SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 FORM 10-KSB/A-1

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

                     For the fiscal year ended June 30, 1997

                                       OR

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

             For the transition period from __________ to __________

                         Commission File Number 0-28140

                                U.S. BRIDGE CORP.
             (Exact name of registrant as specified in its charter)

Delaware                           11-2974406
(State or other jurisdiction of    (I.R.S. Employer Identification No.)
Incorporation or organization)

                    53-09 97th Place, Corona, New York 11368
              (Address of principal executive offices) (Zip Code)

                                 (718) 699-0100
              (Registrant's telephone number, including area code)

               Securities registered pursuant to Section 12(b) of
                                    the Act:
         Title of each class Name of each exchange on which registered
                                      NONE

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

                          Common Stock, $.001 par value
                                (Title of Class)

     Check whether the Issuer (1) has filed all reports  required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such  shorter  period that  registrant  was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days. Yes [X] No [ ]

     Check if no  disclosure  of  delinquent  filers in  response to Item 405 of
Regulation S-B is 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 [ ].

     The  Registrant's  revenues  for its fiscal  year ended June 30,  1997 were
15,494,447.

     The  aggregate  market  value of the voting  stock on  September  30,  1997
(consisting of Common Stock,  $.001 par value per share) held by  non-affiliates
was  approximately  $3,726,239 based upon the average closing bid price for such
Common Stock on said date ($1.375), as reported by a market maker. On such date,
there were 7,402,148 shares of Registrant's Common Stock outstanding.



<PAGE>
                                     PART I


                  ITEM 1.           DESCRIPTION OF BUSINESS

History

     U.S. Bridge Corp.  ("the Company") was  incorporated on September 12, 1988,
in the State of Delaware, as Colonial Capital Corp. In January 1991, the Company
amended its Certificate of  Incorporation  to effect a change in its name to The
Mercado Marketing Corporation. In June 1991, the Company amended its Certificate
of  Incorporation  to effect a change in its name to COFIS  International  Corp.
Effective  in May  1994,  in  connection  with the  reverse  acquisition  of its
subsidiaries,  the Company  amended its Certificate of  Incorporation  to effect
another change in its name to its current name, U.S. Bridge Corp.

     Until its acquisitions  ("the  Acquisitions")  of both U.S. Bridge of N.Y.,
Inc.  ("NY")  and  One  Carnegie  Court   Associates,   Inc.  ("One  Carnegie"),
consummated on April 25, 1994, the Company was a development stage company.  Its
only operations involved searching for possible business acquisitions.  Pursuant
to the Acquisitions,  the Company issued an aggregate of 3,540,000 shares of its
Common  Stock,  par  value  $.001  per  share  ("the  Common  Stock"),   to  the
stockholders  of NY and One Carnegie - 2,820,000 to the  stockholders  of NY and
720,000  to the  stockholders  of One  Carnegie  - in  exchange  for all of said
stockholders'  issued and  outstanding  shares.  Joseph  Polito,  the  principal
stockholder  of NY and  the  sole  stockholder  of One  Carnegie,  received,  in
exchange  for his shares of NY and One  Carnegie  common  stock,  2,380,000  and
720,000 shares,  respectively,  of the Company's  Common Stock. The Acquisitions
were accounted for as "recapitalizations." Accordingly, both NY and One Carnegie
became subsidiaries of the Company.

     In connection with the Acquisitions, the Company amended its Certificate of
Incorporation  to (i)  increase  its  authorized  shares  of Common  Stock  from
10,000,000 to 50,000,000 shares; (ii) increase the par value of the Common Stock
from $.0001 to $.001; and (iii) authorize  10,000,000 shares of Preferred Stock,
which  shares may be issued in  classes  and  series,  pursuant  to the  rights,
designations,  and preferences as determined by the Board of Directors. To date,
the Company has not issued any Preferred Stock.

Recent Developments

     In December 1996, the Company issued bonuses  aggregating 114,617 shares of
Common Stock to the  consultants  and employees of its  subsidiary,  NY; it also
issued an option to purchase 400,000 shares of Common Stock to Joseph Polito; an
option to  purchase  100,000  shares of Common  Stock to Ronald  Polito;  and an
option to purchase  75,000 shares of Common Stock to Steven  Polito  pursuant to
the Company's  1994 Senior  Management  Incentive  Plan. In connection  with the
114,617 shares issued, the Company recorded compensation expense amounting to





<PAGE>
$107,453 which is based upon 50% of the average  closing bid price for the month
of December 1996.

     In February 1997, pursuant to a Form S-8 Registration  Statement filed with
the Securities and Exchange  Commission,  the Company registered the resale of a
total of 686,617 shares of Common Stock,  575,000 shares of which are underlying
options  pursuant to the Company's 1994 Senior  Management  Incentive  Plan. The
options are  exercisable  at various  prices  ranging from $1.750 each to $1.925
each. See "Item 12. Certain Relationships and Related Transactions."

     By agreement  executed March 10, 1997 (mistakenly dated December 31, 1996),
One Carnegie  entered into an Agreement  for Deed in Lieu of  Foreclosure  ("the
Agreement") with Trinity Industries,  Inc. ("Trinity").  The transaction,  which
was not closed and  completed  until  August 1, 1997,  was  necessitated  by One
Carnegie's having defaulted on (i) the $3,000,000 Note (of which Trinity was the
holder),  and (ii) the Deed of Trust and Security  Agreement  which secured said
Note  for  certain  property  located  in  Waldorf,  Maryland.  Pursuant  to the
Agreement,  in lieu of  foreclosing  upon the  property  owned by One  Carnegie,
Trinity, through its affiliate,  Waldorf Properties,  Inc. ("WPI"), accepted the
deed to such property. See Item 2 Description of Property.

     As of May 1997, NY was in arrears in the amount of $480,000 in payments due
under  its lease  with  R.S.J.J.  Realty  Corp.  ("RSJJ").  This  arrearage  was
converted into equity as follows:  on June 19, 1997, NY issued 270,000 shares of
common stock to the Company,  for the cancellation of the debt owed to RSJJ. The
Company, in turn, issued 200,000 shares of its Common Stock to Joseph Polito and
150,000 shares of its Common Stock to RSJJ.  RSJJ then  transferred  all of such
shares to RSJJ's  mortgagor,  which  agreed to accept  said shares as payment of
RSJJ's  outstanding  mortgage.  See "Item 12. Certain  Relationships and Related
Transactions."

Business of U.S. Bridge of N.Y., Inc.

General

     NY was incorporated in the State of New York on September 4, 1990, as Metro
Steel  Structures,  Ltd. NY amended its Certificate of Incorporation to effect a
change in its name to its current  name on January 31,  1995.  Additionally,  NY
amended its authorized  capital (i) to increase the number of authorized  shares
of common stock from 200 to  10,000,000;  (ii) to increase the par value from no
par value to $.001 par value per share;  (iii) to  authorize  500,000  shares of
preferred stock, par value $.01 per share; and (iv) to designate  400,000 shares
of NY's preferred stock as "Series A Preferred  Stock." Also as of such date, NY
effected a 29,687.50  for one  forward  split of its common  stock,  pursuant to
which there became 950,000 shares of common stock outstanding.

     NY  commenced  operations  in or about  June 1993 to serve  primarily  as a
general contractor for construction  projects  sponsored by federal,  state, and
local government





<PAGE>
authorities  in New York  State  and in the New  York  City  metropolitan  area.
Previously,  through other entities,  Joseph Polito furnished and provided steel
erection as a subcontractor for private and governmental  construction projects.
Since its  commencement  of  operations  in June  1993,  NY has  provided  steel
erection  for  building,   roadway,  and  bridge  repair  projects  for  general
contractors  who  have  been  engaged  by  private  and   municipal/governmental
customers. As of September 30, 1997, NY has completed in excess of eighteen (18)
projects,  with an  aggregate  project  value of  $22,768,614,  and is currently
engaged  in  four  (4)  projects  with  an  aggregate  value  of   approximately
$19,998,040.  The Company  plans to maintain its  subcontractor  presence in the
steel industry; however, now that it has obtained general contractor bonding, it
intends to focus on obtaining projects as a general contractor.

         Though formed to operate as a general contractor, NY operated initially
only as a  subcontractor.  NY's  goals were to become a general  contractor  for
municipal projects; however, it needed financing to enable it to obtain bonding,
which is required for all municipal projects.

         On June 15,  1993,  NY  purchased,  from Atlas Gem,  six then  existing
contracts  to  perform  steel  erection  services  for the  following  projects:
Stillwell Avenue,  39th Street Bridge  Rehabilitation,  Honeywell Street Bridge,
New England Thruway,  Lemon Creek, and Kosciuszko Bridge. Upon its sale of these
contracts to NY and its completion of its final project in September 1994, Atlas
Gem ceased  operations.  NY purchased  Atlas Gem's  contracts to add to its then
backlog in order to avoid a conflict of  interest,  as the two  entities - which
were controlled by Joseph Polito as officer, director, and principal stockholder
- were engaging in similar, but different work.

Construction Projects

         In March 1995, NY entered into a  subcontracting  agreement  with McKay
Enterprises,  Inc. (general contractor) for the reconstruction of the 4th Avenue
Bridge,  located in Brooklyn, New York, owned by the New York City Department of
Transportation. Work on the project has been completed.

         In April 1996,  NY entered a  subcontracting  agreement  with  Trataros
Construction,  Inc.  ("Trataros,"  general  contractor)  for the  performance of
structural and water intrusion  repairs of the Williamsburg  Houses owned by the
New York City Housing Authority ("NYCHA"). This contract has been placed on hold
for a  considerable  period of time due to contract  scope changes  and/or other
issues  between  parties not  involving NY. NY does not expect to return to this
project and thus deems same to be completed.

         In May 1996, NY entered a subcontracting agreement with Lehrer McGovern
Bovis,  Inc.  (general  contractor)  for the terminal  restoration  of the Grand
Central Terminal owned by Metro-North Commuter Railroad.  The contract is valued
at $3,706,653 and as of September 30, 1997 is approximately 69% complete.





<PAGE>
         In June 1996, NY entered a prime  contracting  agreement  with EklecCo,
the owner of the  Palisades  Power Mall  located  in West  Nyack,  New York,  to
perform structural steel erection services. The estimated aggregate value of the
contract is  $10,373,552.  The mall is estimated to be  approximately  3,900,000
square feet upon  completion.  The project is to be performed in two phases.  NY
commenced work on Phase I in June 1996. As of September 30, 1997, the project is
79% complete.

         In July  1996,  NY  entered  into a prime  contracting  agreement  with
Tishman Construction  Corporation of New York (construction  manager) to perform
steel erection services on the Louis Vuitton Office Tower owned by Starre Realty
and  located  on East 57th  Street in New York,  New York.  Commencement  of the
project was delayed due to conflict not involving NY, which  conflict  since has
been  resolved.  NY expects  to  recommence  work on this  project by the end of
calendar  1997. In or about December  1996, NY obtained  confirmation  of United
Casualty and Surety Insurance Company's  willingness to issue a performance bond
for NY as general contractor of this project;  however, the construction manager
subsequently waived its bond requirement.  As of September 30, 1997, the project
is 67% complete.

         In  October  1996,  NY entered  into a  subcontracting  agreement  with
Hannibal   Construction  Co.,  Inc.  (general  contractor)  to  provide  certain
structural steel work for  rehabilitation  of the Hellgate  Viaduct  Structures,
located in Philadelphia,  Pennsylvania, owned by the National Railroad Passenger
Corporation (AMTRAK). Work on the project has been completed.

         In November 1996, NY entered into a subcontracting  agreement with N.Y.
Iron (general  contractor) to provide  structural  steel work for the Indonesian
Mission owned by the United Nations. Work on the contract has been completed.

         In  January  1997,  NY entered  into a  subcontracting  agreement  with
Humphreys & Harding,  Inc. to perform certain structural steel erection work for
the Permanent  Mission to the Republic of Korea,  located in New York, New York.
The contract price is $1,500,000.  As of September 30, 1997, work on the project
is 16% complete.

         The following  table lists,  as of June 30, 1997,  (i) all companies in
which Joseph Polito is either an Officer,  Director,  or principal  shareholder;
and (ii) the activities  engaged in by such companies with the Company or any of
its subsidiaries:







<PAGE>
<TABLE>
<CAPTION>

                                    Year            J. Polito's                      Activities with the        Place of
Company Name(1)                     of Inc.         Title             Ownership(%)   Company and NY             Business

<S>                                 <C>             <C>               <C>            <C>                        <C>             
U.S. Bridge Corp.(2)                1988            Pres./Director    61%            Parent Company             Queens, NY

One Carnegie Court                  1990            Pres./Director    0%             Subsidiary of Corp.        Waldorf, MD
 Associates, Inc. (3)(5)(6)

R.S.J.J. Realty Corp.(4)            1983            Pres./Director    100%           Leases the offices and     Queens, NY
                                                                                     storage space to the
                                                                                     Company

Crown Crane, Inc.(4)                1988            --                50%            Supplies cranes to the     Brooklyn, NY
                                                                                     Company for use in the
                                                                                     erection of steel

Atlas Gem Leasing,                  1986            Pres./Director    100%           Supplies welding           Queens, NY
Inc. (4)                                                                             machines and compressors
                                                                                     to the Company

Atlas Gem Erectors                  1986            Pres./Director    100%           Sold certain construction  No office
  Co., Inc. (4)(7)                                                                   contracts to the Company;
                                                                                     ceased operations 9/94

Gem Steel Erectors                  1966            Pres./Director     100%          No business relationship;  No office
 Inc.(4)(8)                                                                          ceased operations 3/91

Waldorf Steel                       1990            Pres./Director     100%          Provided steel to the      No office
Fabricators, Inc.(3)(5)                                                              Company; ceased
                                                                                     operations in 8/95

U.S. Bridge Corp.                   1994            Pres./Director     0%            Subsidiary of  Corp.;      No office
(Maryland) (2)(9)                                                                    ceased operations in 11/96

U.S. Bridge of N.Y.,                1990            Pres./Director     56.3%         Provides steel erection    Queens, NY  
Inc.(4)(10)                                                                          buildings, roadway, and
                                                                                     bridge repair projects
</TABLE>

     (1) Except as disclosed hereunder,  no company listed is beneficially owned
by another entity; nor does any company have any subsidiaries. No company listed
has  conducted any business  operations  under any name except for its corporate
name, except for the Company. See "-History."

     (2) Incorporated in the State of Delaware.

     (3) Incorporated in the State of Maryland.

     (4) Incorporated in the State of New York.

     (5) One Carnegie  owned the  property,  building,  and  equipment  which it
leased to Waldorf Steel Fabricators,  Inc.  ("Waldorf") prior to August 1, 1995,
as of which date it began leasing to U.S. Bridge Corp.  (Maryland)  ("MD") until
MD ceased operations in November 1996.

     (6) Formed in December 1990,  One Carnegie is a wholly-owned  subsidiary of
the Company.  Joseph Polito,  through his ownership of approximately  61% of the
outstanding  shares of the  Company  may be deemed the  beneficial  owner of the
shares of One Carnegie owned by the Company.

     (7) Ceased operations in September 1994.

     (8) Ceased operations in March 1991.

     (9) MD was  incorporated in the state of Delaware on September 21, 1994 and
is a wholly-owned  subsidiary of the Company. It was formed to provide labor for
the  fabrication  of steel by Waldorf,  which it provided  until August 1, 1995,
when Waldorf ceased operations.





<PAGE>
         (footnotes continued from previous page)

     (10) Joseph  Polito,  through his  ownership  of  approximately  61% of the
outstanding  shares of the  Company  may be deemed the  beneficial  owner of the
shares of NY owned by the Company.

                         Schedule of Completed Contracts
<TABLE>
<CAPTION>

Project Name                                 Contract Amount                              Contract Date            Type of Contract
------------                                 ---------------                              -------------            ----------------
<S>                                          <C>                                          <C>                      <C>
Van Wyck                                     $ 195,500                                    April 1992               Lump-Sum
39th Street Bridge                            2,538,252                                   June 1993                Lump-Sum
39th Street (Demolition)                        679,046                                   February 1993            Lump-Sum
New England Thruway                           2,409,058                                   June 1993                Lump-Sum
Honeywell                                     1,100,000                                   June 1993                Joint Venture (1)
Kosciuszko Bridge                             3,034,281                                   June 1993                Lump-Sum
Stillwell Avenue Bridge                       8,084,655                                   June 1993                Lump-Sum
Cross Bronx Expressway                           60,176                                   March 1994               Lump-Sum
Robert Moses Causeway                           540,118                                   December 1994            Lump-Sum
4th Avenue Bridge                               387,965                                   March 1995               Lump-Sum
201 East 80th Street                          1,692,797                                   May 1995                 Lump-Sum
Centereach                                      186,500                                   June 1995                Lump-Sum
Pro-Camera                                       50,275                                   August 1995              Lump-Sum
UDC                                              82,400                                   August 1995              Lump-Sum
Williamsburg Houses (2)                         708,450                                   April 1996               Lump-Sum
South Avenue Plaza                              274,045                                   May 1996                 Lump-Sum
Hellgate Viaduct Structures                     208,750                                   Oct. 1996                Lump-Sum
Indonesian Mission                              348,000                                   Nov. 1996                Lump-Sum
Others(3)                                       188,346                                   N/A                      N/A
                  Total                       22,768,614
</TABLE>


     (1) Joint venture with John P. Picone, Inc. ("Picone"),  whereby NY entered
into a  consulting  agreement  with  Picone,  who was awarded the  project.  The
agreement provided that for 50% of the profits of the project,  NY would provide
Picone with its  expertise in steel  erection,  supply  qualified  workers,  and
oversee the  rehabilitation  of the  bridge.  Picone put NY's  employees  on its
payroll and incurred all the expenses of the project.

     (2) This project, which bore an original contract price of $2,517,651,  was
on hold for a considerable period of time pending a dispute not involving NY. NY
believes  that it will not return to this  project  and thus  deems the  project
complete.

     (3) Total  estimated  project  value of a  collection  of smaller  projects
completed.

         Inasmuch as NY  purchased  steel from  Waldorf and NY leases  equipment
from Crown Crane,  Ltd. and/or Atlas Gem Leasing,  Inc., NY checks prices in the
industry prior to engaging in any such  transactions and will transact  business
with such  companies  only on terms which may be considered  similar to industry
standards.  The Board of Directors intends to exercise  reasonable  judgment and
take such steps as it deems necessary under all of the  circumstances to resolve
any specific  conflict of interest which may occur and will  determine  what, if
any,  specific  measures  -  such  as  retention  of  an  independent   advisor,
independent counsel, or special committee - may be necessary or appropriate. The
fact that Joseph Polito is an officer,  director,  and principal  shareholder in
other companies, including those that transact business with the Company and NY,
opens the potential that there may be conflicts of interest in decisions made by
Mr.  Polito,  which may compromise his fiduciary duty to the Company and NY. Any
remedy under state law, in the event such circumstances arise, most likely would
be prohibitively expensive and time consuming. See "-Suppliers;  Subcontractors;
Unions."





<PAGE>
Industry Overview

         1997 has brought about a resurrection in the  construction  industry in
the New York City metropolitan area. Major  transportation  arteries in New York
are under  extensive  construction  programs to increase their ability to handle
the ever  increasing  volumes of traffic they carry.  Work is in progress on the
major thruways, expressways, and parkways across New York State. NY currently is
preparing   subcontracting  bids  for  some  of  the  roadway  projects  in  the
metropolitan area.

         These projects  positively  affect the  availability of work in diverse
disciplines in the construction industry: landscaping,  concrete, paving, steel,
etc.  NY has  qualified  as a bidder  (and  expects to place a bid by the end of
November  1997)  for a  project  for the  JFK  Airport,  international  arrivals
building, Korean Air and Lufthansa terminals.

         Apart from the infrastructure  construction programs, there has been an
impressive  increase in the  restoration,  alteration,  and  expansion of office
space, residential properties, and public facilities. This increase has resulted
in the  Korean  Mission  subcontracting  project.  There  also  appears to be an
infusion of foreign  investment capital into the depressed real estate market in
New York,  prompting major  renovations and  alterations.  This capital infusion
enhances the value of property and  therefore  increases  the  incentive for new
development.

Marketing

         NY obtains its projects  primarily  through the process of  competitive
bidding.   Accordingly,  NY's  marketing  efforts  include  the  following:  (i)
subscribing to bid reporting services;  (ii) monitoring trade journals including
Engineering  Record  News,  Dodge  Report,  and  Brown's  Letter,   Inc.;  (iii)
monitoring  daily newspapers and real estate  publications;  (iv) membership and
networking in affiliated  organizations  including Allied Building  Trades;  (v)
maintaining  contracts with developers and other general  contractors;  and (vi)
requesting notification from various government agencies as to bid solicitations
being requested.

The Contract Process; Bidding

     In response to bid requests, NY submits to the soliciting entity a proposal
detailing its qualifications,  the services to be provided,  and the cost of its
services.  Based on its  evaluation of the proposals  submitted,  the soliciting
entity awards the contract to the bidder it deems  appropriate.  Generally,  the
contract for a project is awarded to the lowest  bidder,  although other factors
may be taken into consideration.

         NY submits its bids after management  performs a detailed review of the
project  specifications,  an internal review of NY's  capabilities and equipment
availability,  and an  assessment  of  whether  the  project is likely to attain
targeted profit margins. In bidding on





<PAGE>
contracts,  there are two types of bid requests made by the soliciting entity: a
unit cost bid and a  lump-sum  bid.  The unit cost bid is based  upon a cost per
unit basis;  a lump-sum  bid  obligates  NY to  complete  the project at a fixed
price.  With a  lump-sum  bid,  the risk of  estimating  the  quantity  of units
required for a particular  project is on NY, while with a unit cost bid, NY must
estimate the per unit cost, not the number of units needed. Any increase in NY's
unit cost over its unit bid price or cost over its lump-sum bid,  whether due to
inefficiency,  faulty estimates,  weather,  inflation, or other factors, must be
borne by NY and may adversely affect its results of operations.

         Upon  receipt  by a New York  City  agency of  notification  that a bid
submitted  for a project has been  declared the low bid, the city's  procurement
policy requires that the New York Finance Committee then approve all funds to be
allocated to such project.  During this time,  if NY is the low bidder,  it must
provide the New York City agency with such documents as are required - including
a Payment  and  Performance  Bond and a Labor and  Material  Bond in order to be
approved to undertake the project.  Once the New York City Finance Committee has
cleared the allocation of funds for a project and the agency has cleared all the
documentation  required to be submitted by the  contractor,  a starting date and
time table is set up for the project.

         Most  government  contracts  provide for termination of the contract at
the election of the customer,  although in such event, NY is generally  entitled
to receive a small  cancellation fee. Many of NY's contracts are also subject to
completion requirements with liquidated damages assessed against it if schedules
are not met.

         While  Joseph  Polito has been in the  construction  business  for many
years, NY has only recently started bidding on projects as a general contractor,
and NY may incur  unanticipated  expenses,  problems,  or difficulties which may
affect  its bid  prices and  project  profitability.  Though NY has been the low
bidder on several  public  sector and private  sector bids, it has not commenced
any public or private sector projects as a general contractor.  It has, however,
commenced two projects as prime contractor.

         NY expects to act as a general  contractor  on some of the  projects it
will  undertake  in the near  future  and will  need to hire  subcontractors  to
perform  certain jobs such as electrical  and mechanical  work,  though it shall
continue  also  to bid  as a  subcontractor  at the  request  of  other  general
contractors. As a general contractor, NY will be responsible for the performance
of the entire contract, including work assigned to subcontractors.  Accordingly,
NY is subject to  liability  associated  with the failure of  subcontractors  to
perform as required under the contract;  thus, NY may require its subcontractors
to furnish Performance Bonds.  Affirmative action regulations,  however, require
NY to use its best efforts to hire minority  subcontractors for a portion of the
project and some of these minority subcontractors may not be able to obtain such
surety bonds.







<PAGE>
Insurance and Bonding

         NY  maintains  general   liability  and  excess  liability   insurance,
insurance  covering  its  construction  equipment,   and  workers'  compensation
insurance in amounts it believes are  consistent  with  industry  practices.  NY
carries  liability  insurance of  $1,000,000  per  occurrence  which  management
believes is adequate for its current operations.

         Although NY  generally  has not been  required  to provide  Performance
Bonds to general contractors when acting as a subcontractor,  it may be required
to furnish bonds  guaranteeing its performance as a subcontractor in the future.
Currently,  NY is serving as a  subcontractor  on two projects.  For the EklecCo
prime  contracting  project and the Grand  Central  Terminal and Korean  Mission
subcontracting  projects,  NY has been  required to provide,  and has  provided,
Performance Bonds and Labor and Material Bonds.

         NY  expects to bid on both  private  and public  sector  projects  as a
general  contractor.  Most of these  projects,  both public and private  sector,
shall require Bid Bonds and Payment and Performance  Bonds. A Bid Bond is a bond
issued by a bonding  company  which is usually in an amount  equal to 10% of the
bid price and which  guarantees that the contractor will be able to produce such
other  additional  documents and  information  required in order to commence the
project  including the issuance of a Performance  Bond. A Performance  Bond is a
guarantee by a surety,  customarily  100% of the value of the  contract  amount,
that the  contractor  will  complete  the  project  pursuant  to the  terms  and
conditions of the contract.  Most government  contracts allow for termination of
the  contract at the  election of the  customer,  although in such event,  NY is
generally  entitled to receive a small  cancellation fee. Many of NY's contracts
are also subject to completion  requirements  with liquidated  damages  assessed
against NY if  schedules  are not met. In the past,  NY has not been  materially
adversely affected by these provisions as a subcontractor.

         NY's ability to obtain  bonding and its bonding  capacity are primarily
determined by its net worth,  liquid  working  capital  (consisting  of cash and
accounts receivable),  past performance,  management  expertise,  the number and
size of projects under construction,  and various other factors.  The larger the
project  and/or  the more  projects  in which NY is  engaged,  the  greater  the
bonding,  net worth, and liquid working capital  requirements.  Surety companies
consider  such  factors  in  light  of the  amount  of NY's  surety  bonds  then
outstanding and the surety  companies'  current  underwriting  standards,  which
standards  may change  periodically.  Therefore,  NY may be required to maintain
certain  levels  of  tangible  net worth in  connection  with  establishing  and
maintaining  bonding  limits.  As a  practical  matter,  such  levels  may limit
dividends,  if any,  which  might  have  been  declared  and which  would  limit
corporate funds available for other purposes.

         In determining whether to issue a bond, surety companies perform credit
checks and other due diligence  disclosure  requirements  and  investigate  NY's
capitalization, working





<PAGE>
capital, past performance, management's expertise, and such other factors as are
discussed above. The surety companies  require  companies  receiving  bonding to
maintain  certain  amounts of capital  and liquid  assets and base the amount of
bonding they will issue on a formula, which is usually based on certain industry
standards  which take into  account  such  factors.  The surety  companies  also
require that the bonds be personally guaranteed by Joseph Polito.

         Bonding  requirements  vary depending upon the nature of the project to
be performed.  NY anticipates paying premiums of between 1 1/4% to 3 1/2% of the
total  amount  of the  contracts  to be  performed.  Since  these  premiums  are
generally  payable at the beginning of a project,  NY must  maintain  sufficient
working  capital to satisfy  the premium  prior to  receiving  revenue  from the
project.  Bonding premiums are a line item in the submitted bid and are included
as part of NY's billing to its clients.

         In December  1996,  NY obtained a commitment  for a Surety Bond Line of
Credit  ($10,000,000  single  project  limit)  from  United  American  Guarantee
Company,  Ltd. ("UAGC") for its general  contracting  projects.  This commitment
will allow NY to pursue  those  general  contracting  projects in the public and
private sectors which require performance bonds. To date, it has also allowed NY
to obtain  Performance  Bonds and  Labor  and  Material  Bonds for the one prime
contracting  and two  subcontracting  projects  which have  required  same:  the
EklecCo, Grand Central Terminal, and Korean Mission projects.

Work in Progress; Backlog and Seasonality

         Contracts as a subcontractor and general  contractor often involve work
periods in excess of one year.  Revenue on uncompleted  fixed price contracts is
recorded under the percentage of completion  method of accounting.  NY begins to
recognize  profit on its  contracts  when it first accrues  direct costs.  As is
standard  construction  industry practice, a portion of billings may be retained
by the customer until certain contractual obligations are fulfilled.

         The following is a list, as of September 30, 1997, of those projects in
which NY is currently engaged:
<TABLE>
<CAPTION>

                                                               Backlog
Contract Party/                 Contract                       Amount at   Type of             % of job
Project Name                    Amount           Contract Date 9/30/97     Contract            Completed
<S>                             <C>              <C>           <C>         <C>                 <C>   
EklecCo/
  Palisades Power Mall(1) ...   $10,373,552(2)   June 1996     2,178,446   Lump-sum            79%(2)

Lehrer McGovern, Bovis, Inc./
  Grand Central Terminal ....     3,706,653      May 1996      1,169,449   Lump-sum            69%(2)

Tishman Construction Corp./
  Louis Vuitton N.A.(1) .....     4,417,835      July 1996     1,457,886   Lump-sum            67%(2)

Humphreys &  Harding, Inc./
  Korean Mission ............     1,500,000      Jan. 1997     1,260,000   Lump-sum            16%(2)

Total Signed Contracts ......   $19,998,040                  $ 6,065,781
</TABLE>


<PAGE>
     (footnotes from previous page)

     (1) NY is prime contractor (similar to general contractor) on this project.

     (2)  Completion  percentage is as of September 30, 1997 and is based on the
percentage  of costs  incurred  through that date to the  estimated  cost of the
project.

         Though NY does not believe its  business is  seasonal,  its  operations
slow during the winter  months due to  decreased  productivity  of the  laborers
caused by their inability to work in severe weather  conditions.  As a result of
the foregoing, NY's costs are increased.

Suppliers; Subcontractors; Unions

         For the year ended June 30, 1997, NY received  approximately 43% of the
fabricated steel it required from MD, a subsidiary of the Company. Queens County
Ironworks  and New York Iron,  Inc. - neither of which  companies is  affiliated
with the Company,  NY, or any Officer,  Director,  or principal  stockholder  of
either  company - provided  the  remainder  of the steel.  MD  provided  NY with
fabricated  steel until  November 1996, at which time MD ceased  operating.  The
prices paid and the terms for the steel  purchased  from MD were  comparable  to
competitive  prices and terms;  therefore,  NY  believes  it now will be able to
acquire same through other suppliers at similar prices and on similar terms.

         NY  currently  depends  upon  various  vendors to supply  spare  parts,
cranes,  and other  heavy  equipment,  and its ability to hire  skilled  workers
depends upon its ability to comply with certain union  agreements and contracts.
NY rents  cranes from Crown Crane,  Ltd., a company of which Joseph  Polito is a
50%  shareholder,  and rents  generators  and  other  equipment  from  Atlas Gem
Leasing,  Inc., a company which is wholly owned by Mr. Polito.  NY believes that
there are a sufficient number of vendors, so that in the event any individual or
group of vendors can no longer service NY's needs, NY will be able to find other
vendors at competitive prices.

         As is standard practice in the construction  industry,  NY's employees,
other than its office employees,  are not salaried  individuals.  They are union
employees who are hired on an as-needed,  or per project,  basis and are paid an
hourly wage which is set by the unions with which they are associated.  NY hires
skilled  steel  workers  represented  by the  International  Union of Structural
Ironworkers  local 40, 361, & 417 and International  Operating  Engineers locals
14, 14B, 15, 15A,  15C, 15D, and 825 and Cement Masons local 472. NY must comply
with its agreements with the unions,  which  agreements  regulate all employment
issues including pay, overtime, working conditions,  vacations, benefits, etc. -
between NY and the union employees. These agreements expire on June 30, 1999.

         NY believes that it has a good  relationship  with the Unions and is in
compliance  with all union  agreements.  No assurance  can be given that NY will
continue  to  be  in  compliance  with  the  Unions  or  successfully  negotiate
extensions  to NY's  agreements  with  such  Unions.  In the event  problems  or
conflicts with the Unions arise or there is a loss of skilled steel and





<PAGE>
operating engineers, this would have a detrimental effect on NY's operations.

         NY's success as a general  contractor,  in part, will be dependent upon
its ability to hire workers and comply with union  contracts and  agreements and
its ability to oversee and retain  qualified  subcontractors  to perform certain
work. Although NY believes that it will be able to attract subcontractors to bid
on projects it bids as general  contractor,  there can be no  assurance  that it
will be able to do so. NY will be  responsible  for  performance  of the  entire
contract,  including  the work done by  subcontractors.  Accordingly,  NY may be
subject  to  substantial  liability  if a  subcontractor  fails  to  perform  as
required.  In addition,  in hiring and overseeing  subcontractors,  there may be
difficulties of which NY is not aware.

Competition

         All aspects of NY's  business  are,  and will  continue  to be,  highly
competitive.  NY is one of many subcontractors  which erects and furnishes steel
for projects.  Many of these subcontractors have substantially greater financial
resources  and  sales  than  those of NY.  When  contractors  seek  construction
contracts,  they request bids from numerous  subcontractors based on the various
requirements of the project. These subcontractors compete primarily as to price,
name recognition, and prior performance.

         As a general contractor, NY will be competing with many larger and more
experienced (and thus more established) contractors whose names are more readily
recognized and whose  relationships  with federal and state  municipalities  and
agencies,  and those  private  companies  who are bidding  against NY, have been
established.  NY is a subcontractor and a general contractor  specializing,  but
not  exclusively,  in bridge and roadway  repair and  replacement  as well as in
furnishing and erecting steel  structures for buildings.  NY's  competitors  are
numerous, and many have substantially greater marketing, financial, bonding, and
human resources.

Government Regulation

         NY must  comply  with the rules  and  regulations  of the  Occupational
Safety and Health Administration  ("OSHA"), a federal agency which regulates and
enforces  the safety  rules and  standards  for the  construction  industry.  In
addition,  NY must  comply  with a wide range of other state and local rules and
regulations  applicable to its business,  including  regulations  covering labor
relations,  safety  standards,  affirmative  action,  and the  protection of the
environment  including those pertaining to water discharge,  air emissions,  and
hazardous and toxic substance discharge.  Continued compliance with OSHA and the
broad federal,  state, and local regulatory network is essential and costly. The
failure  to comply  with such  regulations  or  amendments  to  current  laws or
regulations  imposing more stringent  requirements may have an adverse effect on
NY's  operations.  NY believes  that it is in  substantial  compliance  with all
applicable laws and regulations.






<PAGE>
Employees

         As of June 30, 1997,  the Company had three  executive  officers and no
employees.   As  of  June  30,  1997,  NY  had  three  executive  officers,  two
administrative assistants,  one comptroller,  one project estimator, one project
manager,  and two employees in the  accounting  department.  The number of union
employees NY utilizes  depends on the number and size of projects in which NY is
engaged and can range from 10-200 employees, some of whom are employed full-time
and others of whom are employed part-time. These union employees are represented
by the  International  Union of Structural  Ironworkers  locals 40, 361 and 417;
International  Operating  Engineers  locals 14, 14B, 15, 15A, 15C, 15D, 825; and
Cement  Masons local 472. NY's  contracts  with these  Unions,  which  contracts
regulate all employment  issues  between NY and the union  employees - including
pay, overtime,  working conditions,  vacations,  benefits, etc. - expire on June
30, 1999. NY considers its relationships with the unions and its employees to be
good.

ITEM 2.           DESCRIPTION OF PROPERTY

         The Company  shares office space with NY (at 53-09 97th Place,  Corona,
New  York  11368)  which  leases  approximately  25,000  square  feet  of  space
(approximately  24,000 square feet of which is utilized for storage  space) from
an affiliate company,  RSJJ. RSJJ is owned by the Company's majority stockholder
and  President,  Joseph  Polito.  The lease,  pursuant  to which NY pays rent of
$20,000  per month to RSJJ,  expires in March  1998.  NY also  leases a yard for
storage  material  pursuant  to an oral  agreement  with RSJJ,  which  agreement
requires  monthly  payments of $3,500.  The Company  believes  that the terms of
these leases are comparable and competitive to those terms which might have been
negotiated with an unaffiliated landlord.

         As of May 1997, NY was in arrears in the amount of $480,000 in payments
due under its lease with RSJJ.  This  arrearage  was  converted  into  equity as
follows:  NY  issued  270,000  shares of common  stock to the  Company,  for the
cancellation  of the debt owed to RSJJ.  The Company,  in turn,  issued  200,000
shares of its Common  Stock to Joseph  Polito and  150,000  shares of its Common
Stock to RSJJ.  RSJJ then  transferred  all of such shares to RSJJ's  mortgagor,
which agreed to accept said shares as payment of RSJJ's outstanding mortgage.

         The Company  also,  through One  Carnegie,  formerly  owned 13 acres of
property in St. Charles Business Park, Waldorf,  Maryland,  inclusive of a 4 1/2
acre (170,000 square foot)  building.  In connection with the acquisition of the
property and equipment,  One Carnegie entered into a $3,000,000 installment loan
agreement with Trinity, which loan was collateralized by all of the property and
equipment  owned by One Carnegie and personally  guaranteed by Joseph Polito and
Atlas Gem.

         By agreement  executed  March 10, 1997  (mistakenly  dated December 31,
1996),  One Carnegie  entered into an Agreement for Deed in Lieu of  Foreclosure
("the Agreement") with





<PAGE>
Trinity. The transaction,  which was not deemed complete and closed until August
1,  1997,  was  necessitated  by One  Carnegie's  having  defaulted  on (i)  the
$3,000,000  Note (of which  Trinity was the holder);  and (ii) the Deed of Trust
and Security Agreement which secured said Note.

         Pursuant  to the  Agreement,  in lieu of  foreclosing  upon the Charles
County, Maryland property owned by One Carnegie, Trinity, through its affiliate,
WPI,  accepted  the  deed to such  property.  As  additional  consideration  for
Trinity's entering the Agreement, One Carnegie executed a promissory note in the
amount of $150,000 naming Trinity as payee. The promissory note is guaranteed by
Joseph  Polito and Atlas Gem. A Bill of Sale and  Assignment,  providing for the
conveyance  of certain One  Carnegie  personal  property in exchange for $25,000
from WPI, comprised an additional component of the Agreement.  A final component
of the Agreement is a Mutual  Release which  releases One Carnegie,  Mr. Polito,
Atlas Gem, and Trinity (and all their  successors  and assigns)  from any claims
which arose prior to execution of the Agreement.

ITEM 3.           LEGAL PROCEEDINGS

         The Company is not a party to any material  litigation and is not aware
of any threatened  litigation  that would have a material  adverse effect on its
business, except for the litigation matters discussed below. The Company and its
subsidiaries believe that the nature and number of these proceedings are typical
for a construction firm of its size and scope.

         Three actions to foreclose upon mechanics liens were commenced by NY in
the last fiscal year.  The first action was  commenced in New York State Supreme
Court,  Kings County on February  25, 1997.  The action names NY and Metro Steel
Structures,  Ltd.  as  plaintiffs  and  the  Perini  Corporation,   Metropolitan
Transportation  Authority, New York City Transportation  Authority, and Fidelity
and Deposit  Company of Maryland  as  defendants.  NY's claim for relief in this
action is $2,199,560. The claim is based upon filed mechanic's liens and general
contract law. The claim is for labor performed and materials  supplied including
money owed under the  contract and money due for "extra" work with regard to the
Rehabilitation  of the  Viaduct  at the  Stillwell  Avenue  Station of the Coney
Island Line in Brooklyn, New York. This action is still in the discovery phase.

         The second  action  was filed on  February  26,  1997 in New York State
Supreme Court,  Queens County.  It names NY, Metro Steel  Structures,  Ltd., and
McKay  Enterprises,  Inc. as plaintiffs  and Perini  Corporation,  Department of
Transportation  of the City of New York,  and  Fidelity  and Deposit  Company of
Maryland as defendants.  NY's claim for relief in this action is $844,932.  This
claim is based upon filed  mechanic's  liens and general contract law. The claim
is for labor  performed and materials  supplied  including  money owed under the
contract  regarding the  rehabilitation  of the 39th Street Bridge over the Long
Island  Rail Road and Amtrak in Queens,  New York.  This  action is still in the
discovery phase.






<PAGE>
On February 7, 1997,  Perini  Corporation  filed a related action against NY and
Metro Steel  Structures,  Ltd. in New York State  Supreme  Court,  Kings County.
Perini's  claims against NY total  $1,140,560  and allege  defective work on the
Stillwell Avenue project and upon a loss/profit agreement for both the Stillwell
Avenue project and the 39th Street Bridge project. NY has counterclaimed for the
amounts set forth in the above  discussion of the two actions  involving  Perini
Corporation,  and its claims are based upon the same theories as those set forth
above.

         NY filed its third action in the New York Supreme Court, Suffolk County
on or about May 13, 1997. The action names Kiska Construction,  the State of New
York,  acting  through  the New  York  State  Comptroller,  the New  York  State
Department of  Transportation,  and the Seaboard  Surety  Company as defendants.
NY's claim for relief in this action is $279,346. This claim is based upon filed
mechanic's  liens and general contract law. The claim is for labor performed and
materials  supplied  including  money owed under the  contract and money due for
"extra"  work  regarding  the   rehabilitation  of  the  Robert  Moses  Causeway
Northbound Bridge over the State Boat Channel, in Suffolk County, New York. This
action is still in the discovery phase.

         In August  1997,  the  Company,  NY, and MD entered  into an  agreement
settling the January 1997 trademark  infringement  claim made by The Ohio Bridge
Corporation.  The  Company  has  agreed  to effect a name  change to USA  Bridge
Construction  Corp.;  NY has  agreed  to  effect  a name  change  to USA  Bridge
Construction  of N.Y.,  Inc.;  and MD has agreed to effect a name  change to USA
Bridge Construction Corp. (Maryland) before the end of the 1997 calendar year.

         In April 1995,  NY (then Metro Steel  Structures,  Ltd.)  commenced  an
Article 78 proceeding  in the Supreme Court of the State of New York,  County of
New York,  against the  Commissioners  of the State Insurance Fund and the State
Insurance Fund to annul the  cancellation of NY's workers'  compensation  policy
and to annul the rates,  classifications,  and  premiums  assigned  to NY.  This
action claims that  defendants  audited NY's books for purposes of assigning the
workers'  compensation  rates  and  premiums  to  be  assessed  against  NY  and
thereafter (i)  "arbitrarily  and capriciously and without any foundation in law
or in fact" assigned to NY's employees improper job  classifications  which were
then used  unlawfully as the basis for improperly  assessing the highest premium
rates which could be assessed against NY; (ii) improperly  applied said premiums
retroactively;  (iii) billed NY for premiums  which were improper and excessive;
and (iv) canceled NY's workers'  compensation policy upon NY's failure to tender
payment in the improper and excessive amount demanded by defendants.

         NY is  prosecuting  this  action to the  fullest  extent  possible.  On
September 30, 1997, NY and defendants  were scheduled to appear before the court
for a conference in this matter. This matter was adjourned,  however, to October
28, 1997, pending settlement discussions.






<PAGE>
In December  1995,  the  Commissioners  of the State  Insurance  Fund for and on
behalf of the State Insurance Fund commenced suit against Joseph Polito,  Ronald
Polito,  Steven Polito, NY, Metro Steel Structures,  Ltd. (now known as NY), One
Carnegie,  and others  alleging  that certain  workers'  compensation  insurance
policies obtained for various insured defendants were obtained  fraudulently and
that the defendant  corporations  failed to pay the  appropriate  premiums.  The
claims  against NY,  amounting  to  approximately  $3 million,  are limited to a
policy  covering the period April 29, 1993 through  December  1994.  NY, Messrs.
Polito,  and all other defendants are defending against this action.  The action
is in the discovery phase, and settlement negotiations are currently underway.

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

         Neither  the  Company  nor NY  submitted  any  matters to a vote of its
security holders during the last quarter of the fiscal year ended June 30, 1997.




<PAGE>
                                     PART II

ITEM 5.           MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
                  MATTERS

     The  Company's  Common  Stock began  trading on the Nasdaq  SmallCap  Stock
Market on July 25, 1996.  Prior to that,  from August 25, 1994 to July 24, 1996,
the Company's Common Stock, $.001 par value per share,  traded  sporadically and
on a limited basis in the over-the-counter market on the OTC Bulletin Board. The
following  table sets forth  representative  high and low closing bid prices for
the period the stock traded on the OTC Bulletin Board and the high and low sales
prices for the period the stock traded on the Nasdaq  SmallCap Stock Market,  by
calendar quarters, as reported by a market maker during the periods provided for
herein. The bid quotations reflect inter-dealer prices,  without retail mark-up,
mark-down,  or  commission,  and may not represent  actual  transactions.  Sales
quotations  represent  prices between  dealers,  do not include resale mark-ups,
mark-downs,  or other  fees or  commissions,  and do not  necessarily  represent
actual  transactions.  Prior to August 25, 1994, there was no trading market for
the Company's Common Stock.
<TABLE>
<CAPTION>

                  Calendar Quarter                                         Prices
                        Ended                                          Low      High

                          1995
                  <S>                                                 <C>       <C>
                  07/01/95 - 09/30/95                                    1/4    1 1/4
                  10/01/95 - 12/31/95                                    1/4    1

                          1996
                  01/01/96 - 03/31/96                                  1 1/4    2
                  04/01/96 - 06/30/96                                  2 1/4    3
                  07/01/96 - 07/24/96(1)                               1 3/4    3 1/4
                  07/25/96 - 09/30/96(1)                               1 1/2    3 3/8
                  10/01/96 - 12/31/96                                  1        3

                          1997
                  01/01/97 - 03/31/97                                  1        2 3/8
                  04/01/97 - 06/30/97                                  1        2 1/8
                  07/01/97 - 09/30/97                                    15/16  1 7/16
</TABLE>


        (1)       As indicated  above,  the Company's Common Stock traded on the
                  over-the-counter  market of the OTC Bulletin Board from August
                  25, 1994 to July 24,  1996.  Since July 25,  1996,  the Common
                  Stock  has  traded  on  the  Nasdaq   SmallCap  Stock  Market.
                  Therefore,  the amounts provided from July 1, 1995 to July 24,
                  1996  represent  bid  quotations,  and the amounts  thereafter
                  represent sales price.

         As of September 30, 1997,  there were 129 registered  holders of record
of the Company's Common Stock, $.001 par value, which number,  determined by the
Company's





<PAGE>



stockholder  records,  does not include  beneficial  owners of the Common  Stock
whose  shares  are held in names  of  various  security  holders,  dealers,  and
clearing  agencies.  The  Company  believes  there  are in  excess  of 500  such
beneficial holders of the Common Stock.

         The Company has paid no  dividends  for the last two fiscal years or in
the 1st quarter of fiscal  1998;  nor does it have any present  plan to pay such
dividends.  Payment of future  dividends will be determined from time to time by
the  Company's  Board of  Directors  based  upon its  future  earnings,  if any,
financial condition, capital requirements, and other factors. The Company is not
presently  subject to any  contractual or similar  restriction on its present or
future ability to pay such dividends.

ITEM 6            .        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS

General

         The following management's  discussion and analysis for the years ended
June 30, 1997 and 1996 is a discussion of the Company's  subsidiaries  since the
Company did not have any  material  operations  of its own except for  primarily
stock-related transactions.

         NY, the primary operating entity,  recognizes revenue and costs for all
contracts under the percentage of completion  method.  Cost of contract revenues
includes all direct material and labor costs and those indirect costs related to
contract performance.  General and administrative  expenses are accounted for as
period  costs  and  are,  therefore,  not  included  in the  calculation  of the
estimates  to complete  construction  contracts in  progress.  Material  project
losses are provided for in their entirety without reference to the percentage of
completion.  As  contracts  can  extend  over  one or more  accounting  periods,
revisions  in costs and  earnings  estimated  during  the course of the work are
reflected  during the  accounting  period in which the facts  become  known.  An
amount equal to the costs attributable to unapproved change orders and claims is
included in the total estimated revenue when realization is probable.

         The current asset,  "costs and estimated earnings in excess of billings
on uncompleted  contracts," represents costs and estimated earnings in excess of
amounts billed on respective uncompleted contracts at the end of each period.

         The  current  liability,  "billings  in excess  of costs and  estimated
earnings on uncompleted  contracts,"  represents billings which exceed costs and
estimated  earnings  on  respective  uncompleted  contracts  at the  end of each
period.

         NY was formed by Joseph Polito, its President,  to serve primarily as a
general  contractor for public and private  sector  construction  projects.  The
public sector  projects are sponsored by federal,  state,  and local  government
authorities  in New York  State  and in the New  York  City  metropolitan  area.
Previously, Mr. Polito, through other entities, furnished





<PAGE>
and provided  steel  erection as a  subcontractor  for private and  governmental
construction projects. Since its commencement of operations in June 1993, NY has
provided  steel  erection  services for  building,  roadway,  and bridge  repair
projects for general  contractors  who have been engaged by private,  municipal,
and/or government clients.

         NY's operations are substantially  controlled by Joseph Polito since he
owns  approximately  61% of the  outstanding  shares of the Company,  which owns
53.23% of the  common  stock of NY;  hence,  Mr.  Polito may be  considered  the
beneficial owner of NY. Mr. Polito is also a 100% shareholder of RSJJ.  Pursuant
to a signed lease  agreement which expires on March 31, 1998, RSJJ leases office
space to NY at a cost of $20,000 per month.  Mr. Polito has ownership  interests
in Waldorf (which ceased operations on August 1, 1995),  Crown Crane,  Inc., and
Atlas Gem  Leasing,  Inc.,  all of which  provided  services to NY for the years
ended June 30,  1997 and 1996.  Lastly,  NY  purchased  from MD, a  wholly-owned
subsidiary of the Company, certain materials and labor to perform steel erection
service.  For the years  ended June 30, 1997 and 1996,  purchases  by NY from MD
amounted  to  $371,321  and  $622,050,  respectively.  MD ceased  operations  in
November 1996; since then, NY has purchased its steel from unrelated parties.

         NY plans to continue to undertake  projects as a subcontractor but will
focus on  obtaining  projects  as a general  contractor  in both the  public and
private sectors.  In the New York City metropolitan area, there are an abundance
of  subcontractors  who have  significant  experience and are  competitive  with
respect to pricing and level of service.  For those general contracting projects
it undertakes,  NY will be responsible for  performance of the entire  contract,
including  the work to be performed by  subcontractors.  Accordingly,  NY may be
subject  to  substantial  liability  if a  subcontractor  fails  to  perform  as
required. Also there may be unanticipated  difficulties in hiring and overseeing
subcontractors.  NY requires bonding from a New York licensed bonding company in
order to bid on projects as a general contractor.

         Though NY does not believe its business is seasonal, its operations are
generally  slow in the winter months due to the decrease in worker  productivity
because of weather conditions. Accordingly, NY may experience a seasonal pattern
in its operating  results with lower revenue in the third quarter of each fiscal
year.  Interim  results also may be affected by the timing of bid  solicitation,
the stage of completion of major projects, and revenue recognition policies.

         In determining whether to issue a bond, surety companies perform credit
checks  and  other due  diligence  disclosure  requirements  and  require  NY to
maintain  certain  amounts of capital and liquid assets.  Each company bases the
amount of bonding it will issue on a formula (devised  individually) which takes
into account,  inter alia,  NY's capital and liquid  assets.  In order for NY to
obtain and maintain  bonding,  it must adhere to the requirements  stipulated in
the bonding  agreements,  which agreements vary with each bonding  company.  The
bonding costs for each bond are  incorporated in the contract price of each job.
These  costs are carried as a line item in the  requisition  and are paid by the
customer. Any monies taken from the





<PAGE>
working  capital  for this  purpose  will be  replaced  as  monthly  requisition
payments are received from the customer.  Bonding  requirements  vary  depending
upon the nature of the projects to be performed.  NY anticipates paying a fee to
bonding  companies of between 1 1/4% to 3 1/2% of the amount of the contracts to
be  performed.  Since these fees  generally  are payable at the  beginning  of a
project, NY must maintain sufficient working capital to satisfy the fee prior to
receiving revenue from the project.

         In December 1996, NY obtained a bonding commitment for a surety line of
credit  ($10,000,000 single project limit) from UAGC for its general contracting
projects.  The  commitment  will allow NY to pursue  those  general  contracting
projects in the public and private sectors which require  performance  bonds. To
date, it has also allowed NY to obtain  Performance Bonds and Labor and Material
Bonds for the one prime contracting and two  subcontracting  projects which have
required same: the EklecCo, Grand Central Terminal, and Korean Mission projects.

Year ended June 30, 1997 as compared to the year ended June 30, 1996

         Contract  revenues for the years ended June 30, 1997 and 1996  amounted
to $15,494,447 and $7,401,433, respectively. This net increase of $8,093,014, or
approximately  109%, is a direct result of NY's  $17,943,400  backlog as of June
30, 1996.  This backlog  amount  represents the contracts NY entered into during
the latter part of its June 30, 1996 fiscal year. During the year ended June 30,
1997,  NY  obtained  new  contracts  and change  orders to  previous  contracts,
aggregating approximately $3,600,347. Included in contract revenues are revenues
from joint venture profit sharing agreements on certain projects.  Joint venture
revenues  for the year ended June 30,  1997  totaled $0 as  compared to the year
ended June 30, 1996 in which they totaled  $200,000.  Accordingly,  revenues for
the year ended June 30, 1997 from NY's core  business,  construction  contracts,
increased  by  approximately  $8,393,000  as compared to the year ended June 30,
1996. As of June 30, 1997, NY's backlog  amounted to  approximately  $6,100,000.
Backlog  represents  the amount of revenue NY expects to realize from work to be
performed on uncompleted  contracts in progress and from contractual  agreements
for which work has not yet begun.

         The Company's gross profit for the year ended June 30, 1997 amounted to
28%,  whereas for the year ended June 30, 1996,  gross  profit  amounted to 32%.
Gross profit  decreased by 4% as a result of NY's revision of its contract costs
estimates for jobs coming to an end in the current year.

         For the years ended June 30, 1997 and 1996,  NY purchased  from Waldorf
approximately  $0  and  $180,333,  respectively,  of  the  materials  and  labor
necessary to perform
fabrication  services.  Effective  August 1, 1995,  Waldorf  ceased  operations.
Waldorf is under the common control of NY's majority  stockholder and president.
Lastly,  for the years  ended  June 30,  1997 and  1996,  NY paid  $371,321  and
$622,050, respectively, to MD for materials and labor necessary to perform steel
erection services. MD is a wholly-owned subsidiary of





<PAGE>
the Company.  In November 1996, MD ceased  operations,  and NY began  purchasing
material and labor from  unrelated  third party steel  fabricators.  At June 30,
1997, NY owed MD $62,606,  principally for advances in connection with the above
services: such amounts are non-interest bearing and are due on demand.

         General and  administrative  expenses have  increased by $441,517 (from
$2,493,399 for the year ended June 30, 1996), or 18%, to $2,934,916 for the year
ended June 30,  1997.  The  increase in general  administration  costs is mainly
attributable to an overall increase in NY's  administrative  salaries associated
with the  material  amount of  increase  in  contract  revenue  and  stock-based
compensation expense.

         As of June 30, 1997, NY increased  its allowance for doubtful  accounts
to $2,287,000 against its contract receivables.  The bad debt expense associated
with the  increase  in  allowance  amounted  to  $1,287,000.  NY  increased  its
allowance  for doubtful  accounts  based on a review of the factors  surrounding
certain  mechanic's  liens filed against a certain customer for certain projects
and an  estimate  of the future  collection  of other  receivables  for which no
mechanic's  liens have been filed.  In management's  opinion,  the allowance for
doubtful  accounts at June 30, 1997 will be sufficient to absorb any losses that
may be sustained from a settlement with this and other customers.  For the years
ended June 30, 1997 and 1996, NY had three  unrelated  customers which accounted
for approximately 86% and 62%,  respectively,  of total revenues. As of June 30,
1997 and 1996,  approximately 83% and 89% of contracts and retainage receivables
are due from four and three customers respectively.

Liquidity and Capital Resources

Year ended June 30, 1997 as compared to the year ended June 30, 1996

         At June 30, 1997, the Company's working capital amounted to $2,546,132.
The working  capital  increase is  principally  attributable  to NY's  contracts
receivable.  As of June 30,  1997,  NY's net  contract  receivable  amounted  to
$8,962,297,  approximately  $2,424,219  (or  27%) of which  has  been  collected
through September 9, 1997.

         Net cash provided by operating  activities amounted to $578,792 for the
year ended June 30, 1997.  For the year ended June 30,  1996,  the net cash used
for operating activities amounted to $2,055,771 and was principally attributable
to increases in accounts  receivable and costs and estimated  earnings in excess
of billings on uncompleted contracts.

         With regards to financing activities, the Company used $200,852 of cash
for the year ended June 30, 1997. Such cash was used primarily for repayments to
affiliates and related parties.






<PAGE>
         As of June 30,  1997,  the Company  owes  approximately  $1,441,589  in
payroll taxes and related penalties and interest. Although, as of June 30, 1997,
the Company  has not entered  into any  written  repayment  agreements  with the
respective tax authorities, it has been making monthly payments to same pursuant
to duly negotiated oral agreements.

         In August 1996,  the Company  issued  400,000 shares of Common Stock in
repayment of a loan of  $300,000.  The stock has been valued at $1.00 per share,
representing  the  average  market  value at the time of the loan.  Accordingly,
interest expense in the amount of $100,000 has been recorded.

         In October 1996,  the Company  issued 250,000 shares of Common Stock as
an advisory fee pursuant to a previous agreement.  These shares have been valued
at $1.20 per  share  with a 50%  discount  due to the  restricted  nature of the
stock,  for a total  value of  $150,000.  The value of these  services  is being
amortized over the advisory period of two years.

         In December  1996, the Company issued 114,617 shares of Common Stock to
the consultants,  officers, and employees of its subsidiary,  NY, under its 1994
Senior Management Incentive Plan ("the Management Plan"). These shares have been
valued at $1.875 per share with a 50% discount,  due to the restricted nature of
the stock, for a total of $107,452.

         Also in December 1996,  the Company issued 575,000  options to officers
of the Company under the  Management  Plan.  The shares were  exercisable at the
then fair market value, and no additional  compensation was recorded.  Under the
terms of the issue,  the officer could execute a note for payment of the shares.
In March 1997,  125,000  shares of Common  Stock were  issued  pursuant to these
options.  The officer  elected to execute a note,  resulting  in a reduction  of
stockholders' equity for the balance of the note, $240,625.

         On August 14, 1995, NY successfully completed its public offering. As a
result, NY sold 791,850 shares,  which included 91,850 shares in connection with
the exercise of the underwriter's  over-allotment options, and 494,500 warrants,
which included  64,500  warrants  pursuant to the  underwriter's  over-allotment
option. NY yielded total net proceeds of $2,077,903 after deducting  underwriter
selling expenses and expense allowance, repayment of bridge loans and promissory
notes and related accrued interest to the bridge lenders and private  investors,
and the pre-payment of the first two years' financial  consulting agreement with
the  underwriter.  Simultaneously  with the  offering,  NY charged all  deferred
offering costs incurred to additional  paid-in  capital which totaled  $903,820.
Accordingly,  the increase in financing activities,  amounting to $2,249,177 for
the year end June 30, 1996, was primarily from NY's initial public offering.

         In June 1997, NY and the Company completed a transaction  whereby stock
NY issued 270,000 shares of common stock to the Company, for the cancellation of
$480,000 in rent debt owed to RSJJ. The Company,  in turn, issued 200,000 shares
of its Common Stock to Joseph Polito  (RSJJ's  president)  and 150,000 shares of
its Common Stock to RSJJ. RSJJ then transferred





<PAGE>
all of such shares to RSJJ's  mortgagor,  which  agreed to accept said shares as
payment of RSJJ's  outstanding  mortgage.  As a result of this transaction,  the
Company  increased  its  ownership  in NY to 53.23%.  The  Company  recorded  an
additional  investment in NY of $218,750,  or the fair market value of the stock
of $1.25 per  share  with a 50%  discount  due to the  restricted  nature of the
stock.  NY recorded a gain on the forgiveness of debt in the amount of $243,750,
the difference between the debt forgiven ($480,000) and the fair market value of
the stock ($1.75 per share) with a 50%  discount,  or $236,250.  The  difference
between the Company's stock value and the stock issued by NY, $17,500,  has been
recorded as a gain on issuance of stock.

         In  December  1994,  NY's Board of  Directors  adopted  the 1994 Senior
Management  Incentive Plan ("the NY Plan") which was adopted also by shareholder
consent.  The NY Plan provided for the issuance of up to 150,000  shares of NY's
common stock in  connection  with the issuance of stock  options and other stock
purchase rights to executive officers and other key employees. In December 1996,
the Board of  Directors  authorized  an amendment to the NY Plan to increase the
amount of stock options available to 1,000,000.

         In February 1997,  pursuant to a Form S-8 Registration  Statement filed
with the  Securities and Exchange  Commission,  NY registered for resale 125,000
shares of common stock underlying  options granted to NY's president pursuant to
the NY Plan.  The options were  exercisable  at $1.10 per share (110% of the bid
price on November 27, 1996).  They were exercised on March 25, 1997 and resulted
in the issuance of 125,000  shares of common stock,  60,000 of which shares have
been resold to date.

ITEM 7.           FINANCIAL STATEMENTS

See attached Financial Statements

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

         Not applicable.





<PAGE>
                                    PART III

ITEM 9.           DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Officers and Directors.

         The names, ages, and positions of the Company's  Executive Officers and
Directors are as follows:
<TABLE>
<CAPTION>

         Name                                                 Age                       Position with the Company

<S>                                                           <C>                       <C>                      
         Joseph M. Polito                                     63                        President and Director
         Ronald J. Polito                                     38                        Secretary and Director
         Steven J. Polito                                     35                        Treasurer and Director

</TABLE>

         All Directors hold office until the next annual meeting of stockholders
or until their successors are elected and duly qualified. Vacancies on the Board
of  Directors  may be filled by the  remaining  Directors.  Officers are elected
annually by, and serve at the discretion  of, the Board of Directors.  There are
no family  relationships  between  or among any  Officers  or  Directors  of the
Company,  except  that  Joseph  Polito is the  father of both  Steven and Ronald
Polito.

         Joseph M.  Polito has been the  President  and  Director of the Company
since  April  1994.  He has been the  president  and a director  of NY since its
inception in 1990, and prior to the  Acquisitions in April 1994, he was the sole
shareholder of NY. Mr. Polito  oversees all of the Company's  operations.  Since
its inception in 1994, Mr. Polito has been the president and a director of MD, a
wholly owned subsidiary of the Company. Since December 1990, Mr. Polito has been
the president and sole director and  shareholder of One Carnegie,  also a wholly
owned  subsidiary  of  the  Company.  Since  1988,  Mr.  Polito  has  been a 50%
shareholder of Crown Crane, Ltd., a company which leases cranes for construction
projects.  Since 1986, Mr. Polito has been the president and 100% shareholder of
Atlas  Gem  Leasing,   Inc.,  a  company  which  leases   generators  and  other
construction equipment. Mr. Polito has also been the president and sole director
and  shareholder  of Waldorf  since 1990.  Before it ceased  operating in August
1995,  Waldorf  fabricated steel and sold same to NY. Since 1983, Mr. Polito has
been the president and 100% shareholder of RSJJ, a company which owns and leases
real property.

     Since  1976,  Mr.  Polito  has been a member of the Allied  Building  Metal
Industries,  Inc.  ("ABMII"),  a trade  association  which has the  authority to
negotiate with the unions in order to better the construction  industry.  He was
the president of same from 1992 until 1993. Since approximately 1987, Mr. Polito
has been the Chairman of the Steel  Institute  of New York, a trade  association
similar to the ABMII.  From the mid-1980's to the  mid-1990's,  Mr. Polito was a
member of the Building Trades Association Joint Safety Committee. Since the mid-





<PAGE>
1980's,  he has  served  on the  Council  of  Presidents  of New  York  Building
Congress, Inc. Since the mid-1970's,  Mr. Polito has been a member of the of the
International Union of Structural  Ironworkers,  locals 40, 361, and 417. He has
been co-chairman of this organization since the early 1990's.

     Ronald J. Polito has been the Secretary and a Director of the Company since
April 1994.  Mr.  Polito has been the  secretary  and a director of NY since its
inception in 1990.  Mr. Polito  oversees the daily  progress on all projects and
analysis of the final costs and profits of jobs  completed  and the  preparation
and bidding on new projects.  Since its  inception in 1994,  Mr. Polito has been
the secretary and a director of MD. From its inception in 1990 until March 1995,
he was also the treasurer of NY. Since  December  1990,  Mr. Polito has been the
secretary  of One  Carnegie and  Waldorf.  Since 1983,  Mr.  Polito has been the
secretary of RSJJ.  Mr.  Polito  received a Bachelor of Science  Degree in Civil
Engineering from Brooklyn Polytechnical  Institute in 1981. He is the son of Mr.
Joseph Polito.

     Steven J. Polito has been  Treasurer of the Company  since March 1995 and a
Director of the Company since April 1994. Mr. Polito was elected treasurer of NY
in March 1995. Mr. Polito oversees the daily  operations for projects in process
and  projects  completed,  including  purchasing  and leasing of  materials  and
machinery  and the  distribution  of  labor.  He had  previously  been a Project
Manager and has been a director  of NY since its  inception  in 1990.  Since its
inception in 1994,  Mr. Polito also has been the treasurer and a director of MD.
Since 1988,  Mr.  Polito has been the treasurer of One  Carnegie,  Waldorf,  and
RSJJ. He is the son of Mr. Joseph Polito.

Significant Employees of NY

     John G. Bauer has been the chief  administrative  officer (a  non-executive
position) of the Company since February 1995. Since its inception in March 1992,
Mr.  Bauer  has  been the  President  and a  Director  of  Dynamic  Construction
Consulting,  Inc.  ("Dynamic"),  a company of which Mr.  Bauer was the  founder.
Dynamic provides construction management and consulting services to NY and other
companies.  From July 1988 to March  1992,  Mr.  Bauer was a Vice  President  of
Tishman Construction Corp. of N.Y., a construction company.

     Michael Panayi has been a structural engineer for NY since its commencement
of  operations  in June 1993.  From 1987 to 1993,  Mr.  Panayi was a  structural
engineer for Atlas Gem.

     William  J.  Kubilus,  a  professional  estimator  in the field of  general
contracting  and  subcontracting  since  1966,  joined  NY in  1996  to  provide
estimating  expertise for the Company's general  contracting and  subcontracting
bids.  Prior to joining NY, from 1993 to 1996,  Mr. Kubilus was an estimator for
Lazzinarro General Contracting.  From 1989 to 1993, he was an estimator for NICO
Construction.






<PAGE>
As  permitted  under  the  Delaware  General   Corporation  Law,  the  Company's
Certificate of Incorporation  eliminates the personal liability of the Directors
to the Company or any of its  shareholders  for  damages  for  breaches of their
fiduciary duty as Directors.

         As a result of the  inclusion of such  provision,  stockholders  may be
unable to recover  damages  against  Directors  for actions  taken by them which
constitute  negligence  or gross  negligence  or which are in violation of their
fiduciary duties.  The inclusion of this provision in the Company's  Certificate
of  Incorporation  may reduce the  likelihood of derivative  litigation  against
Directors and other types of shareholder litigation.

Certain Reports

         No  person  who  during  the  fiscal  year  ended  June 30,  1997 was a
Director,  Officer,  or beneficial  owner of more than ten percent of the Common
Stock (which is the only class of  securities  of the Company  registered  under
Section 12 of the  Securities  Exchange  Act of 1934 (the  "Act") (a  "Reporting
Person") failed to file on a timely basis reports  required by Section 16 of the
Act during the most recent  fiscal year or prior years,  except  Joseph  Polito,
Ronald  Polito,  and Steven Polito each did not file Forms 4 with respect to the
receipt  of  shares  of  Common  Stock as a bonus or with  respect  to the stock
options  granted in December  1996.  All Officers have confirmed that they shall
file the  appropriate  Forms 5 on or before  November 26, 1997. The foregoing is
based  solely upon a review by the Company of (i) Forms 3 and 4 as  furnished to
the  Company  (during  the most  recent  fiscal  year) in  accordance  with Rule
16a-3(d) under the Act; (ii) Forms 5 and amendments  thereto as furnished to the
Company   with  respect  to  its  most  recent   fiscal  year;   and  (iii)  any
representations  received by the Company from any reporting persons that no Form
5 is required, except as described herein.





<PAGE>
ITEM 10. EXECUTIVE COMPENSATION

Summary of Cash and Certain Other Compensation

         The following  provides  certain  information  concerning  all Plan and
Non-Plan (as defined in Item 402 (a)(ii) of Regulation S-B) compensation awarded
to, earned by, or paid by NY, the Company's  subsidiary,  during the years ended
June 30, 1997, 1996, and 1995.

                                            Summary Compensation Table

                                                Annual Compensation
<TABLE>
<CAPTION>


(a)                        (b)     (c)                 (d)              (e)                    (f)             (g)
Name                                                                    Restricted
and Principal                                          Other Annual     Stock                  Options/
Position                   Year    Salary ($)          Bonus ($)        Compensation ($)       Awards ($) (1)   SARS (#)
------------------         ----    ---------------     ---------        ----------------       --------------   --------

<S>                        <C>      <C>                <C>               <C>                   <C>              <C>    
Joseph Polito              1997     $330,000           -                 $ 68,642 (2)          -                125,000
 President and             1996       300,000          -                  111,911 (2)          -                   -
 Director                  1995       378,000          -                   68,200 (2)          -                 25,000

Ronald Polito              1997     $118,800           -                $  17,194 (3)          -                   -
 Secretary and             1996       125,000          -                   15,144 (3)          -                   -
 Director                  1995       121,000          -                   21,200 (3)          -                   -

Steven Polito              1997       $86,580          -                $   8,572 (4)          -                   -
  Treasurer and            1996        94,000          -                    8,275 (4)          -                   -
 Director                  1995         91,575         -                    9,900 (4)          -                   -
</TABLE>

(1)      At the end of the fiscal year,  Joseph Polito held 4,647,156  shares of
         Restricted Stock valued at $5,228,050.  Ronald Polito and Steven Polito
         each  held  2,500  shares of  Restricted  Stock  valued  at  $2,812.50.
         Valuations  are based on the closing bid price of Common Stock ($1.125)
         on June 30, 1997, as reported by a market maker.
(2)      Includes  (i) the  payment of premiums  on a life  insurance  policy of
         $10,722,  $54,362, and $46,000 for the years ended June 30, 1997, 1996,
         and 1995, respectively; (ii) the payment of travel expenses of $50,000,
         $50,000, and $22,200 for the years ended June 30, 1997, 1996, and 1995,
         respectively;  and (iii) the payment of an  automobile  lease of $7,920
         and $7,549 for the years ended June 30, 1997 and 1996. See "-Employment
         and Consulting Agreements."
(3)      Represents  (i)  100,000  shares of Common  Stock  issued as a bonus in
         December  1996 under the  Company's  1994 Senior  Management  Incentive
         Plan.  Valuation  on the  100,000  restricted  shares  is  based on the
         closing  bid price of Common  Stock  ($1.75) on  December  2, 1996,  as
         reported by a market maker.
(4)      Represents (i) an option to purchase 400,000 shares of Company's Common
         stock  granted under the Company's  Stock Option Plan,  exercisable  at
         $1.925  per  share  (which is 110% of the  market  price on the date of
         grant),  upon partial  exercise of which 125,000 shares were purchased,
         60,000 of which shares were resold;  (ii) an option to purchase 125,000
         shares of NY's  common  stock at $1.10 per  share  (110% of the  market
         price on the date of grant),  which  option has been  exercised in full
         (60,000 shares have been resold).
(5)      Represents  150,000  shares of the  Company's  Common  Stock which were
         issued as a bonus in August 15, 1995,  upon  completion of NY's initial
         public offering.  The market price on the date of issuance was ($.625),
         as reported by a market maker.  The 150,000 shares of Common Stock were
         subject  to a  vesting  schedule  whereby  50,000  shares  vested  upon
         issuance; 50,000 vested on August 15, 1996; and 50,000 vested on August
         15, 1997. All of these shares have vested and have been issued.




<PAGE>
         (footnotes from previous page)

(6)      Represents an option to purchase  25,000 shares of NY's common stock at
         $5.50  per share  issued in  accordance  with Mr.  Polito's  employment
         agreement.  The option vests over a three year period. See "-Employment
         and Consulting Agreements".
(7)      Includes (i) payments on an  automobile  lease of $5,416,  $5,416,  and
         $8,000 for the years ended June 30, 1997, 1996, and 1995, respectively;
         (ii) the payment of premiums on a term life insurance policy of $8,510,
         $4,684,  and $5,800 for the years ended June 30, 1997,  1996, and 1995,
         respectively;  and (iii) a travel  allowance  of $12,705,  $2,971,  and
         $7,400 for the years ended June 30, 1997, 1996, and 1995, respectively.
(8)      Reflects  the value of the  ownership  of 2,500  shares of Common Stock
         issued as a bonus in December 1996, at $1.125, the market price on June
         30, 1997.
(9)      Reflects  an option to purchase  shares  issuable  under the  Company's
         stock  option  plan,  at an  exercise  price of $1.75 per share,  which
         shares are vested and exercisable.
(10)     Includes (i) payments on an  automobile  lease of $5,304,  $5,304,  and
         $6,700 for the years ended June 30, 1997, 1996, and 1995, respectively;
         and (ii) a travel allowance of $3,268, $2,971, and $3,200 for the years
         ended June 30, 1997, 1996, and 1995, respectively.

Stock Options

The following table sets forth certain information concerning the grant of stock
options during the year ended June 30, 1997.
<TABLE>
<CAPTION>

                                       OPTION/SAR GRANTS IN LAST FISCAL YEAR
                                                (Individual Grants)

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



                                                 Individual Grants
------------------------------------------------------------------------------------------------------------------------------------

             (a)                            (b)                      (c)                      (d)                       (e)
                                                                  % of Total
                                      # of Securities           Options/SAR's
                                        underlying                Granted to
                                       Options/SARs             Employees in           Exercise or Base
             Name                       Granted(1)               Fiscal Year           Price ($/share)            Expiration Date
------------------------------------------------------------------------------------------------------------------------------------

<S>                                       <C>                       <C>                     <C>                           <C>    
Joseph M. Polito                          400,000                   69.56%                  $1.925               December 1, 2001

Ronald J. Polito                          100,000                   17.39%                   $1.75               December 1, 2001

Steven J. Polito                          75,000                    13.04%                   $1.75               December 1, 2001
====================================================================================================================================
</TABLE>

(1)      Represents  incentive  stock options  granted under the Company's Stock
         Option Plan. The options are fully vested and are exercisable at $1.925
         per share for Joseph  Polito and $1.75 per share for each of Ronald and
         Steven Polito.







<PAGE>



The  following  table  contains  information  with  respect to  employees of the
Company and options held as of June 30, 1997:
<TABLE>
<CAPTION>

                                AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR
                                           AND FY-END OPTION/SAR VALUES

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

             (a)                         (b)                     (c)                       (d)                      (e)
----------------------------------------------------------------------------------------------------------------------------------

                                                                                                                 Value of
                                                                                        Number of             Unexercised In-
                                                                                       Securities                The-Money
                                                                                       Underlying            Options/SAR's at
                                                                                       Unexercised               FY-End($)
                                   Shares Acquired              Value               Options/SAR's at           Exercisable/
            Name                   on Exercise (#)         Realized($) (1)             FY-End (#)              Unexercisable
            ----                   ---------------         ---------------                                     -------------
                                                                                      Exercisable/
                                                                                      Unexercisable
----------------------------------------------------------------------------------------------------------------------------------

<S>                                    <C>                       <C>                    <C>     <C>               <C> <C>
Joseph M. Polito                       125,000                   $ 0                    275,000/0                 0/0 (2)
Ronald J. Polito                          0                       0                     100,000/0                 0/0 (2)
Steven J. Polito                          0                       0                     75,000/0                  0/0 (2)

==================================================================================================================================
</TABLE>

     (1) Based upon the  average bid and asked  prices for such Common  Stock on
the date of exercise, March 13, 1997 ($1.125), as reported by a market maker.

     (2) Since the options are  exercisable  at $1.925 and $1.75,  respectively,
there is no value to such options as of June 30, 1997.

Employment and Consulting Agreements

     On April 4, 1995,  Joseph Polito entered into an employment  agreement with
NY wherein he agreed to devote 80% of his  business  time to the  affairs of NY.
The  agreement is for a term of  approximately  three years and expires June 30,
1998. Pursuant to the terms of the agreement,  Mr. Polito is to receive a salary
of $300,000 per annum until June 30, 1996, with 10% yearly  escalations  subject
to adjustment by the Board of Directors.  Mr. Polito is also to receive a yearly
non-accountable  expense  allowance of $50,000.  Under the NY Plan,  Mr.  Polito
received  stock  options to purchase  25,000 shares of common stock at $5.50 per
share, vesting at the rate of 7,500 in each of April 1996 and 1997 and 10,000 in
April 1998.  Mr.  Polito  also has the right to receive a yearly  bonus equal to
five percent (5%) of the first $1,000,000,  upon reaching  $1,000,000,  and five
percent (5%) of the next $500,000,  upon reaching  $1,500,000,  and five percent
(5%) after  $1,500,000,  of all the  pre-tax  profits of NY. NY shall pay to Mr.
Polito a monthly draw of $10,000  against the bonus.  Pursuant to the agreement,
NY also shall pay the premiums on a  $3,500,000  life  insurance  policy for the
benefit of individuals as directed by Mr. Polito.  The estimated  yearly premium
for same is





<PAGE>
$80,000.  The agreement restricts Mr. Polito from competing with NY for a period
of one year after the termination of his employment.  The agreement provides for
severance  compensation  to be paid to Mr. Polito if his  employment  with NY is
terminated or if there is a decrease in  responsibilities  or duties following a
change in control of NY. The severance compensation shall be made in one payment
equal to three times the aggregate annual compensation paid to Mr. Polito during
the preceding calendar year.

         In June 1995, the Company issued Marlowe & Company  ("Marlowe") 500,000
shares of Common Stock pursuant to the terms of a consulting agreement.  250,000
of such shares were issued immediately,  and 250,000 were held in escrow by Alan
Berkun,  counsel for Marlowe, a National Association of Securities Dealers, Inc.
member  broker-dealer  of which Alan  Berkun  was the  president  and  principal
stockholder,  pending  quotation  of the  Company's  securities  on  the  Nasdaq
SmallCap Stock Market. The sale of the 500,000 shares was registered pursuant to
a  Registration  Statement on Form S-8 filed by the Company on June 11, 1995. In
addition to the shares issued, the consulting agreement provided for the payment
of a consulting fee of $4,000 per month, for six months commencing June 1995, as
additional compensation. This monthly fee was not paid. Pursuant to the terms of
the  consulting  agreement,  in addition  to  consulting  services,  Marlowe was
required  to utilize  its best  efforts to raise a minimum of  $750,000  for the
Company upon quotation of the Company's securities on Nasdaq. All 500,000 shares
were resold pursuant to the S-8  registration  statement filed by Alan Berkun on
behalf of the  Company.  On August 1, 1996,  the  Company  amended its June 1995
agreement  with  Marlowe  and agreed to issue an  additional  250,000  shares of
Common  Stock to  Marlowe in payment  of  overdue  investment  banking  fees and
additional  costs due  Marlowe:  the shares  were issued on October 10, 1996 and
resold  pursuant to  Regulation  S under the Act.  Alan Berkun  acted as special
counsel for the Company regarding these transactions.

     Since March 1995 and April  1994,  Steven and Ronald  Polito have  received
annual salaries of $94,000 and $125,000, respectively, from NY. Both individuals
also  receive a car  allowance  equal to the  monthly  lease  payments  on their
automobiles  and the payment of premiums on life  insurance  policies  for which
they  choose  their  beneficiaries.  Neither  individual  has  entered  into  an
employment agreement with NY or the Company.

                  In  December  1996,  the  Company  entered  into a  Consulting
Agreement  with Bernard  Tapie,  a Paris based  consultant.  Mr. Tapie agreed to
offer his services in the  development of business  relations for the Company in
Asia, the Middle East,  Europe,  and Africa. The Company agreed to pay a monthly
retainer of  $12,000.  The  Company  subsequently  assigned  the  Agreement,  as
provided for therein, to Philip Hababav.

1994 Senior Management Incentive Plan

         In  December  1994,  the Board of  Directors  adopted  the 1994  Senior
Management  Incentive  Plan (the  "Management  Plan").  This plan was adopted by
shareholder consent also.





<PAGE>
The Management  Plan provides for the issuance of up to 2,000,000  shares of the
Company's  Common Stock in  connection  with the  issuance of stock  options and
other stock purchase rights to executive Officers and other key employees of the
Company.  The Company issued  114,617 shares of Common Stock to the  management,
employees and consultants of NY: Joseph Polito  received  100,000 of the shares,
and Messrs. Ronald and Steven Polito each received 2,500.

     The adoption of the  Management  Plan was prompted by the Company's  desire
(i) to attract and retain qualified personnel,  whose performance is expected to
have  a  substantial  impact  on  the  Company's  long-term  profit  and  growth
potential,  by encouraging  those persons to acquire equity in the Company;  and
(ii) to provide the Board with  sufficient  flexibility  regarding  the forms of
incentive  compensation which the Company will have at its disposal in rewarding
executive  Officers,  key  employees,   and  consultants  without  unnecessarily
depleting  the  Company's  cash  reserves.  The  Management  Plan is designed to
augment the Company's existing  compensation  programs and is intended to enable
the Company to offer  executives,  key  employees,  and  consultants  a personal
interest in the Company's  growth and success through the grant of stock options
and/or other rights  pursuant to the Management  Plan. It is  contemplated  that
only those executive  management employees (generally the Chairman of the Board,
Vice Chairman, Chief Executive Officer, Chief Operating Officer,  President, and
Vice  President of the Company),  key  employees,  and  consultants  who perform
services  of special  importance  to the  Company  will be  eligible  to receive
compensation  under the  Management  Plan. As of the date hereof,  the Company's
Officers and Directors number only three: Messrs.  Joseph Polito, Ronald Polito,
and Steven Polito,  though the Plan also includes  Messrs.  Bauer and Panayi.  A
total of 2,000,000  shares of Common  Stock are reserved for issuance  under the
Management Plan.

         Unless otherwise  indicated,  the Management Plan is to be administered
by the Board of Directors  or a committee  of the Board,  if such a committee is
appointed  for this  purpose (the Board or such  committee,  as the case may be,
shall be  referred  to in the  following  description  as "the  Administrator").
Subject to the specific  provisions of the Management  Plan,  the  Administrator
will have the discretion to determine (i) the recipients of the awards; (ii) the
nature of the awards to be granted; (iii) the dates such awards will be granted;
(iv) the terms and conditions of the awards;  and (v) the  interpretation of the
Management  Plan,  except that any award  granted to any employee of the Company
who is also a Director of the  Company  shall also be subject - in the event the
persons  serving as members of the  Administrator  of the Management Plan at the
time such  award is  proposed  to be  granted do not  satisfy  the  requirements
regarding the participation of  "disinterested  persons" set forth in Rule 16b-3
("Rule  16b-3")  promulgated  under the  Exchange  Act - to the  approval  of an
auxiliary  committee  consisting  of not  less  than  two  individuals  who  are
considered  "disinterested  persons" as defined under Rule 16b-3. As of the date
hereof,  the Company  has not yet  determined  who will serve on such  auxiliary
committee, if one is required.

         The Management  Plan generally  provides that unless the  Administrator
determines  otherwise,  each option or right granted shall become exercisable in
full upon certain  "change of control"  events as  described  in the  Management
Plan, or subject to any right or option granted





<PAGE>
under  the  Management  Plan  (through  merger,  consolidation,  reorganization,
recapitalization,  stock dividend,  dividend in property other than cash,  stock
split,  liquidating dividend,  combination of shares, exchange of shares, change
in corporate structure,  or otherwise),  the Administrator will make appropriate
adjustments to such plans and the classes, number of shares, and price per share
of stock subject to  outstanding  rights or options.  Generally,  the Management
Plan may be  amended  by  action  of the  Board of  Directors,  except  that any
amendment  which (i) would  increase the total number of shares  subject to such
plan;  (ii) extend the  duration of such plan;  (iii)  materially  increase  the
benefits  accruing to participants  under such plan; or (iv) change the category
of persons who can be eligible for awards  under such plan,  must be approved by
the  affirmative  vote of a majority of the  shareholders  entitled to vote. The
Management Plan permits awards to be made thereunder until November 2004.

         Directors  who are not  otherwise  employed by the Company  will not be
eligible for  participation in the Management Plan. The Management Plan provides
for  four  types  of  awards:  stock  options,  incentive  stock  rights,  stock
appreciation   rights  (including  limited  stock  appreciation   rights),   and
restricted stock purchase agreements (as described below).

     Stock  Options.  Options  granted under the  Management  Plan may be either
incentive  stock  options  ("ISOs")  or  options  which do not  qualify  as ISOs
("non-ISOs").  ISOs may be granted  at an option  price of not less than 100% of
the fair market value of the Common  Stock on the date of grant,  except that an
ISO granted to any person who owns capital stock  representing  more than 10% of
the total  combined  voting  power of all classes of Common Stock of the Company
("10%  stockholder")  must be granted at an exercise  price of at least 110% for
the fair market value of the Common Stock on the date of the grant. The exercise
price of the  non-ISOs  may not be less than 85% of the fair market value of the
Common  Stock  on  the  date  of  grant.  Unless  the  Administrator  determines
otherwise,  no ISO or non-ISO may be exercisable  earlier than one year from the
date of grant.  ISOs may not be granted to persons who are not  employees of the
Company.  ISOs granted to persons other than 10% stockholders may be exercisable
for a period of up to ten (10) years from the date of grant; ISOs granted to 10%
stockholders  may be exercisable  for a period of up to five years from the date
of grant.  No  individual  may be granted  ISOs that become  exercisable  in any
calendar  year for Common  Stock having a fair market value at the time of grant
in  excess  of  $100,000.  Non-ISOs  may be  exercisable  for a period  of up to
thirteen (13) years from the date of grant.

     Payment for shares of Common Stock purchases  pursuant to exercise of stock
options shall be paid in full in (i) cash, (ii) by certified check, or, (iii) at
the  discretion  of the  Administrator  by shares of Common  Stock having a fair
market value equal to the total exercise  price, or (iv) by a combination of the
above. The provision that permits the delivery of already owned shares of stocks
as payment for the  exercise of an option may permit  "pyramiding."  In general,
pyramiding enables a holder to start with as little as one share of common stock
and, by using the shares of common stock  acquired in  successive,  simultaneous
exercises of the option, to exercise the entire option, regardless of the number
of shares covered thereby,  with no additional cash or investment other than the
original share of





<PAGE>
common stock used to exercise the option.

     Upon termination of employment or consulting services,  an optionee will be
entitled to exercise the vested portion of an option for a period of up to three
months after the date of termination,  except that if the reason for termination
was a discharge  for cause,  the option  shall  expire  immediately,  and if the
reason for  termination  was for death or permanent  disability of the optionee,
the vested portion of the option shall remain exercisable for a period of twelve
(12) months thereafter.

     Incentive  Stock Rights.  Incentive stock rights consist of incentive stock
units  equivalent  to one share of Common  Stock in  consideration  for services
performed for the Company.  Each  incentive  stock unit shall entitle the holder
thereof to receive,  without  payment of cash or property  to the  Company,  one
share of Common Stock in consideration for services performed for the Company or
any subsidiary by the employee,  subject to the lapse of the incentive  periods,
whereby the Company  shall  issue such number of shares upon the  completion  of
each specified  period.  If the employment or consulting  services of the holder
with the Company  terminate prior to the end of the incentive period relating to
the units awarded,  the rights shall thereupon be null and void,  except that if
termination  is caused by death or permanent  disability,  the holder or his/her
heirs,  as the case may be,  shall be entitled to receive a pro rata  portion of
the shares  represented  by the units,  based upon that portion of the incentive
period which shall have elapsed prior to the holder's death or disability.

     Stock  Appreciation  Rights  (SARs).  SARs may be granted to  recipients of
options under the Management Plan. SARs may be granted  simultaneously  with, or
subsequent  to, the grant of a related option and may be exercised to the extent
that  the  related  option  is  exercisable,  except  that  no  general  SAR (as
hereinafter  defined) may be exercised within a period of six months of the date
of grant of such SAR, and no SAR granted with respect to an ISO may be exercised
unless the fair market value of the Common Stock on the date of exercise exceeds
the exercise  price of the ISO. A holder may be granted  general SARs  ("General
SARs") or limited SARs ("Limited SARs"), or both. General SARs permit the holder
thereof to receive an amount (in cash,  shares of Common Stock, or a combination
of both) equal to the number of SARs  exercised  multiplied by the excess of the
fair market  value of the Common  Stock on the  exercise  date over the exercise
price of the related  option.  Limited SARs are similar to General SARs,  except
that, unless the Administrator determines otherwise,  they may be exercised only
during  a  prescribed  period  following  the  occurrence  of one or more of the
following  "Change of Control"  transactions:  (i) the  approval of the Board of
Directors of  consolidation  or merger in which the Company is not the surviving
corporation,  the sale of all of substantially all the assets of the Company, or
the liquidation or dissolution of the Company; (ii) the commencement of a tender
or exchange offer for the Company's Common Stock (or securities convertible into
Common Stock) without the prior consent of the Board;  (iii) the  acquisition of
beneficial  ownership by any person or other  entity  (other than the Company or
any employee benefit plan sponsored by the Company) of securities of the Company
representing 25% or more of the voting power of the Company's





<PAGE>
outstanding  securities;  or (iv) if  during  any  period  of two years or less,
individuals  who at the  beginning  of such period  constitute  the entire Board
cease to  constitute  a majority  of the  Board,  unless  the  election,  or the
nomination for election, of each new director is approved by at least a majority
of the directors then still in office.

     The exercise of any portion of either the related option or the tandem SARs
will cause a corresponding  reduction in the number of shares remaining  subject
to the option or the tandem SARs, thus maintaining a balance between outstanding
options and SARs.

     Restricted Stock Purchase Agreements.  Restricted Stock purchase agreements
provide  for the sale by the  Company of shares of Common  Stock at prices to be
determined  by the Board,  which  shares  shall be subject  to  restrictions  on
disposition  for a stated  period  during  which  the  purchaser  must  continue
employment with the Company in order to retain the shares.  Payment must be made
in cash. If  termination  of employment  occurs for any reason within six months
after the date of purchase,  or for any reason other than death or by retirement
with the consent of the Company of the Company  after the  six-month  period but
prior to the time that the restrictions on disposition  lapse, the Company shall
have the option to reacquire the shares at the original purchase price.

     Restricted  shares awarded under the  Management  Plan will be subject to a
period of time designated by the Administrator (the "restricted  period") during
which the recipient  must continue to render  services to the Company before the
restricted  shares will become vested.  The  Administrator may also impose other
restrictions, terms, and conditions that must be fulfilled before the restricted
shares may vest.

                  Upon  the  grant  of  restricted  shares,  stock  certificates
registered  in the name of the  recipient  will be issued and such  shares  will
constitute  issued  and  outstanding  shares of Common  Stock for all  corporate
purposes.  The holder will have the right to vote the  restricted  shares and to
receive  all  regular  cash  dividends  (and  such  other  distributions  as the
Administrator  may  designate),  if any,  which are paid or  distributed  on the
restricted  shares and,  generally,  to exercise all other rights as a holder of
Common  Stock,  except that,  until the end of the  restricted  period,  (i) the
holder  will  not be  entitled  to take  possession  of the  stock  certificates
representing the restricted  shares; and (ii) the holder will not be entitled to
sell,  transfer,  or otherwise dispose of the restricted shares. A breach of any
restrictions, terms, or conditions established by the Administrator with respect
to any restricted shares will cause a forfeiture of such restricted shares.

     Upon expiration of the applicable  restriction  period and the satisfaction
of any other applicable conditions, all or part of the restricted shares and any
dividends or other  distributions  not  distributed to the holder (the "retained
distributions")  thereon  will  become  vested.  Any  restricted  shares and any
retained  distributions  thereon  which do not so vest will be  forfeited to the
Company.  If prior  to the  expiration  of the  restricted  period  a holder  is
terminated  without  cause or  because  of a total  disability  (in each case as
defined in the





<PAGE>
Management   Plan),  or  dies,  then,   unless   otherwise   determined  by  the
Administrator at the time of the grant, the restricted period applicable to each
award of restricted shares will thereupon be deemed to have expired.  Unless the
Administrator determines otherwise, if a holder's employment terminates prior to
the expiration of the applicable  restricted period for any reason other than as
set forth above, all restricted  shares and any retained  distributions  thereon
will be forfeited.

     Accelerating of the vesting of the restricted shares shall occur, under the
provisions of the Management  Plan, on the first day following the occurrence of
any of the following:  (a) the approval by the stockholders of the Company of an
"Approved Transaction"; (b) a "Control Purchase"; or (c) a "Board Change."

     An "Approved  Transaction" is defined as (A) any consolidation or merger of
the Company in which the Company is not the continuing or surviving  corporation
or  pursuant  to which  shares of Common  Stock  will be  converted  into  cash,
securities,  or other  property  other than a merger of the Company in which the
holders  of the  Common  Stock  immediately  prior to the  merger  have the same
proportionate ownership of Common Stock of the surviving corporation immediately
after the merger;  or (B) any sale, lease,  exchange,  or other transfer (in one
transaction or a series of related  transactions) of all, or substantially  all,
of the assets of the  Company;  or (C) the  adoption of any plan or proposal for
the liquidation or dissolution of the Company.

     A "Control  Purchase" is defined as  circumstances  in which any person (as
such term is defined in Sections  13(d)(3) and  14(d)(2) of the  Exchange  Act),
corporation,  or other entity  (other than the Company or any  employee  benefit
plan  sponsored  by the  Company)  (A) shall  purchase  any Common  Stock of the
Company (or securities  convertible  into the Company's  Common Stock) for cash,
securities,  or any other  consideration  pursuant to a tender offer or exchange
offer, without the prior consent of the Board of Directors,  or (B) shall become
the "beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange
Act),  directly  or  indirectly,  of  securities  of  the  Company  representing
twenty-five  percent  (25%)  or more of the  combined  voting  power of the then
outstanding securities of the Company ordinarily (and apart from rights accruing
under  special  circumstances)  having  the  right  to vote in the  election  of
directors  (calculated  as provided in  paragraph  (d) of such Rule 13d-3 in the
case of rights to acquire the Company's securities).

     A "Board Change" is defined as circumstances in which, during any period of
two consecutive  years or less,  individuals who at the beginning of such period
constitute  the entire Board shall cease for any reason to constitute a majority
thereof  unless the election,  or the  nomination  for election by the company's
stockholders, of each new director was approved by a vote of at least a majority
of the directors then still in office.





<PAGE>
1994 Employee Stock Option Plan

         In  December  1994,  the Board of  Directors  adopted  the 1994  Senior
Employee  Incentive  Plan (the "Employee  Plan").  This plan was adopted also by
shareholder  consent.  The  Employee  Plan  provides  for the  issuance of up to
2,000,000  shares of the Company's  Common Stock in connection with the issuance
of stock options to key employees of the Company.

     The adoption of the Employee Plan was prompted by the Company's  desire (i)
to attract and retain qualified personnel, whose performance is expected to have
a substantial impact on the Company's long-term profit and growth potential,  by
encouraging those persons to acquire equity in the Company;  and (ii) to provide
the  Board  with  sufficient   flexibility  regarding  the  forms  of  incentive
compensation  which the  Company  will have at its  disposal  in  rewarding  key
employees, advisors, and independent consultants without unnecessarily depleting
the  Company's  cash  reserves.  The  Employee  Plan is  designed to augment the
Company's existing  compensation  programs and is intended to enable the Company
to offer  employees  a personal  interest  in the  Company's  growth and success
through the grant of stock options.  A total of 2,000,000 shares of Common Stock
are reserved for issuance under the Employee Plan.

     Under the Employee Plan,  options to purchase an aggregate of not more than
2,000,000  shares  of  Common  Stock  may be  granted  from  time to time to key
employees,   advisors  and  independent  consultants  to  the  Company  and  its
subsidiaries. It is anticipated that awards made under the Employee Plan will be
subject to vesting  periods,  although  the  vesting  periods are subject to the
discretion of the Board of Directors or  Administrator of the plan. If approved,
awards  under  the  Employee  Plan may be made  until  January  1, 2004 when the
Employee Plan terminates.

         The  Employee  Plan is to be  administered  by the Board of  Directors.
Subject to the specific  provisions of the Employee Plan, the  Administrator  is
generally  empowered  to (i)  interpret  the  plan;  (ii)  prescribe  rules  and
regulations  pertaining  thereto;  (iii)  determine  the  terms  of  the  option
agreements;  (iv) amend them with the consent of the optionee; (v) determine the
employees to whom options are to be granted;  and (vi)  determine  the number of
shares subject to each option and the exercise price thereof.

     The per share exercise price for incentive stock options  ("ISOs") will not
be less than 100% of the fair market value of a share of the Common Stock on the
date the option is granted (110% of fair market value on the date of grant of an
ISO if the optionee owns more than 10% of the Common Stock of the Company).

     Options will be exercisable  for a term  determined by the Board which will
not be less than one year.  Options  may be  exercised  only while the  original
grantee has a relationship with the Company or a subsidiary of the Company which
confers  eligibility  to be  granted  options  or up to ninety  (90) days  after
termination at the sole discretion of the Board. In the event of termination due
to retirement, the Optionee, with the consent of the Board, shall have





<PAGE>
the right to exercise his option at any time during the twelve (12) month period
after such  retirement.  Options may be exercised up to twelve (12) months after
death or total and permanent  disability.  In the event of certain basic changes
in the Company,  including a change in control of the Company (as defined in the
Employee Plan) in the discretion of the Board,  each option may become fully and
immediately  exercisable.  ISOs are not  transferable  other than by will or the
laws of descent and  distribution.  Options may be exercised during the holder's
lifetime only by the holder or his or her guardian or legal representative.

     Options  granted  pursuant to the Employee  Plan may be designated as ISOs,
with the  attendant  tax  benefits  provided  under  Section 421 and 422A of the
Internal Revenue Code of 1986. Accordingly,  the Employee Plan provides that the
aggregate  fair market value  (determined  at the time an ISO is granted) of the
Common  Stock  subject to ISOs  exercisable  for the first  time by an  employee
during any calendar  year (under all plans of the Company and its  subsidiaries)
may not  exceed  $100,000.  The Board may  modify,  suspend,  or  terminate  the
Employee Plan, provided,  however, that certain material modifications affecting
the Plan must be approved by the  shareholders,  and any change in the  Employee
Plan that may adversely affect an optionee's  rights under an option  previously
granted under the Employee Plan requires the consent of the optionee.




<PAGE>
ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT

         The following table sets forth certain  information as of September 29,
1997, based upon information  obtained by the persons named below,  with respect
to the  beneficial  ownership of shares of Common Stock by (i) each person known
by the Company to be the owner of 5% or more of the outstanding shares of Common
Stock;  (ii) by each  Officer  and  Director;  and  (iii)  by all  Officers  and
Directors as a group.
<TABLE>
<CAPTION>

                                                                                                 Percent of
                                                                                                 Common
                                                              Number of                          Stock
         Name                                                 Shares                             Owned

         <S>                                                  <C>                                <C>                               
         Joseph Polito (1)                                    4,862,156                          61.1%
         c/o U.S. Bridge Corp.
         53-09 97th Place
         Corona, New York  11368

         Steven Polito (2)                                      127,500                           1.7%
         c/o U.S. Bridge Corp.
         53-09 97th Place
         Corona, New York  11368

         Ronald Polito (3)                                      152,500                           2.0%
         c/o U.S. Bridge Corp.
         53-09 97th Place
         Corona, New York  11368

         All Officers and Directors
         as a group (3 persons)(1)-(3)                        5,142,156                           65.3%
</TABLE>


     (1) Includes  275,000 shares  issuable upon the exercise of an option which
is presently vested and exercisable. Does not include (i) 10,000 shares issuable
to Joseph Polito upon the exercise of options not presently vested;  and (ii) an
aggregate of 251,000 shares gifted by Joseph Polito, of which 81,000 shares were
gifted to members of Joseph Polito's family (including 50,000 each to Ronald and
Steven Polito) and 70,000 shares were gifted to employees of the Company,  as of
January 23, 1995.  Joseph Polito  disclaims  beneficial  ownership of all shares
transferred to his family members.

     (2) Includes  75,000 shares  issuable to Steven Polito  pursuant to options
which have  vested.  (3)  Includes  100,000  shares  issuable  to Ronald  Polito
pursuant to options which have vested.






<PAGE>
ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On  September  1,  1995,  in  conjunction  with  NY's  public  offering
underwriter's   exercise  of  its  over-allotment   option  to  purchase  91,850
additional  shares of NY's  common  stock,  the  Company  exercised  its Special
Warrant and purchased 5,665 shares of NY's common stock at $2.50 per share.

         On October 11, 1995,  NY paid One Carnegie  $50,000 on behalf of MD for
fabrication  services  performed by MD. Such payment was treated as a payment on
account by NY to MD. From July 1995 to October  1995,  NY paid MD  approximately
$183,000 for the labor associated with the fabrication of steel.

         On May 13, 1996, Joseph Polito, the Company's President, entered into a
memorandum of  understanding  with an individual,  Lubov  Ulianova,  whereby Mr.
Polito  borrowed  $300,000  from Mr.  Ulianova.  The loan was secured by 550,000
shares of the Company's Common Stock owned by Mr. Polito,  which shares were put
into an escrow  account,  with Alan Berkun as the escrow  agent.  The funds were
then  loaned  by Mr.  Polito to the  Company.  The loan  provided  that upon the
Company's  listing  of its  Common  Stock on the Nasdaq  SmallCap  Stock  market
(Nasdaq),  400,000  shares of Common  Stock  would be issued to Mr.  Ulianova as
repayment of the loan. This transaction was an exempt transaction, in accordance
with Regulation S under the Securities Act of 1933, as amended. In addition, Mr.
Polito  granted Mr.  Ulianova an option to  purchase  600,000  shares of Company
Common  Stock at a price of $1.50 and could only be  exercised  if the bid price
for the Company's  Common Stock was at least $3.00.  The Company's  Common Stock
was approved for listing on Nasdaq on July 25, 1996,  at which time the loan was
repaid.  The option  expired  unexercised.  These  matters were reviewed for the
Company by its special counsel Alan Berkun, Esq.

         In December  1996,  the  Company  issued  bonuses of 100,000  shares of
Common  Stock to Joseph  Polito  and 2,500  shares to each of Ronald  Polito and
Steven Polito as part of the
aggregate of 114,617 shares issued to NY's employees and consultants pursuant to
the Management Plan. The Company also issued 313 shares of Common Stock to Ilene
Althaus,  Joseph  Polito's wife. In connection with the 114,617 shares issued to
NY's  employees  and  consultants,  the Company  recorded  compensation  expense
amounting  to  $107,453,  which is based on upon 50% of the average  closing bid
price for the month of December 1996.

         In February 1997,  pursuant to a Form S-8 Registration  Statement filed
with the Securities and Exchange  Commission,  the Company registered for sale a
total of 686,617 shares of Common Stock,  575,000 of which are shares underlying
options granted pursuant to the Company's Senior Management  Incentive Plan. The
options are exercisable at $1.75 and $1.925 per share.

     On March 13, 1997,  the Company  issued  125,000  shares of Common Stock to
Joseph Polito upon exercise of options  granted  pursuant to the above mentioned
Management Plan. In


<PAGE>
     February 1997,  these shares were  registered for resale pursuant to a Form
S-8  Registration  Statement.  Mr.  Polito  executed a  promissory  note for the
exercise price.

     NY leases its  administrative  office space and certain  storage space from
RSJJ, an affiliate owned by the Company's majority  stockholder,  Joseph Polito.
In accordance  with a signed lease agreement which expires on March 31, 1998, NY
pays rent in the amount of $20,000 per month.  As of May 1997, NY was in arrears
in the amount of  $480,000  in  payments  due under its lease  with  RSJJ.  This
arrearage  was converted  into equity as follows:  NY issued  270,000  shares of
common stock to the Company,  for the cancellation of the debt owed to RSJJ. The
Company,  in turn,  issued  200,000 shares of its Common Stock to Mr. Polito and
150,000 shares of its Common Stock to RSJJ.  RSJJ then  transferred  all of such
shares to RSJJ's  mortgagor,  which  agreed to accept  said shares as payment of
RSJJ's outstanding mortgage.

     During the year ended June 30, 1996, NY purchased approximately $180,333 of
fabricated  steel  from  Waldorf.   Such  amount  paid  to  Waldorf  represented
approximately 18% of the steel purchased by NY for the year ended June 30, 1996.
Waldorf is wholly owned by Joseph Polito.

     During the years ended June 1997 and 1996,  NY paid  $371,321 and $802,383,
respectively,  to MD for certain  materials and labor necessary to perform steel
erection services. MD is a wholly owned subsidiary of the Company.

     During  the years  ended  June 30,  1997 and  1996,  NY paid  $214,000  and
$163,000,  respectively,  to Crown Crane,  Inc. for leasing cranes  necessary to
perform steel erection services. Joseph Polito owns 50% of Crown Crane, Inc.

     During the year ended June 30, 1997,  NY paid $35,000 to Atlas Gem Leasing,
Inc. for certain machinery  necessary to perform steel erection services.  Atlas
Gem Leasing, Inc. is wholly owned by Joseph Polito.

     See "Item 10. Executive  Compensation-Employment and Consulting Agreements"
for information regarding management's compensation.





<PAGE>
                                     PART IV

ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K

(a) The following  financial  statements of the Company are included as Part II,
Item 8:
<TABLE>
<CAPTION>

                                                                                        Page

<S>                                                                                       <C>
         Independent Auditors Report                                                    F-1
         Consolidated Balance Sheet                                                     F-2
         Consolidated Statements of Operations                                          F-3
         Consolidated Statement of Stockholders' Equity                                 F-4
         Consolidated Statements of Cash Flows                                          F-5 - F-6
         Consolidated Notes to Financial Statements                                     F-7 - F-19
</TABLE>

(b) During the last quarter, the Company filed no reports on Form 8-K.

(c) All exhibits,  except those  designated with an asterisk (*) which are filed
herewith, previously have been filed with the Commission in connection with such
documents as are incorporated by reference herein.
<TABLE>
<CAPTION>

<S>                                 <C>                                                                                         <C>
         2.1               -        Agreement and Plan of Reorganization dated effective as of April 25,
                                    1994 (incorporated by reference herein to exhibit 2.1 of Form 10-K filed
                                    with the Commission for the fiscal year ended June 30, 1994).
         3.1               -        Certificate of Incorporation of the Company filed June 15, 1994.
         3.2               -        By-Laws of the Company (incorporated herein by reference to Form S-
                                    18, dated May 4, 1989).
         4.1               -        Form of Special Warrant (incorporated herein by reference to exhibit 4.1
                                    of Form 10-KSB for the fiscal year ended June 30, 1995).
         4.2               -        Form of Restricted Stock agreement issued to Joseph Polito
                                    (incorporated herein by reference to exhibit 4.2 of Form 10-KSB for the
                                    fiscal year ended June 30, 1995).
         10.1              -        Lease Agreement between One Carnegie Court Associates and Waldorf
                                    Steel Fabrications, Inc., dated March 27, 1990 (incorporated herein by
                                    reference to exhibit 10.1 of Form 10-KSB for the fiscal year ended June
                                    30, 1994).
         10.2              -        Promissory note from the Company to Trinity Industries, Inc.
                                    (incorporated herein by reference to exhibit 10.2 of Form 10-KSB for the
                                    fiscal year ended June 30, 1994).
         10.3              -        Forbearance Agreement between the Company and Trinity Industries,
                                    Inc., dated October 14, 1993 (incorporated herein by reference to exhibit
                                    10.3 of Form 10-KSB for the fiscal year ended June 30, 1994).




<PAGE>
         10.4              -       Lease Agreement between R.S.J.J. Realty Corp. and NY, dated June 30,
                                   1993 (incorporated herein by reference to exhibit 10.4 of Form 10-KSB
                                   for the fiscal year ended June 30, 1994).
         10.5              -       Employment Agreement of Joseph Polito (incorporated herein by
                                   reference to exhibit 10.5 of Form 10-KSB for the fiscal year ended June
                                   30, 1995).
         10.6              -       The  Company's  Senior  Management  Incentive  Plan
                                   (incorporated   herein  by  reference  to  the  proxy
                                   statement dated February 1995).
         10.7              -       The   Company's   Employee   Stock   Option   Plan
                                   (incorporated   herein  by  reference  to  the  proxy
                                   statement dated February 1995).
         10.8              -       Agreement between Iron Workers Local Union 40 and NY (incorporated
                                   herein by reference to exhibit 10.8 of Form 10-KSB for the fiscal year
                                   ended June 30, 1995).
         10.9              -       Agreement between Local Union 14, 14B, 15, 15A, 15C, 15D,
                                   International Union of Operating Engineers, AFL-CIO and NY
                                   (incorporated herein by reference to exhibit 10.9 of Form 10-KSB for the
                                   fiscal year ended June 30, 1995).
         10.10             -       Agreement between Local 780 and NY (incorporated herein by reference
                                   to exhibit 10.10 of Form 10-KSB for the fiscal year ended June 30,
                                   1995).
         10.11             -       Agreement to capitalize the $400,000 of debt  (incorporated herein by
                                   reference to exhibit 10.11 of Form 10-KSB for the fiscal year ended June
                                   30, 1995).
         10.12             -       Consulting Agreement with Marlowe and Company (incorporated by
                                   reference herein to exhibit 10.12 of Form 10-KSB for the fiscal year
                                   ended June 30, 1995).
         10.13             -       Lease surrender agreement between One Carnegie and Waldorf dated
                                   August 1, 1995 (incorporated herein by reference to Form 10-KSB/A for
                                   the fiscal year ended June 30, 1995).
         10.14             -       Lease Agreement between One Carnegie and U.S. Bridge Corp.
                                   (Maryland), dated August 1, 1995  (incorporated herein by reference to
                                   Form 10-KSB/A for the fiscal year ended June 30, 1995).
         10.15*            -       Consulting Agreement dated December 9, 1996 with Bernard Tapie.
         10.16*            -       Memorandum of Understanding, dated May 13, 1996, between the
                                   Company and Lubov Ulianova.
         21.1*             -       List of Subsidiaries.
         27.1              -       Financial Data Schedule.
</TABLE>


<PAGE>
                                   SIGNATURES


         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized, this 7th day of November, 1997.


                                 U.S. BRIDGE CORP.



                           By:       /s/ Joseph M. Polito
                                    Joseph M. Polito, President



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

<TABLE>
<CAPTION>


<S>                                 <C>                                                          <C>
/s/ Joseph M. Polito                President and Director
Joseph M. Polito                    (Principal Executive                                         11/07/97
                                    Officer)                                                     Date


/s/ Ronald J. Polito                Secretary and Director
Ronald J. Polito                                                                                 11/07/97
                                                                                                 Date


/s/ Steven J. Polito                Treasurer                                                    11/07/97
Steven J. Polito                    and Director                                                 Date



</TABLE>



























<PAGE>
                       U.S. BRIDGE CORP. AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>



                                                                                                      Page
                                                                                                     Number

<S>                                                                                                    <C>
    Independent auditors' report                                                                       F-1

    Consolidated balance sheet as of June 30, 1997                                                     F-2

    Consolidated statements of operations for the years
     ended June 30, 1997 and 1996                                                                      F-3

    Consolidated statement of stockholders' equity for the years
     ended June 30, 1997 and 1996                                                                      F-4

    Consolidated statements of cash flows for the years
     ended June 30, 1997 and 1996                                                                      F-5  F-6

    Notes to consolidated financial statements                                                         F-7 - F-19

</TABLE>




<PAGE>
                          INDEPENDENT AUDITORS' REPORT




To the Board of Directors and Stockholders of
U.S. Bridge Corp. and Subsidiaries

We have audited the accompanying consolidated balance sheet of U.S. Bridge Corp.
and its  subsidiaries  (the  "Company")  as of June  30,  1997  and the  related
consolidated  statements of operations,  stockholders' equity and cash flows for
the years ended June 30, 1997 and 1996. 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
audits.

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

In our  opinion,  based on our audits,  the  consolidated  financial  statements
referred to above present fairly,  in all material  respects,  the  consolidated
financial  position of the  Company as of June 30,  1997,  and the  consolidated
results of its  operations  and cash flows for the years ended June 30, 1997 and
1996, in conformity with generally accepted accounting principles.



Scarano & Tomaro, P.C.
Syosset, New York
October 4, 1997





<PAGE>
                       U.S. BRIDGE CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 1997
<TABLE>
<CAPTION>

                                     ASSETS
Current assets:
<S>                                                                      <C>         
    Cash .............................................................   $    555,435
    Cash - restricted ................................................        214,001
    Contracts and retainage receivable, net ..........................      8,962,297
    Costs and estimated earnings in excess of billings
     on uncompleted contracts ........................................      2,225,723
    Deferred tax asset ...............................................        304,225
    Other current assets .............................................        186,499
                                                                         ------------

         Total current assets ........................................     12,448,180

Assets of discontinued operations ....................................      2,889,999
Deferred tax asset - non current .....................................         74,575
Other assets .........................................................         87,500
                                                                         ------------

Total assets .........................................................   $ 15,500,254
                                                                         ============

                                  LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable, including cash overdrafts of $149,290 ..........   $  3,495,492
    Accrued expenses .................................................        964,236
    Payroll taxes payable ............................................      1,441,589
    Note payable .....................................................        145,358
    Billings in excess of costs and estimated earnings
     on uncompleted contracts ........................................        126,455
    Due to officer and related parties ...............................        166,540
    Income taxes payable .............................................        522,379
    Liabilities of discontinued operations ...........................      3,039,999
                                                                         ------------

         Total current liabilities ...................................      9,902,048

Minority interest ....................................................      2,828,301

Commitments and contingencies (Note 13) ..............................           --

Stockholders' equity:
    Preferred stock,  authorized 10,000,000,  issued and outstanding -0- shares
    Common stock, $.001 par value, authorized 50,000,000 shares,
     issued and outstanding 7,402,148 ................................          7,006
    Additional paid-in capital .......................................      3,756,589
    Accumulated deficit ..............................................       (753,065)
                                                                         ------------
         Sub-total stockholders' equity ..............................      3,010,530
         Less: Note receivable - stockholder .........................       (240,625)

         Total stockholders' equity ..................................      2,769,905

Total liabilities and stockholders' equity ...........................   $ 15,500,254
                                                                         ============


</TABLE>
          See accompanying notes to consolidated financial statements.

<PAGE>
                       U.S. BRIDGE CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                          FOR THE YEARS ENDED JUNE 30,
<TABLE>
<CAPTION>

                                                                         1997              1996
                                                                         -------------     ---------
Revenue:
<S>                                                                      <C>             <C>         
    Contract revenue .................................................   $ 15,494,447    $  7,401,433
                                                                         ------------    ----------------

Costs and expenses:
    Cost of contract revenues ........................................     11,137,325       5,031,216
    General and administrative expenses ..............................      2,934,916       2,493,399
    Bad debt expense .................................................      1,287,000       1,019,127
                                                                         ------------    ----------------

         Total costs and expenses ....................................     15,359,241       8,543,742
                                                                         ------------    ----------------

Income (loss) from operations before other income (expense),
 minority interest and (benefit) provision for income taxes ..........        135,206      (1,142,309)

Other income (expenses):
    Interest expense and financing costs .............................       (158,577)        (35,141)
    Unusual item (Note 8(b)) .........................................           --          (441,863)
    Gain on sale/acquisition of subsidiary's stock (Note 9) ..........         17,500         832,571
    Gain on issuance of stock for accounts payable ...................        243,750            --
    Interest income ..................................................         10,425          27,766
                                                                                         ------------    ----------------

         Total other (expenses) income ...............................        113,098         383,333
                                                                         ------------    ----------------

(Income) loss before minority interest and (benefit) provision
 for income taxes ....................................................        248,304        (758,976)

Minority interest in net (income) loss ...............................       (281,773)        342,802
                                                                          ------------    ----------------

Loss before provision (benefit) for income taxes .....................        (33,469)       (416,174)

Provision (benefit) for income taxes .................................        142,875        (860,960)
                                                                         ------------    ----------------

Net income before loss from discontinued operations ..................       (176,344)        444,786

Loss from discontinued operations ....................................        280,911         404,217
Loss on disposal of assets of discontinued operations ................         83,621            --
                                                                         ------------    ----------------

Net income (loss) ....................................................   $   (540,876)   $     40,569
                                                                         ============    ================

Net income (loss) per common equivalent share:

    Income (loss) from operations before other income (expense),
      minority interest and (benefit) provision for income taxes .....   $        .02    $      (.20)
                                                                         ============    ================
    Income (loss) before minority interest and (benefit) provision for
     income taxes ....................................................   $        .04    $      (.19)
                                                                         ============    ================
    Provision (benefit) for income taxes .............................   $        .02    $      (.14)
                                                                         ============    ================
    Net (loss) income ................................................   $      (.08)    $    Nil
                                                                         ============    ================

Weighted average number of common shares outstanding .................   6,854,390       6,137,530
                                                                                                         ================


</TABLE>
          See accompanying notes to consolidated financial statements.


<PAGE>
                       U.S. BRIDGE CORP. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                   FOR THE YEARS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>



                                                         Common
                                                          stock
                                                                          Additional                   Total
                                                                          paid-in       Accumulated
                                                                                                       Stockholders'
                                               Shares       Amount        capital       Deficit        equity

<S>                                             <C>         <C>           <C>           <C>            <C>        
Balances at July 1, 1995 ..................     6,012,531   $     5,616   $ 2,591,652   $  (252,758)   $ 2,344,510

Issuance of common stock in consideration
 for services pursuant to senior management
 incentive plan ...........................       150,000           150        49,350          --           49,500

Net income for the year ended
 June 30, 1996 ............................          --            --            --          40,569         40,569
                                              -----------   -----------   -----------   -----------    -----------

Balances at June 30, 1996 .................     6,162,531         5,766     2,641,002      (212,189)     2,434,579

Issuance of common stock in lieu of
 repayment of loan ........................       400,000           400       399,600          --          400,000

Issuance of common stock as
 consideration for services
 provided to the Company ..................       250,000           250       149,750          --          150,000

Issuance of common stock pursuant
 to the 1995 Senior Management
 Incentive Plan as consideration for
 services provided to the Company .........       114,617           115       107,337          --          107,452

Issuance of common stock in connection
 with the exercise of options .............       125,000           125       240,500          --          240,625

Issuance of common stock in connection
 with settlement of subsidiary's related
 party debt ...............................       350,000           350       218,400          --          218,750

Net loss for the year ended
 June 30, 1997 ............................          --            --            --        (540,876)      (540,876)
                                              -----------   -----------   -----------   -----------    -----------

Balances at June 30, 1997 .................     7,402,148   $     7,006   $ 3,756,589   $  (753,065)   $ 3,010,530
                                              ===========   ===========   ===========   ===========    ===========


</TABLE>

          See accompanying notes to consolidated financial statements.




<PAGE>
                       U.S. BRIDGE CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                          FOR THE YEARS ENDED JUNE 30,

<TABLE>
<CAPTION>

                                                                  1997           1996
                                                                 --------------- --------------
Operating activities:
<S>                                                               <C>            <C>        
    Net income (loss) .........................................   $  (540,876)   $    40,569
    Adjustments to reconcile net (loss) income to net
     cash (used for) provided by operating activities:
         Depreciation and amortization ........................       453,583        882,549
         Minority interest in net income (loss) ...............       281,773       (342,802)
         Bad debt expense .....................................     1,287,000      1,019,127
         Deferred income tax benefit ..........................      (396,300)          --
         Issuance of common stock for services ................       107,453           --
         Gain on sale of subsidiary's stock ...................          --         (832,571)
         Gain on issuance of stock for debt ...................      (143,750)          --
         Contingent loss on disposal of property ..............        92,121           --
    Decrease (increase) in:
         Contracts and retainage receivable ...................    (6,752,882)    (1,711,424)
         Costs and estimated earnings in excess of
          billings on uncompleted contracts ...................       207,801       (607,395)
           Other current assets ...............................        (7,382)       (18,750)
    Increase (decrease) in:
         Accounts payable .....................................     3,519,175        489,597
         Accrued expenses .....................................       778,853       (189,545)
         Payroll taxes payable ................................     1,060,660         62,570
         Billings in excess of costs and estimated
          earnings on uncompleted contracts ...................       109,888         16,567
         Income taxes payable .................................       521,675       (864,263)
                                                                  -----------    -----------
           Net cash used for operating activities .............       578,792     (2,055,771)
                                                                  -----------    -----------

Investing activities:
    Other assets ..............................................        (8,156)          --
                                                                  -----------    -----------
           Net cash (used for) provided by investing activities        (8,156)          --
                                                                  -----------    -----------

Financing activities:
    Principal payments on mortgage ............................          --         (164,992)
    Financing costs incurred ..................................       (35,000)          --
    Principal payments of notes payable .......................          (479)    (1,071,649)
    Advances from officers ....................................       211,341        358,779
    Advances from (payment to) related parties ................      (376,714)       (80,767)
    Proceeds from issuance of Subsidiary's
     common stock and warrants, net of costs ..................          --        3,207,806
                                                                  -----------    -----------
           Net cash provided by financing activities ..........      (200,852)     2,249,177
                                                                  -----------    -----------

Net increase in cash ..........................................       369,784        193,406
Cash, beginning ...............................................       399,652        206,246
                                                                  -----------    -----------
Cash, ending ..................................................   $   769,436    $   399,652
                                                                  ===========    ===========




</TABLE>
          See accompanying notes to consolidated financial statements.




<PAGE>
                       U.S. BRIDGE CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                          FOR THE YEARS ENDED JUNE 30,
<TABLE>
<CAPTION>



                                                                                              1997                    1996
                                                                                      ------------------      ------------
Supplemental disclosure of cash flow information: Cash paid during the year for:
<S>                                                                                   <C>                     <C>               
         Interest                                                                     $           36,848      $          236,610
                                                                                      ==================      ==================
         Taxes                                                                        $              -        $              -
                                                                                      ==================      ================

Supplemental disclosure of non-cash operating activities:

    In connection with the issuance of common stock, 114,617 shares
     were issued as consideration for employee compensation                           $      107,452          $    -
                                                                                      ==============          ======

Supplemental disclosure of non-cash financing activities:
    In connection with the conversion of subsidiary's account payable
     of the Subsidiary's common stock, 350,000 shares of common
     stock were issued as consideration for 270,000 shares of common
     stock of the Subsidiary                                                          $          218,750      $             -
                                                                                      ==================      ===============

    In connection with issuance of common stock, 250,000 shares were
     issued as deferred compensation                                                  $          150,000      $           49,500
                                                                                      ==================      ==================

In connection with the payment of due to shareholder, 400,000
 shares of common stock were issued                                                   $          300,000      $              -
                                                                                      ==================      ================

</TABLE>

<PAGE>
NOTE 1 - ORGANIZATION


     U.S. Bridge Corp. ("the Company") was incorporated in the State of Delaware
on September 11, 1988 under the name of Colonial  Capital Corp.  Effective April
1994, in connection with the reverse acquisition of its subsidiaries,  (See Note
12(a)) Cofis changed its name to U.S. Bridge Corp.

     U.S. Bridge of N.Y. Inc. ("US Bridge NY") is a New York  Corporation and as
of June 30, 1997 is a 53.23%  owned  subsidiary  of the Company  which  provides
steel erection to  contractors.  US Bridge NY was  incorporated  on September 4,
1990.

     One Carnegie Court Associates,  Ltd. "One Carnegie" was incorporated in the
State of Maryland and is a wholly-owned  subsidiary of the Company. One Carnegie
was  incorporated on December 14, 1990, for the purposes of acquiring on January
14, 1991, building, machinery, and equipment, which it rented to US Bridge Corp.
(Maryland) ("US Bridge MD").

     US Bridge MD was  incorporated  in the State of Delaware for the purpose of
providing  laborers  to perform  fabrication  work for US Bridge of NY and other
unrelated customers. US Bridge MD is a wholly-owned subsidiary of the Company.

     The  Company  and its  subsidiaries'  year  end is June 30,  for  financial
statement purposes.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

             a)   Consolidated statements

                  The  consolidated  financial  statements  at June 30, 1997 and
                  1996   include   the   accounts   of  the   Company   and  its
                  majority-owned  subsidiary,  US Bridge NY and its wholly-owned
                  subsidiaries, One Carnegie and US Bridge MD, after elimination
                  of all significant intercompany transactions and accounts.

                  b)       Cash and cash equivalents

                           For  purposes of the  statements  of cash flows,  the
                  Company considers all highly liquid investments purchased with
                  an  original  maturity  of  six  months  or  less  to be  cash
                  equivalents.  US Bridge NY at June 30, 1997 maintains its cash
                  deposits  in accounts  which are in excess of federal  deposit
                  insurance corporation limits by $244,625.

                           As of June 30, 1997, the Company  maintains  $214,001
                  of  restricted  cash  securing a credit  line from a financial
                  institution.

                  c)       Use of estimates

                           The  preparation  of  the  financial   statements  in
                  conformity  with  generally  accepted  accounting   principles
                  requires  management to make  estimates and  assumptions  that
                  affect the  reported  amounts of assets  and  liabilities  and
                  disclosure of contingent assets and liabilities at the date of
                  the financial statements and the reported amounts of revenue





<PAGE>
                  and expenses during the reporting period. The most significant
                  estimates with regard to these financial  statements relate to
                  the  estimating  of final  construction  contract  profits  in
                  accordance  with   accounting  for  long-term   contracts  and
                  estimating  potential  liabilities in conjunction with certain
                  contingencies  and  commitments.  Actual  results could differ
                  from these estimates.

            d)    Balance sheet classifications

                           The   Company   includes   in   current   assets  and
                  liabilities  amounts receivable and payable under construction
                  contracts  which may extend  beyond one year. A one-year  time
                  period is used as the basis for  classifying all other current
                  assets and liabilities.

             e)   Contracts and retainage receivables

                  Contracts and retainage  receivables  represent amounts billed
                  but  uncollected  on  completed   construction  contracts  and
                  construction  contracts in progress and unbilled  retainage on
                  construction contracts completed and in progress.

                  The Company  utilizes the allowance method for recognizing the
                  collectibility  of its  contracts  receivable.  The  allowance
                  method  recognizes  bad debt expense  based on a review of the
                  individual accounts outstanding based on the surrounding facts
                  and estimates made by management.

             f)   Property and equipment

                  Property and equipment  which has been classified as assets of
                  discontinued operations are recorded at cost. Depreciation was
                  provided  using the  straight-line  method over the  estimated
                  useful  lives of the related  assets which range from 10 to 40
                  years.

             g)   Deferred compensation

                  Deferred  compensation which has been included as other assets
                  consists of stock issued to an officer relating to the initial
                  public  offering of US Bridge NY.  Deferred  compensation  has
                  been  charged to  general  and  administrative  costs over the
                  vesting period of the stock issued. (See Note 10(b)(i)).

             i)   Deferred consulting costs

                  Deferred  consulting costs which have been classified as other
                  assets  consist of  consulting  fees in the form of additional
                  common stock issued to a broker-dealer.  (See Note 10(b)(ii)).
                  The deferred  consulting costs of $150,000 are being amortized
                  over the two year period.

             j)   Income taxes

                    The Company  accounts  for income taxes in  accordance  with
               Statement of Financial  Accounting Standards No. 109, "Accounting
               for  Income  Taxes"  which  requires  the  use of the  "liability
               method" of accounting for income taxes. Accordingly, deferred tax





<PAGE>
                  liabilities and assets are determined  based on the difference
                  between the  financial  statement  and tax bases of assets and
                  liabilities, using enacted tax rates in effect for the year in
                  which the differences are expected to reverse.  Current income
                  taxes are based on the  year's  taxable  income  for  Federal,
                  State and City income tax reporting purposes.

             k)   Revenue recognition

                  The Company  recognizes  revenue  and costs for all  contracts
                  under the  percentage of completion  method.  Cost of contract
                  revenues include all direct material and labor costs and those
                  indirect  costs related to contract  performance.  General and
                  administrative  expenses are accounted for as period costs and
                  are,  therefore,  not  included  in  the  calculation  of  the
                  estimates  to complete  construction  contracts  in  progress.
                  Material  project  losses are provided  for in their  entirety
                  without   reference  to  the  percentage  of  completion.   As
                  contracts  can  extend  over one or more  accounting  periods,
                  revision in costs and earnings  estimated during the course of
                  the work are reflected  during the accounting  period in which
                  the  facts  become  known.   An  amount  equal  to  the  costs
                  attributable  to  unapproved   change  orders  and  claims  is
                  included in the total  estimated  revenue when  realization is
                  probable.

                  The current asset,  "costs and estimated earnings in excess of
                  billings  on  uncompleted  contracts",  represents  costs  and
                  estimated  earnings in excess of amounts  billed on respective
                  uncompleted contracts at the end of each period.

                  The  current  liability,  "billings  in  excess  of costs  and
                  estimated  earnings  on  uncompleted   contracts,"  represents
                  billings   which  exceed  costs  and  estimated   earnings  on
                  respective uncompleted contracts at the end of each period.

             l)   Net income (loss) per share

                  Net income  (loss) per share for the years ended June 30, 1997
                  and 1996 are based upon the weighted  average number of common
                  shares outstanding during the respective years.

                  m)       Impact of recently issued accounting standards

                  In March 1995, the Financial Accounting Standards Board issued
                  Statement  of   Financial   Accounting   Standards   No.  121,
                  "Accounting  for the  Impairment of Long-Lived  Assets and for
                  Long-Lived   Assets  to  Be  Disposed  Of",   which   requires
                  impairment  losses to be recorded on long-lived assets used in
                  operations  when  indicators of impairment are present and the
                  undiscounted  cash flows  estimated  to be  generated by those
                  assets are less than the assets'  carrying  amount.  Statement
                  121 also addresses the  accounting for long-lived  assets that
                  are expected to be disposed of. The Company adopted  Statement
                  121 during the year ended June 30, 1996.

             n)   Accounting for stock-based compensation

                         During 1995, SFAS No. 123,  "Accounting for Stock-based
                    Compensation"  was issued.  The statement  requires the fair
                    value of stock  options and other  stock-based  compensation
                    issued to  employees to be either  included as  compensation
                    expense in the





<PAGE>
                  income  statement,  or the pro-forma  effect on net income and
                  earnings  per share to be  disclosed  in the  footnotes to the
                  financial  statements  commencing  in 1996.  The  Company  has
                  elected to adopt SFAS No. 123 effective July 1, 1995.

                    o)     Fair value disclosure as of June 30, 1997

                  The  carrying  value of cash,  accounts  receivable,  accounts
                  payable  and  accrued  expenses  and  short-term  debt  are  a
                  reasonable estimate of their fair value. The carrying value of
                  the  long-term  debt  approximates  fair value  based upon the
                  interest  factors for the debt being based upon the prime rate
                  which reflects market value.

             p)   Reclassifications

                  Certain  reclassifications have been made to the June 30, 1996
                  consolidated  financial  statements in order to conform to the
                  June 30, 1997 presentation.

NOTE 3       -    CONTRACT AND RETAINAGE RECEIVABLE

                  At June 30, 1997, contract and retainage receivable consist of
the following:
<TABLE>
<CAPTION>


<S>                                                                                                <C>           
                  Contracts in progress                                                            $    5,087,169
                  Completed contracts                                                                   4,939,284
                  Retainage                                                                             1,222,844
                                                                                                   --------------
                                                                                                       11,249,297

                  Less:  allowance for doubtful accounts                                                2,287,000

                                                                                                   $    8,962,297
</TABLE>

NOTE 4       -    CONTRACTS IN PROGRESS
<TABLE>
<CAPTION>

                  At June 30, 1997,  costs and  estimated  earnings in excess of
                  billings  and  billings  in  excess  of  costs  and  estimated
                  earnings on uncompleted contracts consist of the following:

<S>                                                                                           <C>                
                  Costs incurred on uncompleted contracts                                     $        14,025,808
                  Profits earned to date                                                                4,190,473
                                                                                                   --------------
                                                                                                       18,216,281

                  Less: billings to date                                                               16,117,013

                                                                                              $         2,099,268
</TABLE>

<PAGE>
Included in the accompanying  balance sheet under the following captions at June
30, 1997:

<TABLE>
<CAPTION>
<S>                                                                                                <C>              
                  Costs and estimated earnings in excess of
                   billings on uncompleted contracts                                               $       2,225,723
                  Billings in excess of costs and estimated
                   earnings on uncompleted contracts                                                       (126,455)

                                                                                                   $       2,099,268
</TABLE>

NOTE 5       -    BACKLOG

                  The  following  schedule  summarizes  changes  in  backlog  on
                  contracts  during  the  year  ended  June  30,  1997.  Backlog
                  represents  the  amount of  revenue  the  Company  expects  to
                  realize from work to be performed on uncompleted  contracts in
                  progress at year end and from contractual  agreements on which
                  work has not yet begun.
<TABLE>
<CAPTION>

<S>                                                                                                  <C>          
                  Backlog balance at July 1, 1996                                                    $  17,943,400
                  Change orders to contracts in progress at July 1, 1996                                 2,486,885
                  New contracts during the year ended June 30, 1997                                      1,113,462
                                                                                                 -----------------
                                                                                                        21,543,747
                  Less: contract revenue earned during the year ended June 30, 1997                   (15,494,447)
                                                                                                  ----------------

                  Backlog balance at June 30, 1997                                                    $  6,049,300
                                                                                                      ============
</TABLE>

NOTE 6       -    ACCRUED EXPENSES

                  Accrued expenses consist of the following at June 30, 1997:
<TABLE>
<CAPTION>

<S>                                                                                   <C>       
                           Wages and related union benefits                           $  307,934
                           Professional fees                                              40,000
                           Insurance expense                                             421,885
                           State franchise taxes                                           1,392
                           Interest and penalties on payroll taxes                       193,025
                                                                                       --------------

                                                                                $        964,236
</TABLE>
NOTE 7       -    INCOME TAXES

                  The Company  has adopted  Statement  of  Financial  Accounting
                  Standards  (SFAS) No.  109,  "Accounting  for  Income  Taxes".
                  Income taxes are provided for the tax effects of  transactions
                  reported  in the  financial  statements  and  consist of taxes
                  currently  due  plus  deferred  taxes  related   primarily  to
                  differences  between the financial and tax basis of assets and
                  liabilities. The deferred tax assets and liabilities represent
                  the  future  tax  return   consequences   of  these  temporary
                  differences,  which will either be taxable or deductible  when
                  the assets and  liabilities  are  recovered  or  settled.  The
                  Company's only such significant  items relate to its allowance
                  for doubtful accounts and Section 144 stock issuances.





<PAGE>
                          For income tax purposes,  the Company reports using a
                  year end of December 31. The Company and its subsidiaries file
                  returns separately for federal and State purposes.

     The reconciliation of income tax computed at the federal statutory tax rate
to income tax expense is as follows for the years ended June 30,

<TABLE>
<CAPTION>
                                                                                1997                  1996
                                                                                ----                  ----
<S>                                                                             <C>                   <C>       
                  Tax computed at the federal statutory
                  income tax rate                                               (11,379)              (141,500)

                  Increase (reductions) resulting from:
                  state and local taxes net of federal benefit                  (4,331)                (18,395)

                  Tax expense on subsidiary income,
                  deferred income tax benefit and
                  other miscellaneous permanent differences                     158,585                -

                  Reversal of prior year accruals                               -                     (701,065)
                                                                                _______              ____________
                                                                                ------------------------------------
                  Income tax expense (benefit)                                  142,875               (860,960)

                  The tax effects of significant  item  comprising the Company's
                  net deferred tax assets as of June 30, 1997 is as follows:

                  Allowance for doubtful accounts                               $   1,073,500
                  Section 144 stock (IRC Section 83)                                  441,700

                  Less: Valuation allowance                                        (1,136,400)

                  Deferred tax asset                                            $     378,800
                                                                                =============

                      Current portion of deferred tax asset                     $     304,225
                                                                                ==================
                  Non-current portion of deferred tax asset                            74,575
                                                                                -------------
                                                                                $      378,800
</TABLE>

                  The  Company  has  recorded  a  deferred  tax  asset  with  an
                  estimated valuation allowance of 75% as of June 30, 1997 based
                  on the estimated  deductibility  of the above items expense in
                  the future.

NOTE 8       -    NOTES PAYABLE

                  a)  Line of credit

                  During August 1994, the Company secured a $250,000 credit line
                  with a bank at an  interest  rate of one and one half  percent
                  (11/2%)  above the prime rate.  The  security  for the line of
                  credit  is in the  form of a  certificate  of  deposit  in the
                  amount of $200,000





<PAGE>
                  provided by US Bridge NY. Interest is payable on the first day
                  of each month which commenced October 1, 1994. The credit line
                  is  payable  on  demand.  At June  30,  1997 the  balance  was
                  $145,358.

            b)    Promissory Notes

                      On January 16, 1995 an Underwriter commenced and privately
                  offered  on a  best-efforts  basis,  sixteen  (16) units of US
                  Bridge NY securities at a price of $55,000 per unit. Each unit
                  consisted  of a  promissory  note in the  principal  amount of
                  $45,000 bearing  interest at 12% per annum,  and 10,000 shares
                  of common stock at $1.00 per share. The 160,000 shares sold in
                  this  offering  were  assigned a value of 100% of the  initial
                  public  offering price of $5.00 per share.  In relation to the
                  common  stock  sold in the  offering,  US Bridge  NY  recorded
                  deferred  financing costs of $640,000 (160,000 shares at $5.00
                  per share less  original  costs of $1.00 per share).  Deferred
                  financing  costs were  amortized on a monthly  basis until the
                  earlier of March 1996, the due date of the related  promissory
                  notes or the  initial  public  offering  of US Bridge NY. As a
                  result,  for the years  ended June 30, 1997 and 1996 US Bridge
                  NY  recorded   amortization   expense  of  $0  and   $441,863,
                  respectively.  The  offering  was  completed  on March 9, 1995
                  resulting  in  all  sixteen  (16)  units  being  sold  netting
                  proceeds to US Bridge NY of approximately $696,851.

NOTE 9       -    MINORITY INTEREST

                      In  connection  with US Bridge NY's  private  placement on
                  March 9, 1995 (see Note 8(b)) and its Initial Public  Offering
                  ("IPO")  (see Note  10(c)(i)),  the  Company's  interest in US
                  Bridge NY was  reduced to 49.95%  before its  exercise  of the
                  special warrant. On September 9, 1995 the Company purchased at
                  $2.50 per share,  5,665 shares of common stock of US Bridge NY
                  by  exercising  its right  pursuant  to the terms of a special
                  warrant issued only to the Company.  As a result,  the Company
                  increased  its ownership in US Bridge NY to 50.1% from 49.95%.
                  During the year ended June 30, 1997 stock  transactions  of US
                  Bridge NY resulted in an increase in the  Company's  ownership
                  of US Bridge NY to 53.23%.  As of June 30, 1997,  the minority
                  interest balance amounting to $2,828,301 is a result of all of
                  the above  transactions and the proportionate  share of income
                  and losses attributable to the minority stockholders.

                      Lastly, in connection with US Bridge NY's IPO, the Company
                  recorded  a gain of  $832,571  during  the year ended June 30,
                  1996 as a result of the increase of the value of its ownership
                  of US Bridge NY's shares.

NOTE 10           -   STOCKHOLDERS' EQUITY

             a)   Recapitalization

                  On April 24, 1994,  after giving  effect to a 1-for-4  reverse
                  stock split,  the Company issued 2,820,000 and 720,000 shares,
                  respectively,  of its common stock to the  stockholders  of US
                  Bridge NY and One Carnegie in exchange for all of their issued
                  and  outstanding  shares.  The  acquisition by the Company has
                  been treated as a  recapitalization  for accounting  purposes.
                  Accordingly, after such transaction and before





<PAGE>
                  US Bridge NY's private  offering and initial public  offering,
                  US Bridge NY was a wholly-owned  subsidiary of the Company. As
                  of June 30, 1997 US Bridge NY is a 53.23% owned subsidiary and
                  One Carnegie is a wholly-owned subsidiary of the Company.

             b)   Issuance of shares

                         (i)On  August 15,  1995,  the  Company  issued  150,000
                    shares  of common  stock to its  President  pursuant  to the
                    terms of the Company's  Senior  Management  Incentive  Plan.
                    Such shares were issued as compensation  for the President's
                    efforts   with  the   Company   and  US  Bridge  NY  in  the
                    consummation  of US Bridge NY's initial  public  offering on
                    August 14, 1995. Of the total  150,000  shares issued to the
                    President,   50,000  shares   immediately   vested   without
                    restrictions and the remaining  100,000 shares vested at the
                    rate of 50,000 shares on each August 15, 1996 and 1997.  The
                    value of  these  shares  were  amortized  over  the  vesting
                    periods.

                         (ii)On June 16, 1995 pursuant to Form S-8  Registration
                    Statement filed with Securities and Exchange  Commission the
                    Company  registered  and issued  500,000 shares to a broker-
                    dealer as consideration for a two year consulting agreement.
                    Pursuant to the consulting agreement,  the consultant served
                    as a  financial  consultant  and advisor to the Company on a
                    non-exclusive  basis for a period of twenty-four (24) months
                    commencing  on June 1,  1995.  Of the total  500,000  shares
                    issued to the  consultant,  250,000 of such shares were held
                    in escrow until  February 1996. The Company had also agreed,
                    as amended, that upon NASDAQ approval, an additional 250,000
                    shares  of  restricted  stock  were  to  be  issued  to  the
                    consultant, which shares were issued in August 1996.

                         (iii) Shares issued to employees

                         During  December  1996, the Company issued an aggregate
                    of 114,617 shares to employees of the Company. In connection
                    with the 114,617  shares  issued to  employees,  the Company
                    recorded compensation expense amounting to $107,453 which is
                    based on upon 50% of the  average  closing bid price for the
                    month of December 1996.

                         (iv) Additional acquisition of shares of US Bridge NY

                         During June 1997,  in  conjunction  with US Bridge NY's
                    capitalization  of  accounts  payable,  the  Company  issued
                    350,000  shares of common  stock to RSJJ in exchange for the
                    270,000  shares  of  common  stock in US Bridge NY issued to
                    RSJJ in  forgiveness  of US Bridge NY's accounts  payable to
                    RSJJ.  The shares issued to RSJJ in exchange of US Bridge NY
                    shares have been  valued at 50% of the  average  closing bid
                    market  value 30 days prior to issuance as a result of their
                    restriction. Accordingly, the Company has recorded a gain on
                    the exchange of shares of approximately $17,500.






<PAGE>
                         (v) Senior Management Incentive Plan

                         During   February   1997,   pursuant   to  a  Form  S-8
                    Registration   Statement   filed  with  the  Securities  and
                    Exchange  Commission,  the  Company  registered  a total  of
                    686,617  common  shares,   of  which,   575,000  shares  are
                    underlying   options   pursuant  to  the  Company's   Senior
                    Management  Incentive  Plan. The options are  exercisable at
                    various  prices  ranging from $1.750 each to $1.925 each. As
                    of June 30, 1997,  the  Company's  president  exercised  the
                    option  to  purchase  125,000  shares at  $1.925  each.  The
                    Company received a promissory note in the amount of $240,625
                    as consideration for such shares.

                         (vi) Due to officer

                         On  May  13,  1996,  an  unrelated   party  loaned  the
                    Company's  President  $300,000  pursuant to a memorandum  of
                    understanding.  The loan accrued interest at 1% above prime,
                    and was due 90 days from  receipt  of funds.  Simultaneously
                    therewith,  the Company's  President  loaned the Company the
                    $300,000.  As collateral for the loan, 550,000 shares of the
                    Company's common stock owned by the President were put in an
                    escrow  account.   In  accordance  with  the  Memorandum  of
                    Understanding,  upon the Company being listed on NASDAQ, the
                    Company  liquidated  such loan by issuing  400,000 shares to
                    such  unrelated  party  pursuant to regulation "S" under the
                    securities  act of 1933,  as amended.  The shares  issued as
                    consideration  for the repayment of such loan were valued at
                    the average  closing  bid price on the date the  transaction
                    was  commenced.  Accordingly,  the  Company  has  recorded a
                    financing expense amounting to $100,000.

            c)    Equity transactions of US Bridge NY

                         i) Initial public offering

                         On August 14, 1995 US Bridge NY successfully  completed
                    its public offering. As a result, US Bridge NY sold 791,850.
                    In connection  with the initial public offering of US Bridge
                    NY, the Company's  ownership  percentage in US Bridge NY was
                    reduced to 49.95% before the exercise of the special warrant
                    as discussed below.

                         (ii) Senior Management Incentive Plan

                         In December 1996, the Company  granted its President an
                    option under its Management Plan to purchase  125,000 shares
                    of Common Stock.  In February  1997,  pursuant to a Form S-8
                    Registration   Statement   filed  with  the  Securities  and
                    Exchange Commission,  the Company registered the sale of the
                    125,000 shares of Common Stock  underlying  the option.  The
                    option was  exercisable  at $1.10 per share (110% of the bid
                    price on  November  27,  1996) and was  exercised  March 25,
                    1997,  resulting in the issuance of 125,000 shares of common
                    stock.





<PAGE>
NOTE 11           -      COMMITMENT AND CONTINGENCIES

            a)    Disclosure of significant estimates - revenue recognition

                         As outlined in the  Summary of  Significant  Accounting
                  Policies,  the Company's construction revenue is recognized on
                  the percentage of completion basis. Consequently, construction
                  revenue  and  gross  margin  for  each  reporting   period  is
                  determined  on a contract by contract  basis by  reference  to
                  estimates  by  the  Company's   management  and  engineers  of
                  expected costs to be incurred to complete each project.  These
                  estimates  include  provisions for known and anticipated  cost
                  overruns,  if  any  exist  or are  expected  to  occur.  These
                  estimates  may be subject to revision in the normal  course of
                  business.

                  b)     Leases

                  US Bridge NY leases its  administrative  offices pursuant to a
                  signed  lease  agreement  with  RSJJ  which  requires  monthly
                  payments of  $20,000.  Such lease  expires on March 31,  1998.
                  Under such lease  agreement,  US Bridge NY is required to make
                  future minimum lease payments as follows:

                 Year Ending
                 June 30,
                 1998                           $       180,000
                                                ===============
                       Total                    $       180,000
                                                ===============

                  Accordingly,  included in selling,  general and administrative
                  expenses is rent expense  which  amounted to $240,000 for each
                  of the years ended June 30,  1997 and 1996.  US Bridge NY also
                  leases  a  yard  for  storage  material  pursuant  to  a  oral
                  agreement  which requires  monthly  payments of $3,500.  As of
                  June 30,  1997,  $66,500  of yard rent  remains  unpaid and is
                  included in accounts payable.

             c)   Significant customers and vendors

                        For the years ended June 30, 1997 and 1996,  the Company
                  had three unrelated  customers  respectively,  which accounted
                  for  approximately  86%  and  62%,   respectively,   of  total
                  revenues.  As of June 30, 1997 and 1996  approximately 83% and
                  89% of contracts and retainage  receivables  are due from four
                  and three customers, respectively.

                  d)    Seasonality

                  US Bridge NY operates in an  industry  which may be  seasonal,
                  generally due to inclement weather occurring during the winter
                  months.  Accordingly,  US Bridge NY, may experience a seasonal
                  pattern in its  operating  results  with lower  revenue in the
                  third quarter of each fiscal year.  Quarterly results may also
                  be affected by the timing of bid solicitations by governmental
                  authorities or the stage of completion of major projects.








<PAGE>
                       e)  Bonding requirements

                  US Bridge NY is  required  to provide  bid and/or  performance
                  bonds in connection with governmental  construction  projects.
                  To date,  US Bridge NY has been  able to  sufficiently  obtain
                  bonding for its private projects. US Bridge NY is continuously
                  pursuing  obtaining bonding for its governmental  construction
                  projects. In addition,  new or proposed legislation in various
                  jurisdictions   may  require   the   posting  of   substantial
                  additional  bonds or require other  financial  assurances  for
                  particular projects.

            f)    Mechanics liens

                        As of June 30, 1997,  three  actions to  foreclose  upon
                  mechanics  liens filed during the fiscal year were  commenced.
                  Such actions amounted to $3,278,775.

                  g)    Payroll taxes

                         As of June 30,  1997,  the Company  owes  approximately
                    $1,441,589  of  payroll  taxes  and  related  penalties  and
                    interest.  Although as of June 30, 1997, the Company has not
                    entered  into  any  formal  repayment  agreements  with  the
                    respective  tax  authorities,  it has  been  making  monthly
                    payments based on oral agreements.

                  h)    Legal proceedings

                                     i)  During  January  1997,  an  action  was
                        commenced  by  The  Ohio  Bridge  Corporation   ("Ohio")
                        against US Bridge NY.  Ohio claims that US Bridge NY has
                        infringed its  trademark  "U.S.  Bridge".  During August
                        1997 in  settlement  of the  action,  the Company and US
                        Bridge NY agreed to effect name changes.

                                     ii)  The  Company  is a  party  to  various
                        claims and legal proceedings incidental to its business.
                        In management's opinion, the outcome of these claims and
                        proceedings  will not have a material  adverse effect on
                        the  financial  statements  of the  Company  taken  as a
                        whole.

NOTE 12           -     RELATED PARTY TRANSACTIONS

                  a) As of June 30,  1997,  the total due to officer and related
                  parties amounting to $166,540  represents advances made by the
                  President of the Company and affiliated entities which bear no
                  interest and are due on demand.

            b)    Rental expense

                  Included  in  general  and  administrative  expenses  is  rent
                  expense  paid by US  Bridge  NY  pursuant  to a  signed  lease
                  agreement  with  a  Company  (RSJJ)  owned  by  the  Company's
                  majority  stockholder.  The lease expires March 31, 1998. Rent
                  expensed  for the years ended June 30, 1997 and 1996  amounted
                  to $240,000 and $240,000, respectively.






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c)         Purchase of material and labor

                        For the years  ended June 30, 1997 and 1996 US Bridge NY
                  purchased   from  Waldorf   approximately   $0  and  $180,333,
                  respectively,  of the materials and labor necessary to perform
                  steel erection  services.  Effective  August 1, 1995,  Waldorf
                  ceased operations.  Said vendor is under the common control of
                  the President of the Company. Lastly, for the years ended June
                  30, 1997 and 1996,  US Bridge NY paid  $371,321 and  $622,050,
                  respectively,  to US Bridge MD for certain materials and labor
                  necessary to perform steel erection services.  US Bridge MD is
                  a wholly-owned  subsidiary of Bridge Corp. Effective September
                  1996, US Bridge MD ceased operations.

                  e)    Employment agreement

                         On  April  4,  1995  US  Bridge  NY  entered   into  an
                    employment  agreement  with its President and Director for a
                    term of  approximately  three (3) years expiring on June 30,
                    1998. The employment agreement provides for an annual salary
                    of $300,000 with a 10% annual escalation.  In addition,  the
                    President and Director  were be granted  options to purchase
                    25,000 shares of US Bridge NY's common  stock,  all of which
                    options shall vest through April 1998. The exercise price of
                    the options shall be equal to the 110% of the stock price in
                    the  initial  public  offering.  The  foregoing  options are
                    intended to qualify as incentive stock options.

NOTE 13           -     DISCONTINUED OPERATIONS

                  a)    Agreement for Deed in Lieu of Foreclosure

                        On March 10, 1997,  One  Carnegie  executed an agreement
                  with its mortgage holder,  whereby the property secured by the
                  mortgage and owned by One Carnegie and rented to US Bridge MD,
                  would be  transferred  to the mortgage  holder.  As additional
                  consideration,  One Carnegie executed a promissory note in the
                  amount  of  $150,000  naming  the  mortgage  holder  as payee.
                  Accordingly,    the   property    and   related    accumulated
                  depreciation,  accrued interest and mortgage payable have been
                  recorded as assets and liabilities of discontinued operations.
                  The transaction  was completed in August 1997,  resulting in a
                  loss on disposal of $83,621.





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