<TABLE>
                 	SYSTEMS TECHNOLOGY ASSOCIATES, INC.

                           	BALANCE SHEETS

                        	MAY 31, 1996 AND 1995
<CAPTION>

<S>              <C>          <C>          <C>             <C>
                                           1996            1995
                                                
                  A S S E T S

CURRENT ASSETS:
                  Cash                     $24,859         $35,263 
                  Accounts Receivable       89,252         127,964 
                  Costs and Estimated 
                     Earnings in Excess of
                     Billings on Uncompleted 
                     Contracts (Note 1)     42,348         180,526 
                  Inventory (Note 1)        43,309         313,809 
                  Prepaid Expenses and 
                     Miscellaneous              25           5,319 

                  Total Current Assets    $199,793        $662,881 

PROPERTY AND EQUIPMENT - NET OF 
   ACCUMULATED DEPRECIATION OF $8,298
   AND $440,232 FOR MAY 31, 1996 AND 
   1995, RESPECTIVELY (Notes 1 and 3)      14,294           30,055 


                  TOTAL ASSETS            $214,087        $692,936 

See accompanying Notes to Financial Statements.

</TABLE>


<TABLE>

                                 Exhibit A

<CAPTION>

<S>         <C>                               <C>                 <C>

                                              1996                1995
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
             Related Parties Notes Payable - 
               Current Portion (Note 4)       $37,950             $38,850 
             Other Notes Payable -
               Current Portion (Note 4)        12,500              33,500 
             Advance from Customers                 -              17,882 
             Accounts Payable - Trade          10,841             101,968 
             Payroll Taxes Payable (Note 5)     2,946               1,304 
             Accrued Expenses                  24,934              81,841 

             Total Current Liabilities        $89,171            $275,345 

LONG-TERM LIABILITIES:
             Related Parties Notes Payable
             (Note 4)                        $154,233           $164,233 
             Other Notes Payable (Note 4)      14,208             32,392 
             Accounts Payable                  63,650             77,205 
             Accrued Expenses                  68,366             88,567 
             Total Long-term Liabilities     $300,457           $362,397 

Total Liabilities                            $389,628           $637,742 


STOCKHOLDERS' EQUITY (DEFICIT) (Notes 6 and 7):
             Redeemable Preferred Stock, 
                $50 Par Value, 2,000 Shares 
                Authorized, Issued and 
                Outstanding ($200,000 
                Aggregate Liquidation 
                Preference)                 $100,000           $100,000 
             Common Stock, $.50 Par 
                Value, 8,000,000 Shares 
                Authorized, 3,425,269 
                Shares Issued, and 
                3,420,363 and 3,424,363 
                Shares Outstanding, 
                Respectively               1,712,635          1,712,635 
             Capital in Excess of Par 
                Value                      2,330,162          2,330,162 
             Retained Earnings (Deficit)  (4,317,770)        (4,087,553)
                                          ____________       ___________
                                           $(174,973)           $55,244 
             Treasury Stock, at Cost            (568)               (50)
                                          ____________       ___________            
Total Stockholders' Equity (Deficit)       $(175,541)           $55,194 


TOTAL LIABILITIES AND STOCKHOLDERS'       __________         __________
   EQUITY                                   $214,087           $692,936 


</TABLE> 

<TABLE>
<CAPTION>
                                   Exhibit B
                       SYSTEMS TECHNOLOGY ASSOCIATES, INC.

                             STATEMENTS OF INCOME

                  FOR THE YEARS ENDED MAY 31, 1996, 1995 AND 1994

<S> <C><C>                        <C>            <C>           <C>
                               1996           1995          1994
REVENUES:
    Contract Revenues Earned   $902,520       $1,000,021    $1,085,534 
    Cost of Revenues Earned     676,474          681,518       743,516 
       Gross Profit            $226,046         $318,503      $342,018 
    
    Operating Expenses:
       Research and Development 
         Costs                       $-          $15,187       $47,304 
       Inventory Markdown       252,179           10,024             - 
       Interest Expense          17,902           27,940        22,940 
       Rent Expense (Note 9)     40,000           54,000        54,000 
       Selling, General and 
         Administrative 
         Expenses               183,538          129,979       115,149 
    Total Operating Expenses    $493,619        $237,130      $239,393 
Operating Income (Loss)        $(267,573)        $81,373      $102,625 
Other Revenue:
    Interest                          $-              $-          $960 
    Other Income                  35,356               -             - 
Income Before Provision
    for Income Taxes and
    Extraordinary Items        $(232,217)        $81,373      $103,585 
Provision for Income Tax       
    (Note 10)                          -                -            - 

Income Before
    Extraordinary Items        $(232,217)        $81,373      $103,585 
Extraordinary Items  
    (Notes 4 and 11):
    Forgiveness of Debt            2,000          219,356       119,106 


NET INCOME  (LOSS)             $(230,217)        $300,729      $222,691 

Primary Earnings per Share:
    Net Income (Loss) Before
    Extraordinary Item            $(0.07)          $0.02         $0.03 
    Extraordinary Item                 -            0.07          0.03 
                                __________       _________     ________

    NET INCOME (LOSS)             $(0.07)          $0.09         $0.06 

    Weighted Average Number
        of Shares Outstanding   3,422,363      3,424,363     3,424,363 

See accompanying Notes to Financial Statements.

</TABLE>


<TABLE>
<CAPTION>

                              Exhibit C

                  SYSTEMS TECHNOLOGY ASSOCIATES, INC.

                STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
               FOR THE YEARS ENDED MAY 31, 1996, 1995 AND 1994


<S>                <C>         <C>         <C>        <C>         <C>                                                      
                                                                  Capital In  
                     COMMON STOCK             PREFERRED STOCK       Excess of
                   Shares      Amount      Shares     Amount        Par 
                                                 
Balance, June 1,
 1993             3,425,269     $1,712,635 2,000      $100,000    $2,311,412 
Net Income        -             -          -          -           - 
                  _________     __________ _________  __________  ___________

Balance, May 31, 
 1994             3,425,269     $1,712,635 2,000       $100,000   $2,311,412 
Purchase of 
 Treasury Stock   -             -          -           -          - 
Issuance of
 Treasury Stock   -             -          -           -          18,750 
Net Income        -             -          -           -          - 
                  __________    __________ __________  _________  ___________
Balance, May 31,
 1995             3,425,269     $1,712,635 2,000       $100,000   $2,330,162 
Net Loss          -             -          -           -          - 
Purchase of
 Treasury Stock   -             -          -           -          - 
                  ___________   __________ __________  _________  ___________

BALANCE, MAY 31,
 1996            3,425,269     $1,712,635  2,000       $100,000  $2,330,162 



                 Retained                              Total
                  Earnings        Treasury Stock        Stockholders'
                  (Deficit)    Shares      Amount       Equity (Deficit)


Balance, June 1,
 1993            (4,610,973)  906          $(50)       $(406,976)
Net Income       222,691      -            -           -
                 ___________  ___________  __________  ___________

Balance, May 31,
 1994            $(4,388,282) 906          $(50)       $(264,285)
Purchase of 
 Treasury Stock  -            100,000      (6,250)     (6,250)
Issuance of 
 Treasury Stock  -            (100,000)    6,250       25,000
Net Income       300,729      -            -           300,729
                 ___________  ___________  __________  _________

Balance, May 31,
 1995           $(4,087,533)  906          $(50)       $55,194
Net Loss        (230,217)     -            -           (230,217)
Purchase of 
 Treasury Stock -             4,000        (518)       (518)
                ____________  ___________  ___________ ___________

BALANCE, MAY 31,
 1996           $(4,317,770)  $4,906       $(568)      $(175,541)
       
See accompanying Notes to Financial Statements

</TABLE>


<TABLE>

                                 Exhibit D

                                 Sheet   1
 
                     SYSTEMS TECHNOLOGY ASSOCIATES, INC.

                         STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED MAY 31, 1996, 1995 AND 1994
<CAPTION>

<S>                                  <C>            <C>            <C>
                                   1996           1995           1994
OPERATING ACTIVITIES:  
  Net Income  (Loss)                 (230,217)      300,729        222,691 
  Adjustments to Reconcile Net  
      Income (Loss) to Net Cash 
      Provided by Operating 
      Activities:
        Depreciation and 
          Amortization               10,831         9,461          7,078 
        Forgiveness of Debt          (2,000)        (219,356)      (119,106)
        Loss on Sale of Assets       5,193          -              - 
        Decrease (Increase) 
          in Assets:
            Accounts Receivable      38,712        (18,533)        84,588 
            Costs and Estimated 
              Earnings in Excess 
              of Billings on
              Uncompleted Contracts 138,178        (62,367)        (97,370)
            Inventory               270,500        (58,927)        15,157 
            Prepaid Expenses and
              Miscellaneous         5,294          7,313           493 
            Deposits                -              6,305           (4,650)
        Increase (Decrease) in 
          Liabilities:
            Advance from Customers (17,882)        4,382           13,500 
            Accounts Payable - 
              Trade                (104,682)       82,586          (71,279)
            Payroll Taxes Payable  1,642           (36,879)        (10,864)
            Accrued Expenses       (56,907)        27,891          (7,873)
                                   _____________   ______________  ____________

              Net Cash Provided by 
                Operating 
                Activities         $58,662          $42,605        $32,365 


INVESTING ACTIVITIES:
  Acquisition of Property and 
    Equipment                      $(1,188)         $(9,611)       $(8,895)
  Proceeds from Sale of Equipment  925              -              -
                                   ______________   _____________  ___________
Net Cash (Used in) Investing 
  Activities                       $(263)           $(9,611)       $(8,895)

See accompanying Notes to Financial Statements.
</TABLE>

<TABLE>
<CAPTION>

                                  Exhibit D
                                  Sheet   2
 
                     SYSTEMS TECHNOLOGY ASSOCIATES, INC.

                          STATEMENTS OF CASH FLOWS
             FOR THE YEARS ENDED MAY 31, 1996, 1995 AND 1994


<S>                             <C>             <C>              <C>

                                1996            1995             1994
FINANCING ACTIVITIES:
  Proceeds from Additional 
    Borrowings                  $-              $92,500          $80,000 
  Repayment of Related Parties  
    Notes Payable               (10,900)        (6,150)          (6,000)
  Repayment of Other Notes 
   Payable                      (37,184)        (113,291)        (28,144)
  Purchase of Treasury Stock    (518)           (6,250)           - 
  Net Decrease in Long-term     
    Accrued Expenses            (20,201)        (19,240)         (33,222)
      Net Cash Provided by 
        (Used in) Financing 
        Activities              $(68,803)       $(52,431)        $12,634 
                                ______________  _____________    ___________
Net Increase (Decrease) in Cash $(10,404)       $(19,437)        $36,104 
  Cash - Beginning of Year      35,263          54,700           18,596 
                                ______________  _______________  ____________

CASH - END OF YEAR              $24,859         $35,263          $54,700 


Supplemental Disclosure of
  Cash Flow Information:        

    Cash Paid During the Year 
      for Interest              $54,879         $26,286           $30,321 

Noncash Transactions:
 
<CAPTION>
Accrued interest payable totaling $95,921 of the First Union Bank 
note was reclassified from notes payable to accrued expenses to 
reflect the status of the liability at May 31, 1994.

As part of the Coherent Communications Systems Corporations 
(Coherent) agreement to acquire shares fo the Corporations stock, 
Coherent contributed $6,400 in inventory, $13,600 in property and 
equipment and $5,000 in prepaid expenses for no additional 
consideration (see Note 11). Accordingly, capital in excess of par 
value was increased by $18,750 for these items, and treasury stock was 
reduced by $6,250.

See accompanying Notes to Financial Statements.
</TABLE


                   	SYSTEMS TECHNOLOGY ASSOCIATES, INC.

                       	NOTES TO FINANCIAL STATEMENTS

                           	MAY 31, 1996 AND 1995

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
  Corporation's Activities
	Systems Technology Associates, Inc. 
(the "Corporation") provides services and equipment in 
the telecommunications, data systems, and automated 
instrumentation fields to governments and the public 
sector.
	The following is a summary of significant 
accounting policies followed in the preparation and
 presentation of the accompanying financial 
statements. These policies conform to generally 
accepted accounting principles.
  Accounts Receivable
	Accounts receivable are reviewed 
periodically for consideration as to their collectibility. An 
allowance for doubtful accounts is established on 
those accounts deemed uncollectible. For the years 
ended May 31, 1996, 1995 and 1994, the Corporation 
charged $17,245, $6,732, and $4,704, respectively, 
against earnings to recognize those accounts whose 
collection was doubtful.
  Inventory
	Inventory is comprised of computer 
components and electronic equipment materials used 
in the manufacture of telephone system devices and is 
valued at the lower of cost or market with cost 
determined on a first-in, first-out (FIFO) basis. During 
the years ended May 31, 1996, 1995 and 1994, the 
Corporation marked down its inventory by $252,179, 
$10,024, and $-0-, respectively, as a result of 
obsolescence and lower of cost or market adjustment 
of certain items. Inventory is pledged as security 
against the outstanding bank loan.
  Property and Equipment
	Property and equipment are stated at 
cost. Depreciation is provided over the five year 
estimated useful lives of the assets under a method 
which approximates straight-line.
  Use of Estimates
	Management uses estimates and 
assumptions in preparing these financial statements in 
accordance with generally accepted accounting 
principles. Those estimates and assumptions affect the 
reported amounts of assets and liabilities, the 
disclosure of contingent assets and liabilities, and the 
reported revenues and expenses.
  Revenue and Cost Recognition
	Revenues on sales contracts are 
recognized under the percentage of completion 
method, measured by the percentage of costs incurred 
to date to estimated total costs for each contract. That 
method is used because management considers total 
cost to be the best available measure of progress on 
the contracts. All of the Corporation's sales contracts 
are for a fixed price. The percentage of completion on 
each sales contract is reviewed periodically  for a 
determination as to the revenue to be recognized. 
Because of inherent uncertainties in estimating costs, it 
is at least reasonably possible that the estimates will 
change in the near term.
	Contract costs include all direct material 
and labor costs and those indirect costs related to 
contract performance, such as indirect labor, supplies, 
tools, repairs, and depreciation. Selling, general, and 
administrative costs are charged to expense as 
incurred. Provisions for estimated losses on 
uncompleted contracts are made in the period in which

  Revenue and Cost Recognition (Continued)
such losses are determined. Changes in job 
performance, job conditions, and estimated profitability 
may result in revisions to costs and income and are 
recognized in the period in which the revisions are 
determined. The asset, "Costs and estimated earnings 
in excess of billings on uncompleted contracts," 
represents revenues recognized in excess of amounts 
billed.
  Fair Values of Financial Instruments
	The carrying amounts reflected in the 
balance sheet for cash, accounts receivable, accounts 
payable and payroll taxes payable approximate the 
respective fair values due to the short maturities of 
those instruments. The fair value for notes payable is 
based on the current rates the Company is paying for 
similarly secured or unsecured notes with similar 
maturities. The amounts reflected in the financial 
statements do not differ significantly from their fair 
values.

NOTE 2 - UNCERTAINTY
	The Corporation incurred operating 
losses of approximately $4.3 million between 1986 
and 1991. Current management took control in 
December 1991 when the Corporation had severe 
financial problems. Management has demonstrated 
its ability to operate the Corporation profitably by 
reflecting both operating income and net income in 
three of the past four years. The combination of 
earnings, debt reductions negotiated with former 
management, and renegotiation of bank debt has 
reduced the Corporations stockholders deficit from 
approximately $729,000 at December 31, 1991,


NOTE 2 - UNCERTAINTY (Continued)

to approximately $175,000 at May 31, 1996. During 
late summer of 1996, the Corporation hired a new 
President and Chief Operating Officer who has 
significant experience in the telecommunications 
industry. His responsibilities will include expanding 
the Corporations product line and enhancing sales 
and earnings. However, in spite of the Corporations 
greatly improved financial condition, there is no 
assurance that management will continue to be 
successful in both meeting its remaining debt 
obligations and continuing to fund current operations. 
The financial statements do not include any 
adjustments pertaining to the recoverability or 
classification of recorded assets or the amounts or 
classification of liabilities if such plans are not 
sufficient to fund operating cash requirements

NOTE 3 - PROPERTY AND EQUIPMENT
	A summary of property and equipment 
as of May 31, 1996 and 1995, is as follows:


</TABLE>
<TABLE>
<CAPTION>
<S>                             <C>                <C>
                                1996               1995
Furniture and Fixtures     		$	2,038         		$	84,089
Laboratory Equipment         	20,554         			386,198
  Total Cost               	$	22,592        		$	470,287
    Less Accumulated 
      Depreciation          			8,298          		440,232
      Book Value          		$	14,294         		$	30,055
</TABLE>

	Depreciation expense for the years 
ended May 31, 1996, 1995 and 1994, was $10,830, 
$9,461, and $7,078, respectively. The property and 
equipment are pledged as security against the 
outstanding bank loan.


NOTE 4 - NOTES PAYABLE
	Related parties and other notes payable 
as of May 31, 1996 and 1995, consist of the following:

<TABLE>
<CAPTION>

<S>                         <C>                 <C>
                            1996                1995
Related Parties Notes:
  Metrology, Inc.           	25,000             	25,000
  Marvin S. Friedland     			51,000           			51,000
  June Benning               10,733              10,733
  Walter Benning          			40,000              40,000
  Daniel N. Carter           21,300              23,500
  Edward P. Myers            	7,300              	8,500
  Terry A. Scott          			24,550           			30,850
  John D. Sanders          			5,000              	5,000
  John F. Erickson           	7,300               8,500
 
	                        	$	192,183            	203,083
Other Notes:
  Tysons National Bank    		$	26,708           $ 39,209
  Michael S. Juhasz                -           			4,683
  Avnet, Inc.                    		-            	22,000
                          __________          _________ 
                          		$	26,708         		$	65,892

    Total Notes Payable   	$218,891            	268,975
</TABLE>

	Terms of the notes payable are as 
follows:
	Tysons National Bank - $50,000 note 
payable dated October 7, 1994. Interest is variable and 
payable monthly at prime plus 2.25%. Principal 
payments of $1,042 are due monthly beginning 
November 1994, with payment in full due October 
1998.  The note is guaranteed by Mr. Terry A. Scott, an 
1999.  officer of the Corporation, and is collateralized by
2000.   all business assets of the Corporation.
	Metrology, Inc.  and Friedland Notes
	Metrology, Inc. - $25,000 unsecured 
demand note payable, issued December 1987, 
originally bearing interest at 10%. Metrology, Inc. is 
controlled by Mr. Friedland, formerly an officer and 
director of the Corporation.
	Marvin S. Friedland - $20,000, $25,000 
and $6,000 unsecured demand notes payable, issued 
September - October 1989, originally bearing interest 
at 15%. Mr. Friedland was formerly an officer and 
director of the Corporation.
	In October 1993, the Corporation entered 
into an agreement regarding these notes whereby the 
interest rate from date of issuance was reduced to 2% 
per annum. Accrued interest from the date of issuance 
was reduced through a $2,000 payment at the time of 
the modification and continued monthly payments of 
$1,000 beginning February 1994 until paid in full. For 
the years ended May 31, 1996 and 1995, no principal 
payments were made. Interest accrues at 2% from 
September 1, 1993, until the outstanding balance due 
to IRS (see Note 5) is satisfied and then at 8% until the 
notes are paid in full. Principal payments will be made 
monthly at $2,000 beginning one month after the 
balance due to IRS is satisfied. Payments will be 
allocated between the Friedland and Metrology notes 
in proportion to the dollar values of the notes due each 
party.
	See Note 12 for subsequent events 
affecting these notes.
	June Benning - $10,733 unsecured note 
payable, originally accruing interest at 15%. On May 5, 
1993, an agreement was signed whereby interest prior 
to January 1, 1993, was forgiven; interest accrues at 
10% after that date. Principal payments of no less than 
$1,000 per month will begin no later than one month 
after satisfaction of the balance due to IRS (Note 5). 
Mrs. Benning is the wife of a former officer and director 
of the Corporation.

	Walter Benning - $40,000 unsecured 
note payable, originally accruing interest at 15%. On 
May 5, 1993, an agreement was signed whereby 
interest will accrue at 8% beginning July 1, 1994; 
interest prior to that date is forgiven. Principal 
payments of not less than $1,000 per month will begin 
in the month following payoff of the balance due to IRS 
(Note 5) and payoff of the balance due to June 
Benning. Mr. Benning is a former officer and director of 
the Corporation.
	Daniel N. Carter - $15,000 and $10,000 
unsecured notes payable dated May 20, 1994, and 
October 1, 1994, respectively. Interest is payable 
monthly at 8% and 10% per annum, respectively; 
principal payments of $500 per month are due on the 
$15,000 note beginning September 30, 1994, with 
payment in full due May 20, 1995, and October 1, 
1996, respectively. For the year ended May 31, 1996, 
$2,200 in principal payments were made.
	Edward P. Myers - $10,000 unsecured 
note payable dated May 24, 1994. Interest is payable 
monthly at 8% per annum; principal payments of $500 
per month are due beginning September 30, 1994, 
with payment in full due May 20, 1995. For the year 
ended May 31, 1996, $1,200 in principal payments 
were made. Mr. Myers is a director of the Corporation. 
	Terry A. Scott - $10,000, $12,500 and 
$10,000 unsecured notes payable dated May 24, 
1994, October 7, 1994, and October 7, 1994. Interest 
is payable monthly at 8%, 10% and 10% per annum; 
principal payments of $500 per month are due 
beginning September 30, 1994, with payment in full 
due May 20, 1995, October 7, 1996, and October 7, 
1995.  For the year ended May 31, 1996, $6,300 in 
1996.  principal payments were made. Mr. Scott is an 
1997.  officer of the Corporation
	John D. Sanders - $5,000 unsecured 
note payable, modified March 30, 1994, so that no 
interest will accrue until the outstanding balance due to 
IRS (Note 5) is satisfied. Interest will then accrue at 
prime plus 2% and reasonable efforts are to be made 
to pay off the loan and accrued interest as soon as 
possible. Mr. Sanders is a shareholder and former 
director of the Corporation.
	Michael S. Juhasz - $18,600 unsecured 
note payable dated October 1, 1992, with principal 
originally due December 31, 1992, was orally modified 
so that monthly principal payments of $250 will be 
made until the entire debt is satisfied. Interest accrues 
at 5% on this debt. This note was paid in full during the 
year ended May 31, 1996.
	Avnet, Inc. - $45,000 payable in 
settlement of a judgment against the Corporation was 
established in November 1993. After an initial $5,000 
payment in November 1993, monthly payments of 
$1,000 will be due through November 1995; monthly 
payments of $2,000 will be due through July 1996. 
Liability is secured by a lien on all assets of the 
Corporation. In February 1996, the Corporation paid 
the judgment after Avnet agreed to forgive $2,000.
	John F. Erickson - $10,000 unsecured 
note payable. Interest is payable monthly at 8% per 
annum; principal payments of $500 per month are due 
beginning September 25, 1994, with full payment due 
May 24, 1995. For the year ended May 31, 1996, 
$1,200 in principal payments were made. Mr. Erickson 
is a shareholder of the Corporation.
	Interest expense on related party notes 
amounted to approximately $11,000 for each of the 
years ended May 31, 1996, 1995 and 1994, 
respectively. Accrued interest to related parties at May 
31, 1996 and 1995, was $14,563 and $44,897, 
respectively, and is included in accrued expenses.
	The principal maturities of related parties 
and notes payable for the subsequent five years are as
follows:

<TABLE>
<CAPTION>

<S>                   <C>                <C>              <C>
Year                  Related Parties    Other            Total

1997                		$	37,950           12,500          	$		50,450
1998                		-                  12,500           			12,500
1999                 	-                  	1,708              	1,708
2000                		-                 	-                -
2001               			154,233            -                154,233
                     ________________    _______________  ____________
	                    	$	192,183        		$	26,708         $218,891
</TABLE>

NOTE 5 - PAYROLL TAX OBLIGATION
	In October 1992, the Corporation 
signed an installment agreement with the Internal 
Revenue Service to pay delinquent payroll taxes and 
related penalties and interest. The Corporation is to 
make monthly payments of $3,000 for 36 months 
beginning October 1992, after which time the 
Corporation's financial circumstances will be 
reevaluated. In September 1995, the Internal Revenue 
Service ruled that the Corporation was to make 
monthly payments of $3,000 until all taxes, penalties 
and interest are paid in full. In March 1996, the Internal 
Revenue Service agreed to reduce the monthly 
payments to $1,000.
	In March 1993, the Corporation and the 
Commonwealth of Virginia agreed upon a payment 
plan regarding delinquent payroll taxes and related 
penalties and interest. At May 31, 1996, all payroll 
taxes, penalties and interest were paid in full.

NOTE 6 - STOCK OPTIONS

	The Corporation has issued stock 
options to various directors, an officer and a lender. 
Under the terms of the options, also discussed in Note 
11, options for 30,000, 30,000 and 77,500 shares are 
outstanding and exercisable at $.125, $.10 and $.25 
per share, respectively.

	A summary of stock option activity as of 
May 31, 1996 and 1995, is as follows:

<TABLE>
<CAPTION>

<S>                                         <C>                    <C>
                                            1996                   1995
Options Outstanding, Beginning of Year      107,500                65,000
Options Granted at $.125 per Share          	30,000                -
Options Granted at $.25 per Share        			-	                     42,500
Options Exercised at:
  $.10 per Share                            -                      -
  $.125 per Share                        			-                    		-
  $.25 per Share                            -                      -

    Options Outstanding, End of Year        137,500             			107,500

NOTE 7 - STOCKHOLDERS' EQUITY (DEFICIT)

	Preferred Stock - The Corporation has 
issued 2,000 shares of preferred stock, $50 par value. 
The stock is nonvoting, may pay noncumulative 
dividends not to exceed $6 per annum, as set by the 
Board of Directors, and is redeemable at any time at
the option of the Corporation at $100 per share. 
Dividends on preferred stock shall be payable out of 
retained earnings prior to the payment of any dividends 
on common stock. In the event of any corporate 
liquidation or dissolution, the preferred shareholders 
are entitled to be paid $100 per share of preferred 
stock, together with any declared but unpaid dividends 
on such shares, prior to any payment or distribution of 
assets to the common shareholders.
	Treasury Stock - During the year ended 
May 31, 1995, the Corporation purchased 100,000 
shares of its common stock from a former officer and 
director at $.0625 per share. This block of stock was 
then reissued to Coherent Communication System 
Corporation (Coherent) in exchange for inventory of 
$6,400, equipment for $13,600 and prepaid expenses 
of $5,000. The difference between the acquisition price 
($6,250) and the subsequent sales price ($25,000) has 
been reflected as capital in excess of par value. During 
the year ended May 31, 1996, the Corporation 
purchased 4,000 shares of its stock at $.125. At May 
31, 1996 and 1995, the Corporation owned 4,906 and 
906 shares, respectively,  with a carrying value of $568 
and $50, respectively. 

NOTE 8 - SEGMENT DATA
	The Corporation classifies its operations 
into one industry segment, telecommunications 
equipment and systems. International export sales 
were $819,037, $990,887 and $1,085,534 for 1996, 
1995 and 1994, respectively. Export sales by 
geographic area as of May 31, 1996, 1995 and 1994, 
are as follows:



</TABLE>
<TABLE>
<CAPTION>

<S>                         <C>                 <C>               <C>

                            1996                1995              1994
Asia                     		$184,315          	$299,152          $358,763
Africa                   			236,285         			247,010        			289,150
Europe                    			81,896          			51,381        			363,254
Middle East                			3,016          			44,726         			30,139
South America            			313,525         			348,618         			44,228
                          __________         ____________    _____________
  Total Export Sales    		$	819,037        		$	990,887     		$	1,085,534

Domestic Sales            			83,483           			9,134     		-
  Total Sales            	 $902,520         $1,000,021        $1,085,534

	Sales to any particular customer were not significant. 
</TABLE>

NOTE 9 - OPERATING LEASE
	The Corporation leases its facilities under 
a month-to-month operating lease. Minimum annual 
rents for the years ended May 31, 1996, 1995 and 
1994, were $40,000, $54,000 and $54,000, 
respectively. In November 1995, the Corporation 
reduced its space by approximately 50%, with a 
proportionate decrease in minimum monthly rent.

NOTE 10 - INCOME TAXES

	The Corporation has available net 
operating loss carryforwards approximating $4 million 
to apply against future taxable income. These 
carryforwards will expire over the years 2001 to 2011.
	The Financial Accounting Standards 
Boards released a statement on the method of 
accounting for income taxes, SFAS 109, which 
addresses the accounting problems faced when 
revenues, expenses, gains or losses are included in 
taxable income of an earlier or later year than the year 
in which they are recognized for financial statement 
purposes. The amounts of current taxes payable or 
refundable and deferred tax liabilities or assets to be 
recognized at the date of the financial statements are 
the amounts which result from all events which have 
been recognized in the financial statements or tax 
returns as measured by the provisions of currently 
enacted tax laws. The Corporation's management has 
implemented this new standard effective June 1, 1993. 
There was no cumulative effect of the change in 
accounting principle to be recorded in determining net 
income for the year ended May 31, 1994, as a net 
operating loss carryforward was the only item which 
would have created a deferred tax asset to be 
recognized, and projected future net income was not 
considered realizable to offset the loss carryforward.
	The provision for income taxes 
attributable to continuing operations consists of the 
following components:

<TABLE>
<CAPTION>

<S>                               <C>                   <C>
  
                                           May 31,
                                 1996                   1995
Income Tax Expense             		$	(81,500)            	$19,200
Benefit of Operating Loss 
  Carryforward                			-                     	(		19,200)
Valuation Allowance           			81,500              			-
                                 _________________      _________________
                               		$	-                  		$	-

</TABLE>

	The provision for income taxes 
attributable to extraordinary items consists of the 
following components:

<TABLE>
<CAPTION>

<S>                                      <C>             <C>
                                                May 31,
                                         1996            1995
Income Tax Expense (Benefit)             $-              $92,400
Benefit of Operating Loss Carryforward			-               (		92,400)
                                         ___________     ___________
	                                       	$	-           		$	-
</TABLE>

	The net deferred tax benefits in the 
accompanying balance sheets include the following 
components:

<TABLE>
<CAPTION>

<S>                                     <C>              <C>
                                                May 31,
                                        1996             1995
Deferred Tax Assets                   		$	1,517,700    		$	1,201,700
Deferred Tax Asset Valuation Allowance		(1,517,700)    		(	1,201,700)
                                        ______________   _____________
Net Deferred Tax Asset                 	$-               $-
</TABLE>


NOTE 11 - RELATED PARTIES TRANSACTIONS
	Under an agreement dated October 25, 
1993, the Corporation has an agreement with two 
shareholders whereby the Corporation or its designate 
has a three- year option to purchase the 636,213 
shares held by the shareholders at $.0625 per share 
and an option for the following two years to purchase 
the shares at $.10 per share. The Corporation must 
exercise its option in blocks of 10,000 or more shares. 
As discussed in Note 7, the Corporation purchased 
100,000 of its shares from a former officer and director 
at $.0625 per share.

	The Corporation entered into a License 
Agreement effective June 1, 1994, with Coherent 
whereby the Corporation acquired nonexclusive rights 
to use technology in connection with the manufacture 
and sale of telecommunications products. In 
consideration for these rights and the acquisition of 
certain inventory and equipment, the Corporation 
facilitated the transfer (through the exercise of options 
by Coherent as the Corporation's designate), of 
100,000 common shares held by a shareholder to 
Coherent. In addition, the Corporation also paid 
Coherent $45,000 for various inventory items acquired 
as part of the exchange.
	In consideration for the advancement of 
funds under various promissory note agreements with 
an officer, a director and a vendor, options regarding 
the purchase of stock were granted to the lenders. The 
options grant the right to purchase a total of 77,500 
shares of stock at $.25 per share for a two-year period 
ending October 1996.
	In July 1993, the Board authorized the 
issuance of options to purchase a total of 30,000 
shares at $.10 per share to three Directors. 
	In December 1995, the Board authorized 
the issuance of options to purchase a total of 30,000 
shares at $.125 per share to three Directors
	As further described in Note 4, various
 related parties have loaned funds to the Corporation.
	A corporation controlled by a former 
officer and director of the Corporation forgave a claim 
in the amount of $112,500 during the year ended May 
31, 1994.

NOTE 12 - SUBSEQUENT EVENTS
	In July 1996, the Corporation was named 
as a defendant in a lawsuit arising in the ordinary 
course of business. Plaintiff is seeking $112,500 in 
sales commissions and related installation costs in 
connection with the sale of the Corporations products. 
Management has recorded commission expense 
amounting to approximately $20,000 in prior years for 
this matter, with $6,500 being due as of May 31, 1996. 
The Corporation intends to vigorously contest this 
matter. While the outcome of this lawsuit cannot be 
predicted with certainty, management does not expect 
this matter to have a material adverse effect on the 
financial position and results of operations of the 
Corporation.
	On July 29, 1996, the Corporation entered into 
an agreement with Marvin S. Friedland and Metrology, 
Inc. to restructure the notes described in Note 4 above. 
The Friedland note was settled for $50,000 cash plus a 
$1,000 note payable in four installments. The 
Metrology, Inc. note was settled for a new $25,000 
noninterest-bearing note of the Corporation due $500 
per month for 50 months. As additional consideration, 
Friedland agreed to sell 611,753 shares back to the 
Corporation and to forgive $24,304 of accrued interest 
on the notes. Metrology, Inc. agreed to sell 24,500 
common shares and 2,000 preferred shares of the 
Corporation back to the Corporation and to forgive 
$12,163 of accrued interest on its notes.