UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 FORM 10 - KSB

[ X ]     ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
          OF 1934

          For the fiscal year ended December 31, 1997

[   ]     TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
       
          Commission file number: 33-38214-D

                          PURSUIT VENTURE CORPORATION
                          ---------------------------
             (Exact name of registrant as specified in its charter)

             Delaware                                            62-1458678
             --------                                            ----------
  (State or Other Jurisdiction                                (I.R.S. Employer
of Incorporation or Organization)                            Identification No.)


                 1621 Altivo Way, Los Angeles, California 90026
                 ----------------------------------------------
                    (Address of principal executive offices)

                                 (818) 980-0929
                                 --------------
                (Issuer's telephone number, including area code)

         Securities registered under Section 12(g) of the Exchange Act
                                      None
              --------------------------------------------------
                              Title of each class

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15 (d) of the  Exchange  Act  during the past  twelve  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 X   No

Transitional Small Business Disclosure Format (Check one):  Yes      No X

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

        State the issuers revenues for its most recent fiscal year. None

          State the aggregate market value of the voting stock held by
                        nonaffiliates of the registrant.
             
              There is no market for the registrant's voting stock

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: Date: December 31, 1997

      Common Stock, par value $0.001 per share. Shares outstanding 500,000

<PAGE>



                          PURSUIT VENTURE CORPORATION

                                  FORM 10-KSB

                               DECEMBER 31, 1997


                                     INDEX


Part 1                                                                     Page
 
   Item 1  Description of Business                                           3
   Item 2  Description of Property                                           8
   Item 3  Legal Proceedings                                                 8
   Item 4  Submission of Matters to a Vote of Security Holders               8
                                                                             
Part II

   Item 5  Market for Common Equity and Related Stockholder Matters          8 
   Item 6  Plan of Operation                                                 9 
   Item 7  Financial Statements                                             10
   Item 8  Changes in and Disagreements with Accountants on Accounting      
           and Financial Disclosures                                        19 

Part III

   Item 9  Directors, Executive Officers, Promoters and Control Persons,    
           Compliance with Section 16(a) of the Exchange Act                19
   Item 10 Executive Compensation                                           19  
   Item 11 Security Ownership of Certain Beneficial Owners                  
           and Management                                                   19
   Item 12 Certain Relationships and Related Transactions.                  20
                                                                            
Part IV

   Item 13 Exhibits and Reports on Form 8-K                                 20

                                       2

<PAGE>


                                     PART I



ITEM 1:  DESCRIPTION OF BUSINESS

(a) and (b) Business Development and Business of Issuer

General

     Pursuit  Venture  Corporation  (the  "Company")  is a Delaware  corporation
organized on December 7, 1990,  for the purpose of  identifying  and acquiring a
business  opportunity  which  Management  believes  offers  potential  long-term
growth.  The  Company  will seek to acquire  majority  interests  in an existing
business or purchase assets which it will use to establish a business.

     The Company does not intend to become  involved in any business which would
require  it to  register  as a  securities  broker-dealer  under the  Securities
Exchange Act of 1934, as an investment  advisor under the  Investment  Advisor's
Act of 1940; or as an investment  company  under the  Investment  Company Act of
1940.   Except  as  set  forth  herein  under  BUSINESS  Forms  of  Combination,
Management's  discretion is otherwise unrestricted and it may participate in any
business which may, in the opinion of Management,  meet the business  objectives
discussed herein.

     Management  believes that business  opportunities  will become available to
the Company due  primarily  to its status as a  publicly-held  company,  and its
flexibility in structuring  and  participating  in business  opportunities.  The
Company has no  agreement  or  understanding  to acquire or  participate  in any
business  opportunity,   nor  does  it  currently  have  any  opportunity  under
investigation. Decisions as to which business opportunity to pursue will be made
by  Management  of the Company,  which will in all  probability  act without the
consent, vote, or approval of the Company's stockholders.

     The  Company's  offices  are  located  at 1621  Altivo  Way,  Los  Angeles,
California  90026. Its telephone number is (818) 980-0929 and telecopier  number
is (818) 980-8746.

Business Plan

     The Company is a "shell" corporation which proposes to engage in the active
search for a business combination or merger opportunity which, in the opinion of
Management, will enhance stockholder value.

     Management  believes that business  opportunities  will become available to
the Company due  primarily  to its status as a  publicly-held  company,  and its
flexibility in structuring  and  participating  in business  opportunities.  The
proposed  corporate  structure  of the  Company  has not been the  subject  of a
feasibility study or market research nor is Management aware of statistical data
which  would  support  the  perceived   benefits  of  a  merger  or  acquisition
transaction  for  target  company  stockholders.  Therefore,  there  can  be  no
assurance that a market exists for such a corporate vehicle.  At present,  there
are  no  plans,  agreements,   understandings,  or  commitments  to  acquire  or
participate in any business opportunity nor has the Company solicited,  received
or considered any proposals regarding a possible combination or merger. Further,
there can be no  assurance  that the Company  will be  successful  in locating a
suitable  entity for a merger or that the Company  will be able to  consummate a
combination.

                                       3

<PAGE>



Forms of Combination

     The manner in which the Company  participates in a business  opportunity is
predicated on the nature of the opportunity, the respective needs and desires of
the Company and the promoters of the combination,  and the relative  negotiating
strength of the Company and such promoters. It is likely that a combination will
take the form of a merger,  consolidation,  asset acquisition or some other form
of  combination.   The  otargeto   entities  may  include   private   companies,
partnerships, or sole proprietorships.

     In transacting a combination,  a significant amount of additional shares of
the  Company's  Common Stock may be issued.  The Company is  authorized to issue
5,000,000  shares of Common  Stock of which  2,000,000  shares  are  issued  and
outstanding.  In the  event  that a  substantial  number of  shares  are  issued
pursuant to a transaction,  present Management and current  stockholders may not
have control of a majority of the voting shares of the Company. Further, as part
of such a  transaction,  all or a majority of the  Company's  Management  may be
requested to  relinquish  their  positions and new directors and officers may be
appointed without a vote by stockholders. Moreover, no assurance can be given as
to the experience or  qualifications  of such persons either in the operation of
the  activities  of the Company or in the  operation of the  business,  asset or
property being combined.

     The  Company  does not  propose to  restrict  its  search  for  combination
opportunities  to  any  particular  industry,  and  may,  therefore,  engage  in
essentially any business.  Management contemplates that the Company will seek to
merge with or acquire a target company with either assets or earnings,  or both.
The Company has not  established  a specific  level of earnings or assets  below
which it would not consider a merger or acquisition with a target company.

     The Company intends to obtain, if possible,  audited  financial  statements
for the entity which it acquires.  It is expected that audited  financials  will
help Management to understand the financial  position of the company it acquires
and will  also  help the  Company  in  complying  with the  financial  reporting
requirements of the Securities  Exchange Act of 1934, if the  acquisition  would
fall within the ambit of such law.

     It is anticipated that business  opportunities will become available to the
Company from various sources, including its Officers and Directors, professional
advisors such as attorneys and accountants,  securities broker-dealers,  venture
capitalists,  members of the  financial  community,  and others who may  present
unsolicited proposals. The Company has no plans, understandings,  agreements, or
commitments with any individuals other than its Officers and Directors to act as
finders of opportunities for the Company.

Plan of Acquisition

     The Officers and  Directors of the Company will  undertake  the analysis of
business  opportunities.   Management  will  have  unrestricted  flexibility  in
seeking, analyzing and participating in business opportunities.  In its efforts,
Management intends to follow a systematic approach to identify its most suitable
acquisition candidates.

     Management  intends to concentrate on identifying any number of preliminary
prospects which may be brought to its attention through present  associations or
unsolicited.   Management   will  then  apply  certain  broad  criteria  to  the
preliminary  prospects.   Essentially,  this  will  entail  a  determination  by
Management  whether  or not  the  prospects  are in an  industry  which  appears
promising  and whether or not the prospects  themselves  have  potential  within
their own industries.

                                       4

<PAGE>



     During this  initial  screening  process,  Management  will ask and receive
answers  to  questions  framed to  provide  appropriate  threshold  information,
depending upon the nature of the  prospect's  business.  Such  evaluation is not
expected to be an in-depth analysis of the target company's operations, although
it will  encompass a look at most,  if not all, of the same areas to be examined
once if and when a target  company  is  selected  for an  in-depth  review.  For
example,  at this stage,  Management may look at a prospect's  unaudited balance
sheet. However,  when a prospect is selected for an in-depth review,  Management
will  review  the  prospect's   audited  financial   statements.   Nevertheless,
Management  anticipates  this  evaluation  will  entail a broad  overview of the
business of the target  company and should  allow a  significant  percentage  of
preliminary prospects to be eliminated from further consideration.

     Management will conduct an in depth analysis of five major areas of concern
with respect to the target company as follows:

     1.  Managerial  and Financial  Stability.  Management  will review  audited
financial statements of the target company and will also research the background
of each  director  and member of  management  of the target  company in order to
discern  whether  the  stability  of the  target  company  is such that  further
negotiations are warranted.

     2. Industry  Status.  Management  will research the potential of the target
company's  industry.  The concern  here is whether the  industry is in a growth,
stagnant or declining stage.

     3.  Production  of  Product.  If  the  target  company  is a  manufacturer,
Management  will review whether it has the necessary  resources or access to the
necessary  resources  and  supplies  to  produce a quality  product  in a timely
manner. 

     4.  Acceptance  and  Potential  of  Product.  Management  will  review  the
acceptance of the target company's product in the market place.  Management will
also determine  whether or not there is potential for the product to be workable
and to fulfill its intended purpose.

     5.  Development  of Target  Company.  Management  will  review  the  target
company's state of development (examples:  start-up stage,  established company,
etc.).

     The  foregoing is an outline of the areas of concern which most often arise
and merit careful scrutiny by Management.  Because of the possible  varieties of
target  companies  which may come to the  attention  of  Management,  additional
factors  will  most  likely  be  considered  in any given  analysis.  Also,  the
procedures  used in such a review are expected to vary depending upon the target
company  being  analyzed.  Management  may select a target  company  for further
negotiations  even though the target may not receive a favorable  evaluation  in
one or more of the five primary areas of concern.

     Management  expects to enter into further  negotiations with various target
company managements following successful conclusion of the initial financial and
evaluation studies. Negotiations with target company management will be expected
to focus on the  percentage  of the Company  which target  company  stockholders
would  acquire  in  exchange  for their  shareholdings  in the  target  company.
Depending upon, among other things, the target company's assets and liabilities.

     The  Company's  stockholders  will,  in  all  likelihood,   hold  a  lesser
percentage   ownership   interest  in  the  Company   following  any  merger  or
acquisition. The percentage ownership may be subject to significant reduction in
the event the Company  acquires a target company with  substantial  assets.  Any
merger  or  acquisition  effected  by the  Company  can be  expected  to  have a
significant  dilutive  effect on the  percentage of shares held by the Company's
stockholders.

                                       5
<PAGE>


     Management does not intend to force an active  participation in the affairs
of the acquired  company.  However,  Management  will  evaluate any  opportunity
offered for such participation if such participation was a necessary  ingredient
of a merger.  It is not the intention of Management to seek such  participation.
Management  will in all likelihood be requested to relinquish any voting control
it may  exercise  prior to a merger to the present  management  of the  business
which is acquired.

     Current   Management  would  clearly  not  control  the  surviving  company
following  such a  dilution  and will not be in a  position  to demand an active
participation and therefore would not participate unless invited to do so.

     The final stage of any merger or  acquisition to be effected by the Company
will  require  the  Company to retain the  services  of counsel  and a qualified
accounting  firm in order to  properly  effect  the merger or  acquisition.  The
Company may be expected to incur  significant  legal fees and  accounting  costs
during the final stages of a merger or acquisition. Management intends to retain
legal and accounting services only on an as-needed basis in the latter stages of
a proposed merger or acquisition.

     The interests of Management is to increase stockholder value. If successful
all the stockholders, including Management, will benefit. Management's objective
is to issue restricted  shares of the Company to acquire a private company which
is a going concern.  If Management is requested to sell a portion of its shares,
give away a portion  of its  shares or cancel a portion  of its shares to obtain
such a merger,  then  Management  will face a conflict of  interest.  Presently,
Management has no plan on how to deal with this conflict and believes no general
plan can be  formulated at this time;  this may  adversely  affect the Company's
ability to successfully  conclude a subsequent  merger or acquisition.  Conflict
resolutions  will otherwise be handled on a case-by-case  basis. If the conflict
cannot be resolved,  litigation could therefore occur, which would likely damage
the Company's prospects.

     There are no corporate  policies,  board  resolutions  or bylaws which deal
with  conflicts of interest  with respect to the sale of shares of the company's
shares by Management and none are anticipated to be placed into effect.

     Management cannot commit at this time as to whether a stockholder will have
the  right  to  vote to  complete  a  merger/acquisition  as the  nature  of the
transaction,  and the needs of the candidate will dictate the legal requirements
of the transaction.

     In connection with the acquisition of a private  business,  the Company may
not obtain an independent appraisal of the value of the acquired business.  Such
omission by the Company could result in  overvaluation  or other related  errors
which then could adversely  effect the price paid by the Company for the private
business.  It is probable  that an existing  stockholder's  future  share values
would be  adversely  effected  by factors  including  but not  limited to excess
dilution, reduced dividends, if any, and a lack of market for shares.

     Should a  stockholder  wish to challenge  the Company in Court to reverse a
merger or otherwise assert damages against the Company's  Management for neglect
of fiduciary  duties in the  construction of a merger or acquisition,  the legal
remedy available to that stockholder  under state corporate law will most likely
be prohibitively expensive and time consuming.

     The  Company  has  in  effect  no  bylaws  understandings,   agreements  or
resolutions which prevent related party transactions. Such bylaws or resolutions
could be changed by Management  initiative.  No such changes are presently being
considered.

                                       6
<PAGE>


     There are no present plans,  proposals,  or  arrangements  to sell or issue
additional shares of the Company prior to an acquisition or a merger.

Competition
-----------

     The Company will remain an insignificant  participant among the firms which
engage in mergers with and acquisitions of  privately-held  entities.  There are
many established venture capital and financial concerns which have significantly
greater  financial and personnel  resources  and  technical  expertise  than the
Company.  In view of the Company's lack of working capital resources and limited
management  availability,  the  Company  will  continue  to be at a  significant
competitive disadvantage compared to its competitors.

Regulation and Taxation
-----------------------

     The Company could be subject to regulation under the Investment Company Act
of 1940 in the  event the  Company  obtains  and  continues  to hold a  minority
interest in a number of entities.  However,  Management  intends to seek at most
one or two mergers or acquisitions and  Management's  plan of operation is based
on the Company  obtaining a  controlling  interest in any merger or  acquisition
target company and, accordingly,  the Company may be required to discontinue any
prospective merger or acquisition of any company in which a controlling interest
will not be obtained.

     The Company could also be required to register under the Investment Company
Act of  1940  in the  event  the  Company  comes  within  the  definition  of an
Investment   Company  contained  in  that  Act  due  to  its  assets  consisting
principally  of  shareholdings  held in a  number  of  subsidiaries.  Management
intends to seek at most one or two mergers or acquisitions,  which  transactions
will result in the Company holding only majority interest in subsidiaries.

     Any securities  which the Company acquires in exchange for its Common Stock
will be orestricted securitieso within the meaning of the Securities Act of 1933
(the o1933 Acto).  If the Company elected to resell such  securities,  such sale
could not proceed unless a Registration Statement had been declared effective by
the Securities and Exchange  Commission or an exemption  from  registration  was
available.  Section 4(2) of the 1933 Act,  which exempts sales of securities not
involving a public  offering,  would in all likelihood be available  since it is
likely  that any such sale would be a block sale to a private  investor to raise
additional capital. Although Management's plan of operation does not contemplate
resale of  securities  acquired,  in the event such a sale were  necessary,  the
Company would be required to comply with the provisions of the 1933 Act.

     As a condition to a merger or  acquisition,  it is possible that the target
company's  management may request  registration of the Company's Common Stock to
be received by target  company  stockholders.  In such event,  the Company could
incur significant  registration costs.  Management intends to require the target
company  to  bear  most,  if not  all,  of the  cost of any  such  registration.
Alternatively,  the Company may issue  orestricted  securitieso to a prospective
target company, which securities may be subsequently registered for sale or sold
in accordance with Rule 144 of the Securities Act of 1933.

     The Company  intends to structure a merger or  acquisition in such a manner
as to minimize  federal and state tax consequences to the Company and any target
company.

     In the course of a merger or  acquisition  the  Company  may  undertake,  a
substantial  amount of  attention  will be focused  upon  federal  and state tax
consequences  to both the Company and the target company.  Presently,  under the
provisions  of federal and various  state tax laws,  a qualified  reorganization
between  business  entities will generally  result in tax-free  treatment to the
parties of the reorganization. This generally requires the company to acquire at
least 80% of the combined voting power of the acquired company plus at least 80%
of the total number of shares of all other  classes of stock in exchange for the
voting stock of the acquiring company.

                                       7
<PAGE>


     While the  Company  expects to  structure  any merger or  acquisition  in a
manner  which  will  minimize  federal  and state tax  consequences  to both the
Company  and the  target  company,  there is no  assurance  that such a business
combination will meet the statutory  requirements of a  re-organization  or that
the parties will obtain the intended tax-free treatment upon a transfer of stock
or assets.  A  non-qualifying  reorganization  could result in the imposition of
both federal and state taxes which may have a substantial  adverse effect on the
Company.  Further, there is no assurance that federal and state tax laws may not
be amended in the foreseeable future to preclude the Company, as well as others,
from  availing  itself of the tax-free  treatment  presently  afforded  business
entities engaged in mergers and acquisitions.

     As of the date hereof no arrangements  for merger or acquisition  have been
made.

Employees

     The Company is a development stage operation and currently has no employees
other than its sole  director  and  officer.  The need for  employees  and their
availability will be addressed as circumstances warrant.

Property

     The Company  utilizes  the offices of its sole  Officer and  Director,  Mr.
Patrick C. Brooks. On a month-to-month basis. With effect from July 1, 1998, the
Company  pays Mr.  Brooks a fee of $500 per month for this usage which  includes
the use of telephone,  telecopier,  computers, office fixtures and fittings, and
secretarial services.  Management does not foresee the need for separate offices
until business circumstances dictate otherwise.

ITEM 2:  DECSRIPTION OF PROPERTY

None

ITEM 3:  LEGAL PROCEEDINGS

None

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

None

                                    PART II

ITEM 5:  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Not  applicable - the  Company's  stock is not traded  publicly and no dividends
have been paid.

                                       8

<PAGE>



ITEM 6:  PLAN OF OPERATION

     During the third  quarter  of 1998,  the  Company  resumed  its  efforts to
identify business  opportunities  consistent with its objectives.  However,  the
Company's ability to opearte is significantly  limited and adversely impacted by
the absence of opereating funds.  Against this background,  the Company has been
unsuccessful in identifying established and profitable operating companies which
desire a public listing through a 'reverse-mergero.

     Additionally,  within its sphere of opeartions, the Company competes with a
variety of sources such as investment bankers and venture  capitalists which are
capitlized and possess significantly greater management resources. Therefore the
Company's  ability to achieve its stated  objectives at the current time are, at
best, tenuous.  However,  Management continues to use all available resources in
its endeavours to successfully complete a business combination.


ITEM 7:  FINANCIAL STATEMENTS


     See Audited Financial Statements as follows.












                      THIS SPACE LEFT BLANK INTENTIONALLY




                                       9

<PAGE>



                             HENRY SCHIFFER, C.P.A.
                           A PROFESSIONAL CORPORATION
                        315 S. Beverly Drive, Suite 302
                        Beverly Hills, California 90212
                    Tel. (310) 286 6830 Fax. (310) 286 6840






                          INDEPENDENT AUDITOR'S REPORT



To The Board of Directors and Stockholders
Pursuit Venture Corporation

I have audited the accompanying balance sheets of Pursuit Venture Corporation at
December 31, 1997 and 1996 and the related  statements of income,  stockholders'
equity and cash flows for the years then ended.  These financial  statements are
the responsibility of the Company's management.  My responsibility is to express
an opinion on these financial statements based on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material  aspects,  the financial  position of Pursuit  Venture  Corporation  at
December  31,  1997 and 1996 and the  results of its  operations,  stockholders'
equity and cash flows for the years then ended,  in  conformity  with  generally
accepted accounting principles.



/s/ Henry Schiffer
-----------------------------
Henry Schiffer
Certified Public Accountant
July 16, 1998

                                       10

<PAGE>


                          PURSUIT VENTURE CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)
                                 BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1996




                                     ASSETS


Current Assets:                                               1997       1996
---------------                                               ----       ----


Cash and equivalents                                               0          0
                                                             -------    -------

Total Assets                                                       0          0
                                                             =======    =======




LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
--------------------

Accounts payable and accrued expenses                         20,000     13,000


Stockholders' Equity:
---------------------

Preferred stock - 1,000,000 shares
         authorized; issued and outstanding
         none @ $0.01 par value                                 --         --
Common stock - 5,000,000 shares authorized;
         issued and outstanding 500,000 shares at
         December 31, 1997 and 270,000 shares at 1996
         @ $.001 par value  (Notes 1 and 2)                      500        270
Paid in capital (Note 2)                                      34,730     34,730
Deficit accumulated during the
         development stage                                   (55,230)   (48,000)
                                                             -------    -------

         Total Stockholders'Equity (Deficit)                 (20,000)   (13,000)
                                                             -------    -------

         Total Liabilities and Stockholders'Equity                 0          0
                                                             =======    =======

                                       11

<PAGE>


                          PURSUIT VENTURE CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF OPERATIONS
               FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 AND
     FOR THE PERIOD FROM INCEPTION (DECEMBER 7, 1990) TO DECEMBER 31, 1997




                                              Year Ended   Period from Inception
                                          ---------------- (December 7, 1990) to
                                          1997        1996   December 31, 1997
                                          ----        ----   -----------------


Revenue:                                       0           0           0

Operating Expenses:

Expenses incurred in connection
   with securities registration                0           0      12,087
Officer and director fees                    230           0         230
Amortization of organization costs             0           0       5,000
Professional fees                              0           0       5,028
Travel expenses                                0           0       1,324
Transfer agent fees                            0           0       1,449
Accounting fees                            7,000       3,500      20,000
Other expenses                                 0           0      10,112

         Total operating expenses          7,230       3,500      55,230

Net (loss)                                (7,230)     (3,500)    (55,230)
                                        --------    --------    --------




Weighted number of shares outstanding    327,500     270,000     327,500
                                        ========    ========    ========



Net (loss) per share                        (.02)       (.01)       (.17)
                                        ========    ========    ========



                                       12

<PAGE>
<TABLE>
<CAPTION>



                                   PURSUIT VENTURE CORPORATION
                                  (A DEVELOPMENT STAGE COMPANY)
                           STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
              FOR THE PERIOD FROM INCEPTION (DECEMBER 7, 1990) TO DECEMBER 31, 1997


                                                                              Deficit 
                                                                            Accumulated 
                                              Common Shares                   During      Total
                                            -----------------     Paid In   Development Stockholders'
                                            Shares     Amount     Capital      Stage      Equity
                                            ------     ------     -------      -----      ------
<S>                                         <C>            <C>      <C>            <C>     <C>  
December 7, 1990
   Issuance of 270,000 units
   (consisting of one share of common
   stock and one warrant) for
   $0.0185185 cash per unit                 270,000        270      4,730          0       5,000

Net loss                                          0          0          0    (12,368)    (12,368)
                                            -------    -------    -------     -------     ------

Balance, December 31, 1990                  270,000        270      4,730    (12,368)     (7,368)

Net loss, year ended
   December 31, 1991                              0          0          0     (5,877)     (5,877)
                                            -------    -------    -------    -------     -------    

Balance, December 31, 1991                  270,000        270      4,730    (18,245)    (13,245)

Net loss, year ended
   December 31, 1992                              0          0          0     (9,391)     (9,391)
                                            -------    -------    -------    -------     -------   

Balance, December 31, 1992                  270,000        270      4,730    (27,636)    (22,636)

Paid in Capital (note 2)`                         0          0     30,000          0      30,000

Net loss, year ended
   December 31, 1993                              0          0          0     (5,846)     (5,846)
                                            -------    -------    -------    -------     -------  

Balance, December 31, 1993                  270,000        270     34,730    (33,482)      1,518

Net loss, year ended
   December 31, 1994                              0          0          0     (6,600)     (6,600)
                                            -------    -------    -------    -------     -------   

Balance, December 31, 1994                  270,000        270     34,730    (40,082)     (5,082)




                                               13
<PAGE>


                                 PURSUIT VENTURE CORPORATION
                                (A DEVELOPMENT STAGE COMPANY)
                    STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT) (Continued)
            FOR THE PERIOD FROM INCEPTION (DECEMBER 7, 1990) TO DECEMBER 31, 1997


                                                                        Deficit  
                                                                      Accumulated 
                                        Common Shares                   During       Total
                                      -----------------     Paid In   Development Stockholders'
                                      Shares     Amount     Capital      Stage      Equity
                                      ------     ------     -------      -----      ------


Balance, December 31, 1994            270,000        270     34,730    (40,082)     (5,082)

Net loss, year ended
   December 31, 1995                        0          0          0     (4,418)     (4,418)
                                      -------    -------    -------    -------     ------- 

Balance, December 31, 1995            270,000        270     34,730    (44,500)     (9,500)

Net loss, year ended
   December 31, 1996                        0          0          0     (3,500)     (3,500)
                                      -------    -------    -------    -------     -------   

Balance, December 31, 1996            270,000        270     34,730    (48,000)    (13,000)

Stock issued for officer
   and director fees                  230,000        230          0          0         230

Net loss, year ended
   December 31, 1997                        0          0          0     (7,230)     (7,230)
                                      -------    -------    -------    -------     -------  

Balance, December 31, 1997            500,000        500     34,730    (55,230)    (20,000)
                                      =======    =======    =======     ======      ======


                                              14
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                            PURSUIT VENTURE CORPORATION
                           (A DEVELOPMENT STAGE COMPANY)
                              STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 AND
       FOR THE PERIOD FROM INCEPTION (DECEMBER 7, 1990) TO DECEMBER 31, 1997



                                                       Year Ended     Period from Inception
                                                    ----------------  (December 7, 1990) to
                                                     1997      1996     December 31, 1997
                                                     ----      ----     -----------------
<S>                                                <C>        <C>            <C>     
CASH FLOWS FROM OPERATING
      ACTIVITIES

      Net (loss)                                   (7,230)    (3,500)        (55,230)

Adjustments to reconcile net (loss) to net
     cash (used) by operating activities

     Amortization of organization expenses              0          0           5,000
     Increase (decrease) in accounts payable
       and accrued expenses                         7,000      3,500          20,000

 NET CASH (USED) BY
   OPERATING ACTIVITIES                              (230)        (0)        (30,230)


CASH FLOWS FROM INVESTING ACTIVITIES
   Organization costs                                   0          0          (5,000)

CASH PROVIDED FROM
   INVESTING ACTIVITIES                                 0          0          (5,000)

CASH FLOWS FROM
   FINANCING ACTIVITIES
   Issuance of common stock                             0          0           5,000
   Common stock issued for services                   230          0             230
   Paid in capital from shareholders (Note 2)           0          0          30,000
   Borrowings of long-term debt,
     related party (Note 2)                             0          0               0

   NET CASH PROVIDED FROM
     FINANCING ACTIVITIES                             230          0          35,230

NET INCREASE (DECREASE) IN CASH                         0          0               0

CASH BALANCE, BEGINNING OF PERIOD                       0          0               0

CASH BALANCE, END OF PERIOD                             0          0               0
                                                  =======    =======         =======


                                         15
</TABLE>

<PAGE>



                          PURSUIT VENTURE CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)
                         NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1997 AND 1996



Note 1    Summary of Significant Accounting Policies

          This summary of  significant  accounting  policies of Pursuit  Venture
          Corporation  is presented  to assist in  understanding  the  Company's
          financial   statements.   The  financial   statements  and  notes  are
          representations of the Company's management,  which is responsible for
          their integrity and objectivity.  These accounting policies conform to
          generally  accepted  accounting  principles and have been consistently
          applied in the preparation of the financial statements.

          (a)  Organization and Business Activities:

               The Company was  incorporated  on December 7, 1990 under the laws
               of the State of Delaware.

               The  Company's   principal   purpose  is  to  seek  out  business
               opportunities,   including   acquisitions,   that  the  Board  of
               Directors, in its discretion, believes to be a potential for long
               term growth.

               Upon  incorporation,  the Company  issued  270,000  shares of its
               common  stock and 270,000  warrants to  Fountain  Colony  Holding
               Corporation  (formerly  known as  Argyle  Funding,  Incorporated)
               hereinafter oFountaino as its sole stockholder.  Upon issuance of
               the  shares,  Fountain  contributed  $5,000 to the capital of the
               Company and  advanced  funds of $30,000 to the Company  (see note
               2).  Fountain  created the  Company  for the  express  purpose of
               distributing its ounitso to the shareholders of Fountain in order
               to create a  publicly-owned  company to acquire a  privately-held
               business which,  in the opinion of management,  has the potential
               for growth  and  profit.  Each  ounito  consists  of one share of
               common  stock,  $0.001 par value,  and one warrant to purchase an
               additional  share of common  stock of the  Company at an exercise
               price of $10 per share. During 1992, Fountain distributed 257,844
               ounitso  (and  cash  of  $1,216  in  lieu  of  units  in  certain
               instances)  to  the  stockholders  of  Fountain  based  on  their
               respective  pro-rata  ownership  of Fountain.  The warrants  were
               never exercised and expired November 30, 1992.

               The Company is currently in the  development  stage.  The Company
               has  not  as yet  commenced  any  operations  or  identified  any
               potential acquisition  opportunities.  There is no assurance that
               the Company  will be able to acquire a  satisfactory  business on
               terms favorable to the Company or profitably operate any business
               so acquired.

          (b)  Organization costs:

               Organization  costs consist of accounting  and legal fees and are
               being amortized over a 60-month period.

          (c)  Fiscal Year:

               The Company operates on a calendar year basis.


                                       16
<PAGE>



                          PURSUIT VENTURE CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)
                         NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1997 AND 1996



Note 1    Summary of Significant Accounting Policies (continued)

          (d)  Basis of Operation:

               The Company prepares its financial  statements and federal income
               taxes on the accrual basis of accounting.

Note 2    Note due to Related Party

          The Company had an unsecured note payable to Fountain in the amount of
          $30,000.  The note  accrued  interest  at 10% per  annum.  In 1993 the
          shareholders  of  Fountain  elected to cancel the note and all accrued
          interest  and provide the funds to the Company as  additional  paid-in
          capital. The Company reversed all accrued interest payable to Fountain
          as an offset to expenses in 1993.

Note 3    Capital Structure

          The  Company's  Articles of  Incorporation  authorized  two classes of
          stock;  preferred and common.  Preferred stock  authorized;  1,000,000
          shares at a par value of $.01.  There  are no issued  and  outstanding
          preferred shares. The terms, conditions, preferences and provisions of
          the preferred stock have not, as of this date, been  established,  but
          rather will be established by the Company's Board of Directors.

          The Company has 5,000,000  shares of common stock  authorized at a par
          value of $.001. There are 500,000 shares issued and outstanding.

          During 1997 the Company  issued  230,000 shares of common stock to its
          sole officer and  director  for  services  provided to the Company his
          sole  capacity  as  the  Company's  board  member,  President,   Chief
          Financial Officer and Secretary.

Note 4    Income Taxes

          At  December  31,  1997,  the  Company  has a federal  operating  loss
          carryforward  of $55,230 for financial  accounting  and federal income
          tax purposes.  Utilization  of the net  operating  loss in any taxable
          year  during  the  carryforward  period  may be  subject  to an annual
          limitation due to the ownership change limitations  imposed by the tax
          law.

          The net operating  losses will expire at various  dates  commencing in
          the year 2005 through 2012.

          The deferred tax asset consists of the future benefit of net operating
          loss  carryforwards.  A valuation  allowance limits the recognition of
          the benefit of deferred tax assets  until  realization  is  reasonable
          assured by future profitability.

          The following is a summary of deferred taxes:

                   Deferred asset             $ 8,000
                   Valuation allowance         (8,000)
                                              ------- 
                                                    0
                                              =======

                                       17
<PAGE>



                          PURSUIT VENTURE CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)
                         NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1997 AND 1996



Note 5    Options & Warrants

          The Company has not adopted a stock option plan. There are no warrants
          issued or outstanding.

Note 6    Commitments

          The Company has been provided minimal office space at no charge.




                                       18
<PAGE>



ITEM 8:          CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                       ACCOUTING AND FINANCIAL DISCLOSURE

     None.


                                    PART III

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

                                   MANAGEMENT

     The following sets forth information  concerning the Directors and Officers
of the Company:

                Name             Age                    Positions
                ----             ---                    ---------
         Patrick C. Brooks        52        Director, President, Chief Financial
                                            Officer and Secretary

     The following sets forth certain biographical information pertaining to the
Directors and Officers of the Company:

Patrick C. Brooks

     Mr. Brooks was appointed sole officer and director of the Company in August
1997.

     Since  1988  Mr.   Brooks  has  served  as  President  of  Home   Indemnity
Incorporated,  a  company  he  founded.  Formerly,  he served  as  Chairman  and
President of Bio-Dental Technologies Corporation, a publicly-held company traded
on the NASDAQ Stock  Exchange.  Additionally,  he served as joint  principal and
owner of Thunderbird Securities Corporation and Meridian Securities,  Inc., both
companies  being  securities-broker  dealers  licensed  by  the  Securities  and
Exchange Commission and the N.A.S.D.

         From 1987 to 1990,  Mr.  Brooks was the  promoter  and sponsor of three
publicly-held Business Investment Companies.  In the fifteen years prior to 1987
he  served  in  the  casualty  insurance  industry  in  successively   advancing
underwriting positions with major European and American insurance companies.

ITEM 10:  EXECUTIVE COMPENSATION

     The Company issued 230,000 shares of its Common Stock to Mr. Brooks in lieu
of cash  compensation for the services he provided to the Company as of December
17, 1997. Mr. Brooks serves as sole Director, President, Chief Financial Officer
and  Secretary of the  Company.  Future  compensation  to the  Directors  and or
Offices will be decided by the Board of Directors. Such transactions will not be
conducted at arm's length.

ITEM 11:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table sets forth  information  regarding  ownership  of the
Company's  Common Stock by each person known by the Company to be the beneficial
owner of more than 10% of the outstanding  Common Stock, by each director and by
each executive  officer of the Company.  All shares are held beneficially and of
record,  and  each  recorded   stockholder  has  sole  voting,   investment  and
dispositive power.

                                       19
<PAGE>
                                     Shares 
                                  Beneficially              Percentage of
Name                                 Owned                   Shares Owned  
----                                 -----                   ------------  


Patrick C. Brooks (1)               230,000                      11.5

Directors and Officers as a Group   230,000                      11.5  

----------
(1) Director and/or Officer of the Company


ITEM 12:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On December  17,  1997,  the Company  issued  230,000  shares of its Common
Stock, par value $.001, to its sole director and officer as compensation in lieu
of a salary for the  performance  of his duties as a director  and an officer of
the Company. This transaction was not conducted in arm's length transaction.


                                    PART IV

ITEM 13:  EXHIBITS AND REPORTS ON FORM 8-K

Report on Form 8-K dated December 17, 1997

                                       20

<PAGE>


                                   SIGNATURES

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

                                               PURSUIT VENTURE CORPORATION



                                               /s/ Patrick C. Brooks
                                               ---------------------------------
                                               Patrick C. Brooks
                                               Director, President and Secretary


Date:  July 16, 1998


                                       21