,347)
         Adjustments to reconcile net loss to net cash
                  provided by operating activities:
                           Depreciation and amortization                               5,269              5,244
                           Gain on vendor settlement                                       -            (64,516)
                           Provision for loss on accounts receivable                       -             (2,200)
                           Loss on abandonment of equipment                            4,952                  -
                  Changes in operating assets and liabilities:
                           Accounts receivable                                        63,830             15,080
                           Trade credits due from vendor                              41,000                  -
                           Notes and other receivables, related parties               (1,973)           (33,527)
                           Inventories                                               327,309             59,432
                           Prepaid expenses                                           19,970            (16,245)
                           Other                                                           -             13,810
                           Accounts payable and accrued liabilities                   33,947             35,899
---------------------------------------------------------------------------------------------------------------

         Net cash flows used for operating activities                                 (4,903)          (170,370)
---------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
         Sale of other assets                                                          2,165                  -
         Purchase of property and equipment                                                -             (1,372)
---------------------------------------------------------------------------------------------------------------

         Net cash flows from (used for) investing activities                           2,165             (1,372)
---------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
         Borrowings on note payable, net                                              32,014            163,000
         Principal payments on note payable and capital lease                              -            (51,632)
---------------------------------------------------------------------------------------------------------------

         Net cash flows from financing activities                                     32,014            111,368
---------------------------------------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN CASH                                                       29,276            (60,374)

CASH - BEGINNING OF PERIOD                                                            18,395             78,769
---------------------------------------------------------------------------------------------------------------

CASH - END OF PERIOD                                                             $    47,671         $   18,395
---------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURES OF CASH
         FLOW INFORMATION

                  Cash paid for interest                                         $    10,935         $    7,774

                  Note receivable transferred to note
                    payable co-borrower for reduction in the
                    Company's portion of note payable                                      -             35,000

                  Inventory received as part of vendor settlement
                    agreement                                                              -             23,516


                                                 F-6
See accompanying notes.
</TABLE>



<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, 1993               41,733,000       $41,733           $925,124       $  (412,438)      $  554,419

  Net loss                                    -             -                  -          (183,347)        (183,347)
-------------------------------------------------------------------------------------------------------------------

Balance at June 30, 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)
===================================================================================================================

                                                                  F-7

</TABLE>


<PAGE>


--------------------------------------------------------------------------------
TELECONFERENCING 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 (see Note C). 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-8


<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. A valuation reserve of $219,829 has been provided as
of June  30,  1995 as a  result  of the  inability  of the  Company  to sell its
products in the ordinary course of business.

Property and Equipment
----------------------
Property and equipment are stated at cost,  however,  during the year ended June
30,  1995,  all such  items  were  sold,  retired,  or  otherwise  disposed  of.
Depreciation is computed on the  straight-line  method over an estimated  useful
life of five years.

Research and Development Costs
------------------------------
Research and development  costs are charged to operations in the period incurred
and totaled none and $12,559 for the fiscal years 1995 and 1994, respectively.

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,  1995,  the Company has a $30,500  note  receivable,  due from an
entity  99% owned by a  stockholder/director/officer  of the  Company.  The note
accrues interest at one percent above prime.

The Company paid management fees, salaries and royalties to an entity owned by a
stockholder/director/officer  of the  Company  totaling  $44,000 and $65,651 for
fiscal 1995 and 1994, respectively.

Note C - Notes Payable

The Company is a co-borrower on a note payable to a financial  institution  with
interest at 8.5% through  October 1998,  thereafter  with interest at prime plus
2.5%,  until  maturity in November  2000.  Principal and interest are payable in
monthly installments of $1,786. The note is 85% guaranteed by the Small Business
Administration  and  collateralized  by the general  assets of each  company and
personally guaranteed by a stockholder/director/officer of the Company. The note
payable of $138,382  represents  the  Company's  portion of a joint loan with an
entity owned by a  stockholder/director/officer. Both  companies are jointly and


                                      F-9


<PAGE>


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

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

severally liable for the entire loan balance,  which totals  $186,279.as of June
30, 1995. By agreement between the co-borrowers as of June 30, 1995, the Company
is  directly  liable  for  only  $138,382  of  the  outstanding   note  balance.
Furthermore,  the Company is also responsible for making all interest  payments,
which accrue, on the Company's share of the note payable until maturity.  During
the first quarter of fiscal 1996, the companies paid the note in full.

The Company has a $300,000  line-of-credit  with a financial  institution,  with
interest at prime plus 2.25%,  maturing November 1, 1994. Either the Company may
use the line-of credit or an entity owned by a  stockholder/director/officer  of
the Company. The line is 85% guaranteed by the Small Business Administration and
collateralized  by the general assets of each company and personally  guaranteed
by a stockholder/director/officer of the Company. The Company had no outstanding
borrowings  under  the line at June  30,  1995,  however,  the  co-borrower  had
$329,824  under  the  line.  During  the  first  quarter  of  fiscal  1996,  the
co-borrower paid the note in full.

The line-of credit and the note payable both contain certain representations and
covenants,  as well as  requirements  that certain minimal  financial  ratios be
maintained.  These include a requirement that the Company maintain  tangible net
worth  of at  least  $350,000  and a  debt  to  tangible  net  worth  ration  of
one-to-one. Furthermore, the Company's co-borrower is subject to other financial
ratio  covenants.  In addition,  both  companies  are  restricted to incurring a
maximum of $50,000 in capital  expenditures  combined  in any year.  At June 30,
1995,  the Company was not in  compliance  with  either of its  financial  ratio
covenants. As a result, the financial institution has demanded immediate payment
on the note  payable.  Accordingly,  these  debts were in default as of June 30,
1995, but as noted above were repaid in fiscal 1996.

Note D - Commitments

During fiscal 1995, the Company rented its facilities on a month-to-month basis.
Rent expense was $38,623 and $41,567 for the years ended June 30, 1995 and 1994,
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,  1995,  the
Company had approximately  $71,200 in purchase commitments  remaining under this
agreement.


                                      F-10

<PAGE>

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

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

Note E - Income Taxes

As of June 30, 1995, the Company had net operating loss  carryforwards  totaling
approximately $864,000 that may be offset against future taxable income, if any.
These loss  carryforwards  expire in varying  amounts  from 1998  through  2010.
Furthermore,  use of the loss carryforwards is limited by certain changes in the
Company's ownership.

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 $320,000
of the loss  carryforward  has been offset by a valuation  allowance of the same
amount.


                                      F-11