SECURITIES AND EXCHANGE COMMISSION

                					  Washington, D.C. 20549

                   						    FORM 10-K

                   						  ANNUAL REPORT

         				Pursuant to Section 13 or 15(d) of the
				           Securities Exchange Act of 1934

      				     Date of Report August 31, 1995

      				  MERIT DIVERSIFIED INTERNATIONAL, INC.
			 (exact name of registrant as specified in its charter)

          Nevada                   0-12423                  94-2906927
(state or other jurisdiction    (commission file          (IRS Employer
      of incorporation)           number)            Identification No.)


25320 Bellanca Way, Torrance CA                     90505
(address of principal executive office)            (zip code)

                                   (310) 326-3871
                          (registrant's telephone number)

           Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, no par value
                              (Title of class)

Indicate by check mark whether the registrant (1) has file all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the  Registrant was required to file such reports), and (2) has
been subject to  such filing requirements for the past 90 days.

	Yes    _____	No ___X_____

The aggregate market value of the voting stock held by non-affiliates of
the  registrant: Currently the Company's stock is thinly traded. There
are 12,512,694  shares held by non-affiliates. The average bid and ask
price for the period  covered by this Form 10-K was $0.054 per share.
Using this value of $0.054 per share, the aggregate market value is
estimated at $675,685.  

Number of common shares, without par value, outstanding as of August 31, 
1995 was 23,225,554.







                      MERIT DIVERSIFIED INTERNATIONAL, INC.
                                  FORM 10-K

                       FISCAL YEAR ENDED AUGUST 31, 1995
                              TABLE OF CONTENTS

                     		       	                      		      	Page
Part I	

	Item 1	Business							                                      	3

	Item 2	Properties								                                    3
	
	Item 3	Legal Proceedings							                              4
	
	Item 4	Submission of Matters to a Vote of Security	    
			Holders								                                            4

Part II	

	Item 5	Market for Registrant's Common Stock and Related
			Stockholder Matters						                                  4
		
	Item 6	Selected Financial Data						                         4

	Item 7	Management's Discussion and Analysis of Financial
			Condition and Results of Operations				                  5-6
		
	Item 8	Consolidated Financial Statements and Supplementary
			Data									                                            7-18

	Item 9	Changes in and Disagreements with Accountants on
			Accounting and Financial Disclosure				                    19

Part III	

	Item 10	Directors and Executive Officers of the Registrant	  19

	Item 11	Executive Compensation						                         19

	Item 12	Security Ownership of Certain Beneficial Owners
			and Management							                                   19-20

	Item 13	Certain Relationships and Related Transactions		     20

Part IV	

	Item 14	Exhibits, Financial Statements, Schedules and Reports
			on Form 8-K								                                        20

Signatures											                                         21





                    MERIT DIVERSIFIED INTERNATIONAL, INC.
                                    PART I

ITEM 1:	BUSINESS (General)					

A. The Company

The Company currently has no operations and no cash flow or operating
capital. The Company is considered to be a development stage company and
will continue to be classified as such until the Company initiates
business operations.

B.  History of Operations

Merit Diversified International, Inc. ("the Company") was incorporated
in the State of Utah in 1983. Initially the Company published a 
telephone directory, but this operation was suspended in 1987 due to
lack of  operating funds and revenues. Since 1988 the Company has made
several  attempts to acquire and operate various businesses. All efforts
have proven  to be unsuccessful. 

In 1994, the Company purchased from Phalanx, Ltd., certain rights to
molds and  designs of exclusive jewelry. These were purchased with
27,000,000 shares of  the Company's common stock. Originally valued at
$270,000 this investment  proved to be worthless. Major shareholders of
the Company sued for return of  the shares. On February 9, 1995 the
Superior Court of the County of Maricopa,  Arizona decided that the
27,000,000 shares were improperly given and denied  those shares voting
rights. On March 23, 1995 a shareholders meeting was held  where those
shares were rescinded and returned to the Company. 

As of August 31, 1995, the Company has no employees and no operating
assets.   The Company continues to meet its organizational obligations
through the  contribution of capital by major shareholders.

The Company has continued its efforts to acquire, merge with or enter
into  other forms of business combinations.  It is presently unknown
whether any  transaction will be successfully concluded. 

ITEM 2:	PROPERTIES					

None



ITEM 3:	LEGAL PROCEEDINGS					

None

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

In 1994, the Company purchased from Phalanx, Ltd., certain rights to
molds and  designs of exclusive jewelry. These were purchased with
27,000,000 shares of  the Company's common stock. Originally valued at
$270,000 this investment  proved to be worthless. Major shareholders of
the Company sued for return of  the shares. On February 9, 1995 the
Superior Court of the County of Maricopa,  Arizona decided that the
27,000,000 shares were improperly given and denied  those shares voting
rights. On March 23, 1995 a shareholders meeting was held  where those
shares were rescinded and returned to the Company.

ITEM 5:	MARKET FOR THE REGISTRANT'S COMMON STOCK AND 		
		RELATED STOCKHOLDER MATTERS					

The Company's common stock is traded on the OTC Bulletin Board.

The quote below is from the "Pink Sheets" and the OTC Bulletin Board. 
These numbers represent an average. The Company's stock was thinly
traded  in fiscal year ended August 31, 1995.

Bid              High                .01             Low            .005

Ask              High                .10             Low            .10

The Company has paid no dividends since its incorporation.


ITEM 6:	SELECTED FINANCIAL DATA					

The following information is derived from the consolidated financial 
statements included elsewhere herein.  All information presented below 
should be read in conjunction with the Consolidated Financial Statements 
and Notes included elsewhere in this Form 10K.

<TABLE>
<S>
<S>

For Year Ended August 31      1995       1994       1993        1992	   1991

Net Sales                        0          0          0           0		     0
Net Income (Loss)                0    (21,418)   (17,650)   (247,760)	(19,456)

Earnings (Loss) per Share      NIL          0          0        (.02)		    0

Cash Dividends per Share         0          0          0           0		     0

Total Assets                     0          0     16,418      16,300	  28,900

Long Term Notes Payable          0          0          0           0 		    0
Total Stockholders' Equity  (8,000)  (109,677)   (93,269)   (103,464)(199,762)

</TABLE>




Balance of Page Left Blank Intentionally

















ITEM 7:	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 	
		CONDITION RESULTS OF OPERATIONS					

The information set forth in "Management's Discussion and Analysis of
Financial Condition and  Results of Operations" below includes "forward
looking statements" within the meaning of  Section 27A of the Securities
Act, and is subject to the safe harbor created by that section.  
Factors that could cause actual results to differ materially from these
contained in the forward  looking statements are set forth in
"Management's Discussion and Analysis of Financial  Condition and
Results of Operations".

Year Ended August 31, 1995 and 1994

The Company has no assets and has not engaged in any operational
activities during the past five  years.  At present, the Company has no
employees.   The Company does not expect any changes  unless the Company
concludes a merger or other business combination.

During the years ended August 31, 1995 and 1994, the Company had no
operations.  The  Company maintained its existence through contributions
from its shareholders to satisfy its  general and administrative
expenses.  As detailed on the accompanying consolidated statements  of
cash flows, there were no significant adjustments between the net loss 
and net change in cash.
			
Due to the nature of the Company's activities, the Company's prospects
for the future are  dependent on a number of variables which cannot be
predicted.  Generally, after identifying a  potential business
opportunity, the Company could incur significant costs in evaluating the 
desirability of an acquisition or other form of business combination.
Should the Company  determine to proceed with the business combination,
the transaction costs could be significant.   Thereafter, results of
operation would likely be materially affected by the business acquired
or  merge with the Company.

The Company has continued its efforts to acquire, merge with or enter
into another form of  business combination with another entity, and the
Company plans to continue these efforts in the  future fiscal year.  It
is presently unknown whether any transaction will be successfully 
concluded. 

Liquidity and Capital Resources

Year Ended August 31, 1995

The Company currently does not have adequate reserves to satisfy its
short term obligations. The  Company is currently seeking private
placement funding to maintain its obligation until such time  as its
operations can generate cash flow. No guarantee can be made that the
current development  stage search for an operational business or private
funding will be successful. The Company is  able to continue because the
major shareholders continue to cover administrative expenses. No 
guarantee can be made that the major shareholders will continue to cover
these expenses.        






ITEM 7:	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 	 	  	      
        CONDITION RESULTS OF OPERATIONS (Continued)			  

The Company considers it current cash and cash equivalent balances
inadequate to satisfy its cash  requirements for the next twelve months. 
Legal and accounting and other expenses required  could increase
significantly in connection with any contemplated business combination. 
The  Company may not have the liquidity and capital resources to
consummate such business  combination.  Due to the nature of the 
Company's present activities, however the Company is  unable to predict
its likely expenditure for professional fees and other expenses.  The
Company  has no major capital commitments nor access to mechanisms to
fund working or operating  capital, and there can be no assurance that
it will be successful in its efforts to raise additional  capital to
maintain its plan of operation.



























(Balance of  Page Left Blank Intentionally)


















		          		MERIT DIVERSIFIED INTERNATIONAL, INC.
				            (A Developmental Stage Company)


Item 8-Financial Statements
Index to Consolidated Financial Statements					


1995, 1994 and 1993 Consolidated Financial Statements:

                                                  					        Page

	Report of Independent Certified Public Accountants           				8


	Balance Sheets as of August 31, 1995 and 1994 				              	9


	Statements of Operations for the Years Ended August 31,			
		1995, 1994 and 1993							                                    	10


	Statements of Stockholders' Equity for the Years Ended
		March 31, 1995, 1994 and 1993							                           11


	Statements of Cash Flows for the Years Ended August 31,
		1995, 1994 and 1993								                                    12


	Summary of Accounting Policies and Notes to Consolidated 
		Financial Statements			         			                         13-17


Schedules-	


	II Valuation and Qualifying Accounts						                      18


























                        Mark Shelley CPA
                       110 S. Mesa Dr. #1
                         Mesa, AZ 85210
                         (602) 833-4054


                  INDEPENDENT AUDITOR'S REPORT


To the Board of Directors
Merit Diversified International, Inc.

I have audited the accompanying balance sheet of Merit Diversified
International, Inc., a  development stage company, as of August 31, 1995
and 1994 and the related statements of  operations, stockholders' equity
and cash flows for the three years ended August 31, 1995.  My 
responsibility is to express an opinion on these financial statements
based on my audit.  I did not  audit the statements prior to the year
ended August 31, 1992.  Other auditors audited those  statements.

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

In my opinion, the financial statements referred to above present
fairly, in all material respects,  the financial position of Merit
Diversified International, Inc. as of August 31, 1995 and 1994 and  the
results of their operations and their cash flows for the three years
ended August 31, 1995 in  conformity with generally accepted accounting
principles.


							Mark Shelley CPA



April 7, 1997


















                   MERIT DIVERSIFIED INTERNATIONAL, INC.
                       (A Developmental Stage Company)

                        CONSOLIDATED BALANCE SHEETS
												

August 31,							                     1995		                 1994		


Assets						                      	$	-		                    $	-
												
Total Assets						                 $	-		                    $	-
												

Liabilities and Shareholders' Equity

Current liabilities

	Accounts and taxes payable			     $  8,000		               $   43,313
	Notes payable						                  -		                       66,364
Total current liabilities				         8,000		                  109,677

Commitments and contingencies

Shareholders' Equity

	Common Stock-no par value; 	
50,000,000 shares authorized, 
23,225,554 and 49,825,554
issued and outstanding as of 
1995 and 1994,
respectively					                1,332,349		                1,332,349

	Additional paid-in capital			   1,122,215		                1,038,538

	Accumulated deficit-accumulated
	during the developmental stage	(2,462,564		               (2,462,564)

Total shareholders' equity			       (8,000)	                 (109,677)
												
Total liabilities and 
shareholders' equity	           $	-		                       $	-	
												
	



See Notes to Consolidated Financial Statements












                     MERIT DIVERSIFIED INTERNATIONAL, INC.
                         (A Developmental Stage Company)

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE> 									
<S>
<S>
										  	                                                      Inception
Years Ended August 31,	 	        1995	      1994	       1993	       to 1995		

Net revenue				                $	-	       $	-	        $	-	          $	-

Costs and expenses:

  General and administrative	    -         5,000	       30,745	     2,244,147
  Depreciation and amortization	 -  		      -   	          400	         6,200

Income (loss) from operations		  -	       (5,000)  	   (31,145)   	(2,250,347)

Other income (expense):

  Interest expense			            -		        -	          (7,075)	      (22,518)
  Loss on sale of fixed assets	  -	         (918)		          -		         (918)
  Loss on sale of investments		  -	      (15,500)    	       -	      (269,800)
  Income from debt adjustment		  -		        -	          21,470  	      86,419

Total other income (expense)		   -	      (16,418)	      14,395	      (206,817)

Income before taxes
 on income					                  -	      (21,418)  	   (16,750)	   (2,457,164)

Taxes on income				              -		        -	     	       900	         5,400

Net income (loss)				            -	      (21,418)  	   (17,650)	   (2,462,564)

Net income (loss) per share		   nil		        0.00	         0.00

Weighted average number of shares 
  and share equivalents 
  outstanding			         36,525,554	   30,962,450	   22,825,554	



See Notes to Consolidated Financial Statements


</TABLE>















                   MERIT DIVERSIFIED INTERNATIONAL, INC.
                     (A Developmental Stage Company)

              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
																
<TABLE>
<S>
<S>

Years ended August 31, 1994, 1993, and 1992:
			  	                       Common Stock	      Paid in     Accumulated    Treasury      Stockholders'
			                        Shares	   Amount     Capital	    (Deficit)	       Stock	     Equity	
Balance, August 31,
 1992

Purchase of
investment		               540,000		       -	          -		           -	          -			        -
Purchase of software
libraries		              1,100,054		       -	          -		           -	          -			        -
Stockholder contributions	       -		       -	     27,845		           -	          -		    27,845
Net loss			                      -		       -	          -	      (17,650)	         -		   (17,650)

Balance, August 31,
 1993		                 22,825,554	1,318,349   1,033,528	   (2,441,146)	     4,000	    (93,269)

Purchase of Phalanx
 rights			              27,000,000		       -	          -		           -	          -           -    		       -
Contribution to paid-
 in-capital			                   -	       	-       5,010		           -	          -	      5,010
Cancellation of
 treasury shares		               -	   (4,000)	         -		           -	     (4,000)		        -
Net loss			                      -		       -	          -	      (21,418)	         -	    (21,418)	

Balance, August 31,
 1994			                49,825,554	1,314,349   1,038,538	   (2,462,564)	         -	 	 (109,677)

Issuance of stock	         400,000	   18,000	          -		           -	          -	    18,000
Contribution to paid-
 in-capital			                   -		       -	     83,677		           -	          -	    83,677
Rescission of Phalanx
 shares	               (27,000,000)		      -	          -		           -	          -		        -
Net loss			                      -		       -	          -		           -	          -		        -	

Balance, August 31,
 1995			                23,225,554	$1,332,349 $1,122,215	  ($2,462,564)          -	    (8,000)	



See Notes to Consolidated Financial Statements

</TABLE>





















                      MERIT DIVERSIFIED INTERNATIONAL, INC.
                          (A Developmental Stage Company)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                 Increase (Decrease) in Cash and Cash Equivalents

Years ended August 31,		      1995		       1994		         1993	            
	
				    			       

Operating activities:

  Net income (loss)			     $		           $ (21,418)	     $ (17,650)	   
  Adjustments to reconcile net loss
    to cash used in operating activities:
    Depreciation expense 	       -				           -		   	       400
    Loss on devaluation			       -			       16,418			            -	
Changes in operating assets and
     liabilities:
    Accounts payable      		 (40,323)	       5,000		         2,379	
Cash provided by (used in)
 operating activities    			  40,323)			         -		       (14,871)
Investing activities:
 Net decrease in notes 
    payable	                 (61,354)		     (5,010)		      (12,456)
 Purchase of fixed assets		        -				         -			         (518)	
Cash used in investing 
    activities	              (61,354)		     (5,010)		      (12,974)	 
Financing activities:
  Net change in common stock		18,000			          -			            -
  Paid-in-capital				         83,677	        5,010		        27,845
Cash provided by financing
 activities					             101,677		       5,010		        27,845
Net increase (decrease) in 
 cash and cash equivalents		       -				         -			            -	
Cash and cash equivalents,
 beginning of period			            -				         -			            -	
Cash and cash equivalents,
 end of period			          $	   -		        $		-		          $	-	

Significant non cash transactions
	Fiscal year ended August 31, 1995:
		Rescission of Phalanx shares
	Fiscal year ended August 31, 1994:
		Purchase of Phalanx rights for 27,000,000 shares of common stock
	Fiscal year ended August 31, 1993:
		Purchase of investment for 540,000 shares of common stock
		Purchase of Software Libraries, Inc. for 1,000,000 shares of common stock


See Notes to Consolidated Financial Statements











                  MERIT DIVERSIFIED INTERNATIONAL, INC.
                   (A Developmental Stage Company)
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
												
Note 1.		General Company Information and Summary of Significant
Accounting Policies

The Company was organized August 23, 1983 in the State of Utah.
Initially the Company  published and attempted to market a telephone
directory, but this operation was suspended in  1987 due to lack of
operating funds and revenues. Since 1988 the Company has made several 
attempts to acquire and operate various businesses. These have proven
thus far to be  unsuccessful. Note 2 below lists some of the attempted
acquisitions and the results. The  Company continues to pursue a path of
merger with an operating business.

The Company has incurred significant losses since its inception and as
of August 31, 1995, has  no source of revenue.  The Company has no cash
and has maintained its existence and paid  ongoing expenses through the
issuance of common stock.

The Company has been able to continue because major shareholders have
continued to invest in  the Company to meet its expenses.  

The Company is considered a development stage Company and will remain in
this status until  operations begin.  There can be no assurance that the
Company will be able to merge with an  operating company, acquire an
ongoing business, or that the major shareholders will continue to  pay
the expenses of the Company.


Basis of Presentation

The accompanying consolidated financial statements have been prepared in
accordance with  United States generally accepted accounting principles.

Property and Equipment

As of August 31, 1995 the Company had no fixed assets. Previously the
Company depreciated its  fixed assets over their useful lives on a
straight line basis.

Development Stage Company

The Company has had no revenue or operations during the previous five
years and because of  this has considered itself a development stage
company. It will remain in this status until such  time as it initiates
or merges with operations of some kind. In the early years the Company 
generated nominal revenue from the sale of its telephone directory.
These minimal revenues have  been netted with general and administrative
expenses of those years.











                 MERIT DIVERSIFIED INTERNATIONAL, INC.
                   (A Developmental Stage Company)
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
												

Net Loss Per Share

Loss per share is computed based on the average number of shares
outstanding during each year.

Revenue Recognition

The Company has had no revenue during the past five years.

Provision for Income Taxes

	The provision for income taxes is the total of the current taxes
payable and the net of the  change in the deferred income taxes.
Provision is made for deferred income taxes where  differences exist
between the period in which transactions affect current taxable income
and the  period in which they enter into the determination of net income
in the financial statements. The  Company has a net operating loss carry
forward of approximately $2,000,000 available to offset  future taxable
income. The last of the carry forward expires in 2009. No benefit has
been  recorded on the face of the balance sheet for this benefit.

Note 2.		Investments and Acquisitions

Marketable securities at August 31, 1992 and 1991 had an original cost
basis of $240,000. The  stock is currently considered worthless.

	Investments in 1992
                                							Original    Carrying      Carrying
							                                 Basis	    Value as of   Value as of
									                                         August 31,	    August 31,
								   	                                         1992	          1994

Western Airlines (38% equity position)	$80,000	    $  -		        $ -
Publishing Companies			               	165,000	     7,500	         -
Art Works						                         24,000	     8,000	         -

Totals						                           269,000	    15,500	         -

	Investments in 1991
Art Works						                         21,900	    21,900	         -
Distribution Rights				                  5,000	     5,000	         -

Total Investments in 1991			           $26,000    $26,000	       $ -













                 MERIT DIVERSIFIED INTERNATIONAL, INC.
                    (A Developmental Stage Company)
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
												

	Investment in Western Airlines 1992
	
	The Company acquired a 38% interest in Western Airlines for
$80,000 cash paid for by a  stockholder on behalf of the Company.
Currently Western Airlines is in bankruptcy and is not  expected to come
out of bankruptcy in the near future.

	
	Purchase of Phalanx, Ltd. Rights

	In 1994 the Company purchased from Phalanx, Ltd., certain rights
to molds and designs  of exclusive jewelry. These were purchased with
27,000,000 shares of the Company's common  stock. Originally valued at
$270,000 this investment proved to be worthless. Major shareholders  of
the Company sued for return of the shares. On February 9, 1995 the
Superior Court of the  County of Maricopa, Arizona decided that the
27,000,000 shares were improperly given and  denied those shares voting
rights. On March 23, 1995 a shareholders meeting was held where  those
shares were rescinded and returned to the Company.

	Proposed Merger

	As part of a proposed merger the Company issued 1,250,000 shares
to various parties for  consulting. This merger was not successful,
however the shares of stock for consulting are still  outstanding.

Note 3.		Related Party Transactions
	
The Company has been able to continue in existence and to remove most of
its debts because  some of the major shareholders have continued to
cover the administrative expenses and to pay  outstanding debts. There
is no guarantee that these shareholders will continue to fund the 
Company.

There are no outstanding obligations due to or from related parties as
of August 31, 1995.








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                  MERIT DIVERSIFIED INTERNATIONAL, INC.
                     (A Developmental Stage Company)
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
												

Note 4.		Notes Payable


                                      8/31/95		     8/31/94		      8/31/93

Hanson			                                   -			    $10,354		      $10,354

10% annual interest, $150 monthly payment 
secured by 533,670 shares of Merit common stock, 
also secured by personal guarantee of Alfred 
Cassidy


Wurtz				                                    -			    33,000		       33,000

10% annual interest, secured by 162,000 shares of 
Merit common stock, also secured by personal 
guarantee of Alfred Cassidy


Eureka Federal Savings	                      -			     5,010		        5,010

amount based on a suit filed 10/1/86 in California, 
settled in 9/93 for $5,010


Jackson, Private Note	                       -			    18,000		       18,000

Total				                                    -			   $66,364	       $66,364


Note 5.		Commitments and Contingencies

The Company has no commitments or contingencies as of August 31, 1995
except for its  outstanding debt as noted on the balance sheet.

Note 6. 	Going Concern

The Company has incurred significant losses since its inception and as
of the August 31, 1995  had no source of revenue. The Company also had
no cash and has paid for all of its ongoing  expenses with the issuance
of its common stock.

The Company has been able to continue because the major stockholders
have been willing to  continually invest in the Company to cover
expenses. The Company is to be considered a  development stage company
and will remain in this status until operations have been established.
No guarantee can be made that the Company will be able to merge with an 







               MERIT DIVERSIFIED INTERNATIONAL, INC.
                  (A Developmental Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
												

operational company or that the major stockholders will continue to pay
the expenses of the Company. As of August  31, 1994 and 1995, the
Company had no assets. 

Due to the nature of the Company's activities, the Company's prospects
for the future are  dependent on a number of variables which cannot be
predicted.  Generally, after identifying a  potential business
opportunity, the Company could incur significant costs in evaluating the 
desirability of an acquisition or other form of business combination.
Should the Company  determine to proceed with the business combination,
the transaction costs could be significant.   Thereafter, results of
operation would likely be materially affected by the business acquired
or  merge with the Company.


Note 7.		Subsequent Events

The Company is currently seeking additional funding through debt and
equity financing. The  Company is also seeking a suitable merger
candidate. No guarantees can be made that the  Company will be
successful in its attempts to obtain funding or acquire or start an
operational  business.

In February 1997 major stockholders contributed $8,000 to pay old
payable.

In April 1996, the Company approved a 20 to 1 reverse stock split.
Subsequent to the stock split, the Company approved the issuance of
13,000,000 shares of common stock to NEAT Inc., a Nevada corporation,
with the intent of marketing a certain new technology and combining both
companies. There can be no assurance that the potential combination or
marketing plan will be successful.













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               MERIT DIVERSIFIED INTERNATIONAL, INC.
                 (A Developmental Stage Company)
          SCHEDULE II- VALUATION AND QUALIFYING ACCOUNTS
												


NONE































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ITEM 9:	CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON 	
	ACCOUNTING AND FINANCIAL DISCLOSURES				

None


ITEM 10:	DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY	

	The officers and directors of the Company were the following:

Name			               Age				         Title

Alfred Cassidy	       83				          Chairman/President
George Jackson	       80				          Vice President/Director
Gary Cassidy	         65				          Secretary/Treasurer/Director

Alfred Cassidy is retired and is a private investor.

George Jackson is retired and is a private investor.

Gary Cassidy is retired and is a private investor.



ITEM 11:	EXECUTIVE COMPENSATION					

	No officer or director receives compensation for services rendered
except that the  directors are authorized to receive 100 shares of R-144
Company stock for each directors meeting  that they attend. No such
stock has been issued.

ITEM 12:	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND 	
		MANAGEMENT					

	As of August 31, 1995 the following were beneficial owners of more
than five percent of  the Company's common stock.

Stock		    Name and Address			        Ownership			       %

Common	    Alfred H. Cassidy			       10,712,860			      46
           25 Poncetta Dr. #307
           Daley City, CA 94015

           Total as a Group			        10,712,860			      46


	The table below sets forth those directors and officers who own
shares of Company stock.

Common	    Alfred H. Cassidy			       10,712,860			      46
           25 Poncetta Dr. #307
           Daley City, CA 94015

Common	    George Jackson			             740,080			       3
           25 Poncetta Dr. #307
           Daley City, CA 94015




ITEM 13:	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		

	No director of officer, directly or indirectly, is indebted to the
Company in an amount in  excess of $60,000 as of the close of the fiscal
year August 31, 1995.

ITEM 14:	EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS	

a.  Audited financial statements.
b.  Shareholders meeting dated March 23, 1995.
c.  Board of Directors meeting dated March 23, 1995.















Balance of Page Left Blank Intentionally


































                            SIGNATURES

	The signature below is that of Mr. Michael. Neri. Mr. Neri did not
become involved with  the Company until  April 1996. Mr. Neri disclaims
any knowledge or liability for any transaction  prior to this time. Mr.
Neri signs below as a current officer and director. The actual officers
and  directors were not available to sign.

	Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of  1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned  hereunto duly
authorized.

			Merit Diversified International, Inc.
			(registrant)


		
	_____________/S/_____________________
	Michael Neri, Chief Accountant

Dated:    April 10, 1997

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


Signature					                Title			                  Date



_____________/S/_________
Michael Neri			               Chief Accountant