U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

(Mark One)

     |X| Quarterly  report under Section 13 or 15(d) of the Securities  Exchange
Act of 1934

     For the quarterly period ended June 30, 1997

     |_| Transition report under Section 13 or 15(d) of the Exchange Act

                        For the transition period from to

Commission file number   333-07727

                           Allegiant Technologies Inc.
        (Exact Name of Small Business Issuer as Specified in Its Charter)

                                   Washington
         (State or Other Jurisdiction of Incorporation or Organization)

                                   98-0138706
                      (I.R.S. Employer Identification No.)

          9740 Scranton Place, Suite 350, San Diego, California, 92121
                    (Address of Principal Executive Offices)

                         (619) 587 - 0500, Extension 105
                (Issuer's Telephone Number, Including Area Code)

-----------------------------------------------------------------------------
         (Former Name, Former Address and Former Fiscal Year, if Changed
                               Since Last Report)

         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 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          X              No _________


         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the latest  practicable  Common stock, par value,  $0.01
per share, 8,393,007 shares of common stock outstanding as of July 31, 1997

         Transitional Small Business Disclosure Format (check one):

Yes    __________            No      X


<PAGE>



ITEM 1.   FINANCIAL STATEMENTS-JUNE 30, 1997


                           ALLEGIANT TECHNOLOGIES INC.



                      (Expressed in United States Dollars)
                              FINANCIAL STATEMENTS
                      (Unaudited - Prepared by Management)


                                  JUNE 30, 1997


<PAGE>


ALLEGIANT TECHNOLOGIES INC.
BALANCE SHEET
(Expressed in United States Dollars)
AS OF JUNE 30
<TABLE>
<CAPTION>
                                                                                               1996              1997
<S>                                                                                         <C>            <C>
ASSETS

Current assets:
     Cash and cash equivalents                                                             $     921,043   $     33,388
     Accounts receivable, net of allowance for doubtful accounts                                 125,615         23,366
     Other receivable                                                                               -             2,851
     Inventories                                                                                  79,033        147,827
     Prepaid expenses                                                                             61,670         31,927
                                                                                           -------------   ------------

     Total current assets                                                                      1,187,361        239,359
Deposits                                                                                          15,709           -
Property and equipment, net (Note 2)                                                             275,302         80,402
Intangible assets, net (Note 3)                                                                  321,889           -
Deferred costs                                                                                    30,000           -
                                                                                           -------------   ------------

     Total assets                                                                          $   1,830,261   $    319,761
                                                                                           =============   ============

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                                      $     161,961   $    414,218
     Accrued liabilities                                                                          35,239        418,406
     Deferred revenues                                                                            52,516         24,455
     Notes payable (Note 4)                                                                       35,341        119,704
     Current portion of debentures payable (Note 5)                                                 -           500,000
                                                                                           -------------   ------------

     Total current liabilities                                                                   285,057      1,476,783
Deferred rent                                                                                     22,002           -
Debentures payable (Note 5)                                                                      492,798           -
                                                                                           -------------   -------------

     Total liabilities                                                                           799,857      1,476,783
                                                                                           -------------   ------------

Shareholders' equity:
   Capital stock (Note 6)
       Authorized
           50,000,000  preferred shares, par value $0.01 per share
          100,000,000  common shares, par value $0.01 per share
       Issued and outstanding
            8,393,007  common shares (1996 - 8,107,295)                                           81,073         83,930
   Additional paid-in capital                                                                  3,965,092      4,062,235
   Accumulated deficit                                                                        (3,015,761)    (5,303,187)
                                                                                           -------------    -----------

       Total shareholders' equity                                                              1,030,404     (1,157,022)
                                                                                           -------------    -----------

   Total liabilities and shareholders' equity                                              $   1,830,261    $   319,761
                                                                                           =============    ===========

</TABLE>
                       Unaudited - See accompanying notes.


<PAGE>


ALLEGIANT TECHNOLOGIES INC.
STATEMENTS OF OPERATIONS
(Expressed in United States Dollars)

<TABLE>
<CAPTION>
                                                                Three Month Period Ended     Six Month Period Ended
                                                                          June 30,                    June 30,
                                                                1996             1997             1996         1997
                                                        --------------   ------------    --------------   ------------
<S>                                                     <C>              <C>             <C>              <C>
NET REVENUE                                             $      439,086   $     138,845   $      909,796   $     454,357

COST OF REVENUE                                                 92,307          62,195          193,210         149,770
                                                        --------------   -------------   --------------   -------------

GROSS PROFIT                                                   346,779          76,650          716,586         304,587
                                                        --------------   -------------   --------------   -------------



EXPENSES
     Sales and marketing                                       304,123          48,443          955,684         240,435
     Research and development                                  233,142          53,938          483,016         216,024
     General and administrative                                263,337         166,809          512,128         406,216
     Amortization of purchase of intangibles                    33,649          31,149           68,548          62,298
     Write-off of intangibles                                     -            197,293             -            197,293
     Loss on disposal of fixed assets                             -             21,654             -             21,654
                                                        --------------   -------------   --------------   -------------

     Total operating expenses                                  834,251         519,286        2,019,376       1,143,920
                                                        --------------   -------------   --------------   -------------


Loss from operations                                          (487,472)       (442,636)      (1,302,790)       (839,333)

     Interest income                                             4,347             166            8,479             166
     Interest expense                                          (18,034)        (25,367)         (37,386)        (25,367)
                                                        --------------   -------------   --------------   -------------

Net loss                                                $     (501,159)  $    (467,837)  $   (1,331,697)  $    (864,534)
                                                        ==============   =============   ==============   =============


Loss per share                                          $       (0.065)  $      (0.055)  $       (0.173)  $      (0.103)
                                                        ===============  ==============  ==============   ==============


Shares used in computing per share amounts                   7,692,295       8,393,007        7,692,295       8,393,007
                                                        ==============   =============   ==============   =============

</TABLE>
                       Unaudited - See accompanying notes.


<PAGE>


ALLEGIANT TECHNOLOGIES INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
(Expressed in United States Dollars)

<TABLE>
<CAPTION>
                                                                             Additional                       Total
                                               Number                         Paid-in        Accumulated    Shareholders'
                                             of Shares        Par Value       Capital         Deficit         Equity
<S>                                           <C>          <C>             <C>             <C>              <C>        
Balances at December 31, 1995                 7,042,295    $      70,423   $   2,404,398   $  (1,684,064)   $   790,757

Shares issued    - cash                         815,000            8,150       1,621,850                      1,630,000
                 - exercise of warrants         250,000            2,500         247,500                        250,000
Offering costs                                                                  (308,656)                      (308,656)
Net loss                                                                                      (1,331,697)    (1,331,697)
                                          -------------    -------------   -------------   -------------    -----------


Balances at June 30, 1996                     8,107,295           81,073       3,965,092      (3,015,761)     1,030,404

Net loss                                                                                      (1,422,852)    (1,422,852)
                                          -------------    -------------   -------------   -------------    -----------


Balances at December 31, 1996                 8,107,295           81,073       3,965,092      (4,438,653)      (392,488)

Shares issued    - cash                         285,712            2,857          97,143                        100,000
Net loss                                                                                        (864,534)      (864,534)
                                          -------------    -------------   -------------   -------------    -----------


Balances at June 30, 1997                     8,393,007    $      83,930   $   4,062,235   $  (5,303,187)   $(1,157,022)
                                          =============    =============   =============   =============    ===========
</TABLE>
                       Unaudited - See accompanying notes.


<PAGE>


ALLEGIANT TECHNOLOGIES INC.
STATEMENTS OF CASH FLOWS
(Expressed in United States Dollars)

<TABLE>
<CAPTION>
                                                               Three Month Period Ended        Six Month Period Ended
                                                                        June 30,                    June 30,
                                                              1996              1997         1996               1997
                                                        ---------------  -------------    -------------   -------------
<S>                                                     <C>              <C>             <C>              <C>
OPERATING ACTIVITIES
     Net loss                                           $     (501,159)  $    (467,837)  $   (1,331,697)  $    (864,534)
     Adjustments to reconcile net loss to net cash
       used in operating activities
        Amortization and depreciation                           27,887          56,739          100,669         113,478
        Write-off of intangible                                   -            197,293             -            197,293
        Loss on disposal of fixed assets                          -             21,654             -             21,654
        Changes in operating assets and liabilities
           Accounts and other receivables                       32,270          32,784            8,661          10,867
           Inventories                                          18,156          51,540           20,334          52,376
           Prepaid expenses and deposits                       (49,469)          1,168           (3,564)         33,902
           Accounts payable and accrued liabilities           (219,990)         77,779          (48,739)        127,652
           Deferred revenues                                       803          (2,912)          (1,282)        (10,108)
                                                        --------------   -------------   --------------   -------------

     Net cash used for operating activities                   (691,502)        (31,792)      (1,255,618)       (317,420)
                                                        --------------   -------------   --------------   -------------


INVESTING ACTIVITIES
     Purchase of property and equipment                           (776)           -             (60,045)           -
     Proceed on sale of property and equipment                    -             51,475             -             51,475
                                                        --------------   -------------   --------------   -------------

     Net cash used for investing activities                       (776)         51,475          (60,045)         51,475
                                                        --------------   -------------   --------------   -------------


FINANCING ACTIVITIES
     Proceeds from issuance of capital stock                 1,630,000            -           1,880,000         100,000
     Share offering cost                                      (308,656)           -            (308,656)           -
     Proceeds from issuance of notes                              -               -                -            100,000
     Payments on notes payable                                 (12,717)          9,034          (25,153)           -
     Deferred costs                                            107,332          15,000           46,250          15,000
     Deferred rent                                              (1,761)        (36,502)          (4,401)        (36,502)
     Amortization of debt discount                              31,798           4,225           31,798           4,225
                                                        --------------   -------------   --------------   -------------

     Net cash provided by financing activities               1,445,996          (8,243)       1,619,838         182,723
                                                        --------------   -------------   --------------   -------------


Increase (decrease) in cash and cash equivalents               753,718          11,440          304,175         (83,222)


Cash and cash equivalents, beginning of period                 167,325          21,948          616,868         116,610
                                                        --------------   -------------   --------------   -------------


Cash and cash equivalents, end of period                $      921,043   $      33,388   $      921,043   $      33,388
                                                        ==============   =============   ==============   =============

</TABLE>
                       Unaudited - See accompanying notes.


<PAGE>


ALLEGIANT TECHNOLOGIES INC.
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 1997




1.      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


     Nature of Operations

     Allegiant Technologies Inc. was incorporated in Washington State, U.S.A. on
December  28,  1993 and was  registered  to carry on  business  in the  State of
California on March 23, 1994.

     The  Company's  principal  line of business is  developing,  marketing  and
supporting interactive multimedia development software.

     Basis of Presentation

     The accompanying financial statements have been prepared in conformity with
generally  accepted  accounting   principles,   in  the  United  States,   which
contemplates  the continuation of the Company as a going concern.  However,  the
Company has sustained substantial operating losses in recent years. In addition,
the Company has used  substantial  amounts of working capital in its operations.
Further,  at June  30,  1997,  current  liabilities  exceed  current  assets  by
$1,237,424 and total liabilities exceed total assets by $1,157,022.

     The  Company's  ability to satisfy  projected  working  capital and capital
expenditure  requirements  is  dependent  upon its ability to secure  additional
funding  through public or private sales of securities.  There are no assurances
that the Company will be able to secure the required  capital on any terms. As a
result,  there  exists  a  substantial  risk  that  the  Company  will  have  to
discontinue its operations.  The financial  statements  include an adjustment to
the  cost  of  intangible  assets,  relating  to the  Company's  acquisition  of
SuperCard,  but do not include any other  adjustments that might result from the
outcome of this uncertainty.

     Use of Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amount of assets and  liabilities and disclosure of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amount of revenues  and expenses  recorded  during the  reporting
period. Actual results could differ from those estimates.

     Inventories

     Inventories  consist  primarily  of  software  media,  manuals  and related
packing  materials.  Inventories are valued at standard cost, which approximates
the lower of cost, determined on a first-in, first-out basis, or market assuming
the sale of product in the ordinary course at business.

     Capital Assets

     Capital  assets are  recorded at cost.  Depreciation  is provided  over the
estimated useful lives ranging from three to seven years using the straight-line
method.


<PAGE>


ALLEGIANT TECHNOLOGIES INC.
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 1997




     1.   ORGANIZATION   AND   SUMMARY  OF   SIGNIFICANT   ACCOUNTING   POLICIES
(cont'd.....)


     Intangible Assets

     Intangible  assets are recorded at cost.  Amortization is provided over the
estimated useful lives of five years using the straight-line method.  Management
evaluates the future  realization of intangible assets quarterly and writes down
any amounts  that  management  deems  unlikely to be  recovered  through  future
product sales. As at June 30, 1997, the Company's ability to continue as a going
concern is  uncertain.  Product  sales have  decreased  significantly  and it is
expected that sales will  continue to be adversely  affected.  After  reasonable
investigation and inquiry,  management  concluded that the future realization of
intangible assets, represented by the purchase of SuperCard, is substantially in
doubt and therefore decided to write-off and change the earnings the unamortized
balance of such costs.

     Capitalized Software Costs

     Financial  accounting  standards  provide  for  capitalization  of  certain
software  development  costs  after  technical  feasibility  of the  software is
attained. No such costs were capitalized in 1994, 1995, 1996 or 1997 because the
impact on the financial statements would not be material.


     Revenue Recognition

     Revenue is derived from product sales and licenses,  maintenance  contracts
and  consulting,  training and other  services.  Revenues from product sales and
licenses are  recognized  upon shipment of the  products.  Revenue from software
maintenance  contracts is recognized on a  straight-line  basis over the term of
the contract,  generally one year.  Revenue from consulting,  training and other
services are recognized in the period in which services are performed and earned
in accordance with the respective  agreements.  To the extent that an engagement
is projected  to be completed at a loss, a provision  for the full amount of the
loss is provided at that time.

     The  Company  may enter into  agreements  whereby it  licenses  products or
provides  customers  the right to multiple  copies.  Such  agreements  generally
provide for  non-refundable  fixed fees which are  recognized at delivery of the
product  master or the first  copy.  Per copy  royalties  in excess of the fixed
minimum amounts and refundable  license fees are recognized as revenue when such
amounts are reported to the Company and no longer refundable.

     The Company will sell its products throughout the world,  however, the most
significant geographical area is the United States. The Company performs ongoing
credit evaluations of its customers and generally does not require collateral on
domestic sales. The Company  maintains an allowance for potential credit losses.
Additionally,  the Company  maintains an allowance  for  anticipated  returns on
products sold to distributors.

     United States Generally Accepted Accounting Principles

     Accounting under United States and Canadian generally  accepted  accounting
principles is substantially  the same with respect to the accounting  principles
used by the Company in the preparation of these financial statements.


<PAGE>


ALLEGIANT TECHNOLOGIES INC.
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 1997




2.      PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                                                                                    1996          1997
        <S>                                                                                <C>             <C>
        Property and Equipment consists of:
           Furniture and fixtures                                                          $     154,240   $     17,619
           Office equipment                                                                       17,416         23,723
           Computer equipment                                                                    193,437        187,473
                                                                                           -------------   ------------

                                                                                                 365,093        228,815
        Accumulated depreciation                                                                 (89,791)      (148,413)
                                                                                           -------------   ------------

                                                                                           $     275,302   $     80,402
                                                                                           =============   ============
</TABLE>



3.      INTANGIBLE ASSETS

<TABLE>
<CAPTION>
                                                                                                    1996         1997
        <S>                                                                                <C>             <C>
        Intangible assets consist of:
           Acquisition costs of SuperCard                                                  $     498,000   $    498,000
           Royalty buyout                                                                        100,000        100,000
                                                                                           -------------   ------------

                                                                                                 598,000        598,000
           Accumulated amortization                                                             (276,111)      (400,707)
           Write-off                                                                                -          (197,293)
                                                                                           -------------   ------------

                                                                                           $     321,889   $       -
                                                                                           =============   ============
</TABLE>

     Acquisition  costs  include  goodwill,   product   technology  and  related
acquisition  costs. On February 4, 1994 the Company purchased from a non-related
party,  the  rights  to a  product  sold  under  the  name  "SuperCard"  and the
underlying  software  technology for cash and other  consideration.  The royalty
buyout  represents  a fixed  sum  payment  for the  termination  of the  royalty
interest on SuperCard  sales.  The buyout  option was  negotiated as part of the
original  acquisition of SuperCard.  The unamortized  balance of such costs have
been written-off and charged to earnings  because of the substantial  doubt that
exists regarding the realization of such costs through future product sales.


<PAGE>


ALLEGIANT TECHNOLOGIES INC.
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 1997




4.      NOTES PAYABLE

<TABLE>
<CAPTION>
                                                                                                    1996        1997
        <S>                                                                                <C>             <C>  
        Note payable - On February  13, 1997 the Company  issued a note  payable
           (the "Note") in connection with a proposed private  placement of debt
           securities  in the amount of  $750,000.  The Company was advanced the
           sum of  $100,000  under the Note.  The Note is  secured  by a general
           charge over the assets of the Company and bears interest at the First
           National  Bank & Trust  Company  of  Chicago  prime  rate plus 2% per
           annum,  which is  payable  quarterly  commencing  on July  15,  1997.
           Amounts advanced under the Note, together with accrued interest,  are
           due on the  earlier of the date on which the  Company  completes  any
           offering of equity securities for an amount
           of not less than $1,500,000, and February 13, 1999.                             $        -      $    100,000


           Accrued interest                                                                         -             6,000


           On July 15, 1997, the Company  failed to make an interest  payment as
           required  under  the  terms of the  Note.  As a  consequence  of this
           default,  the Note, together with accrued interest,  is currently due
           and payable upon demand.


        Note payable on buyout of royalty on SuperCard  sales,  payable over two
           years in equal monthly installments commencing March 1, 1995
           with interest at 9% per annum.                                                         35,341         13,704
                                                                                           -------------   ------------


                                                                                                  35,341        119,704

        Less: current portion                                                                    (35,341)      (119,704)
                                                                                           -------------   ------------


        Notes payable, net of current portion                                              $        -      $       -
                                                                                           =============   =============

</TABLE>

<PAGE>


ALLEGIANT TECHNOLOGIES INC.
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 1997




5.      DEBENTURES PAYABLE

<TABLE>
<CAPTION>
                                                                                                    1996         1997
        <S>                                                                                <C>              <C>
       The Company issued  debentures in the aggregate  amount of $500,000 which
           which may be  converted  into  Units of the  Issuer at a price  $1.96
           until  December  18,  1997,  at the option of the  holder.  Each Unit
           consists of one common share and one share purchase warrant entitling
           the holder to  purchase  an  additional  common  share at $1.96 until
           December 18, 1997. The debentures,  if not converted into Units,  are
           due on December 18, 1997.

        The debentures are not secured and do not bear interest.                           $     500,000   $    500,000

        Less: discount                                                                            (7,202)          -
                                                                                           -------------   ---------

                                                                                                 492,798        500,000
        Less: current portion                                                                       -          (500,000)
                                                                                           -------------   ------------

        Debentures payable, net of current portion                                         $     492,798   $       -
                                                                                           =============   ============
</TABLE>

6.      CAPITAL STOCK

        Authorized

            50,000,000   preferred  stock,  par value $0.01 per share. The Board
                         of  Directors  has the  authority  to divide the shares
                         into  one  or  more  series  and  to  determine   their
                         attributes at the time of issuance.
           100,000,000   common stock, par value $0.01 per share

        Performance shares

        Included  in  issued  and   outstanding   common  shares  are  2,000,000
        performance  shares to be  released  from escrow on the basis of 1 share
        for  every  $0.52  Cdn  of  pre-tax  cash  earned  by the  Company  on a
        cumulative basis. Of the performance shares, 675,000 shares have further
        vesting  provisions  attached  to  them  in  addition  to  the  earn-out
        provisions.  The value of these  performance  shares  will be charged to
        expense at the time of their  release from escrow.  These shares are not
        included  in  the  determination  of  loss  per  share  until  there  is
        reasonable certainty that they will be released from escrow.

        Stock options

        The  Company  established  a stock  option  plan  ("the  Plan") to grant
        options to purchase  common stock to employees,  officers,  non-employee
        directors  of the  Company  and  certain  other  individuals.  The  Plan
        authorizes the Company to issue or grant and incentive  stock options to
        purchase up to 2,517,902 shares of its common stock as of June 30, 1997.
        There are 1,580,402  options available that may be granted in the future
        under the stock option plan.


<PAGE>


ALLEGIANT TECHNOLOGIES INC.
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 1997




6.      CAPITAL STOCK (cont'd.....)


        Stock options (cont'd.....)


        Under  the  terms of the  Plan,  incentive  options  may be  granted  to
        employees,  officers,  directors and consultants at prices not less than
        the fair market  value on the date of grant.  Options  vest over various
        terms not  exceeding  four years and expire  five years from the date of
        grant.


        During  the  period,  990,000  options  were  cancelled  as a result  of
        employee  terminations.  At June 30,  1997,  there are  937,500  options
        outstanding  at an  exercise  price of $0.75  per  share  expiring  from
        periods ranging from May 24, 2000 to November 26, 2001


        As of June 30, 1997, the Company has outstanding share purchase warrants
        entitling the holders to purchase a total of 1,012,947  common shares of
        the Company as follows:


<TABLE>
<CAPTION>
                          Number                 Exercise
                        of Shares                 Price                                  Expiry Date
                            <S>                  <C>                                  <C>
                             88,235              $       1.96                         December 18, 1997

                            150,000              $       3.62 (Cdn)                   April 25, 1998

                            489,000              $       2.30                         April 26, 1998

                            285,712              $       0.35 to April 15, 1998

                                                 $       0.40 from April 16, 1998
                                                              to April 15, 1999       April 15, 1999
                      -------------

                          1,012,947
                      =============
</TABLE>


7.      RELATED PARTY TRANSACTIONS

        During the six months ended June 30,  1997,  the Company paid or accrued
        $30,000 (1996 - $30,000) in management  fees to companies  controlled by
        certain directors of the Company.


<PAGE>


ALLEGIANT TECHNOLOGIES INC.
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 1997




8.      GEOGRAPHIC INFORMATION

        Substantially  all the  Company's  operations,  employees and assets are
located in the United States.

        A significant portion of the Company's sales are to customers in foreign
countries.

        Sales by geographical  region for the six months ended June 30, 1997 are
as follows:

<TABLE>
<CAPTION>
                                                                                                    1996          1997
           <S>                                                                             <C>             <C>
           Japan                                                                           $     104,418   $     24,182
           Europe                                                                                155,946         75,929
           Other                                                                                  73,433         25,707
                                                                                           -------------   ------------

           Total export sales                                                                    333,797        125,818
           United States                                                                         575,999        328,539
                                                                                           -------------   ------------

           Net sales                                                                       $     909,796   $    454,357
                                                                                           =============   ============

</TABLE>

<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Overview

The Company designs, develops and markets multimedia,  Internet, and application
development  software  authoring  tools used to create  interactive,  multimedia
communication,   education,   entertainment,   presentations   and   information
management  applications.  Currently,  the  Company's  core product only runs on
computers compatible with the Macintosh operating system.

The Company has incurred substantial start up, development and other expenses in
excess of revenues  which has resulted in cumulative net losses to June 30, 1997
of $5,303,187. As at June 30, 1997, the Company had a working capital deficit of
$1,237,424,and   total  liabilities   exceed  book  value  of  total  assets  by
$1,157,022.

The  Company's  results  of  operations  for the last  two  quarters  have  been
adversely affected by three significant factors: (1) the Company was not able to
secure adequate financing to complete new product under development, including a
Windows version of SuperCard,  and to maintain effective  marketing  strategies,
(2) the Company's  existing products are sold into a market segment that has, in
the  past  year,  experienced  significant  sales  declines,  and (3)  sales  of
Macintosh  computers and related Macintosh software in general have continued to
decline. Management continues to investigate and evaluate various means by which
it can generate  incremental  revenues at reduced cost,  however, it is expected
that sales in the immediate future will continue to be adversely affected.

The  Company's  ability to continue  as a going  concern is  dependent  upon its
ability  to  secure  additional  funding  through  public  or  private  sales of
securities,  including  equity  securities of the Company,  the  successful  and
timely  completion  of product  development  on a Windows  version of SuperCard,
material  creditor  concessions  and the success of its future  operation.  As a
result,  there  exists  a  substantial  risk  that  the  Company  will  have  to
discontinue its operations.  The financial  statements  presented as at June 30,
1997 do not include any  adjustments  that might result from the outcome of this
uncertainty, except for a write down of intangibles assets, as described below.

The  Company has  developed  and has  commenced  reorganization  plans that,  if
successfully implemented, will allow the Company to continue as a going concern.
However,  there are no  assurances  that the Company  will be able to secure the
required capital on terms favorable to the Company or on any terms. In addition,
even in the event the necessary capital is made available to the Company,  there
are no  assurances  that it can retain or, if  necessary,  hire key personnel to
implement such plans  successfully  nor are there any assurances that such plans
will gain the acceptance of the Company's  creditors.  Negotiations are on going
where necessary and it is expected that the results of  management's  efforts to
reorganize the Company will be known within ninety days of this report.
<PAGE>
 Liquidity and Capital Resources

The Company has sustained  substantial operating losses and has used substantial
amounts of working  capital in its  operations  to June 30, 1997. As of June 30,
1997 the Company had cash  equivalents of $33,388 and a working  capital deficit
of  $1,237,424.  Total  liabilities  exceed  the book  value of total  assets by
$1,157,022.  The  Company's  ability to satisfy  projected  working  capital and
capital  expenditure  requirements  is  dependent  upon its  ability  to  secure
additional  funding  through  public or private sales of  securities,  including
equity securities of the Company. Presently, there is no credible basis on which
the Company can project future cash flow form operations.

The  Company's  primary  future  needs  for  capital  are for  expanded  product
development,  marketing and selling expenses and working capital.  The Company's
working capital  requirements may vary depending upon numerous factors including
the progress of the Company's product development, competitive and technological
advances, marketing acceptance of the Company's products and other factors.

It is management's opinion, after reasonable investigation and inquiry, that the
realizable  value of the Company's  assets is insufficient to satisfy the claims
of creditors in the event of a liquidation and therefore  shareholders  would be
virtually certain not to receive any liquidation proceeds on their shares should
the Company be dissolved.


Results of Operation

The following table sets forth,  for the periods  indicated,  certain  operating
data as a percentage of net revenue.

<TABLE>
<CAPTION>
                                                             Three                            Six
                                                             Months Ended                  Months Ended
                                                             June 30                       June 30
                                                             -------------------           ---------------------


                                                             1996           1997           1996            1997
                                                             ----           ----           ----            ----
<S>                                                          <C>            <C>            <C>               <C>
     Net revenues                                            100%           100%           100%              100%

     Cost of revenues                                          21            45              21               33
                                                              ----          ----           -----             ----
     Gross profit                                              79            55              79               67
                                                              ----          ----           -----             ----
     Expenses:
        Sales and marketing                                    69            35             105               53
        Research and development                               53            39             53                48
        General and administrative                             60           120             56                89
        Amortization                                            8            22              8                14
        Write-off of intangibles                                -           142              -                43
        Loss on disposal of fixed assets                        -            16              -                 5
                                                              ------        -----           -----            -----

     Total operating expenses                                 190            374             222            (252)
                                                              ---           ----             ---             ---

     Loss from operations                                    (111)          (319)           (143)           (185)

     Net interest income (expense)                            (  3)          (18)             (3)             (5)
                                                             ------         -----          ------          ------

     Net loss                                                (114)%         (337)%          (146)%          (190)%
                                                             ====           ====            ====            ====

</TABLE>
<PAGE>
Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1996

Net revenue includes revenues from sales of software products and services, less
reserves for  anticipated  product  returns and future vendor support  services.
Total net  revenues  decreased  by 68% from  $439,086 for the three months ended
June 30, 1996 to $138,845 for the three months ended June 30, 1997. The decrease
is due to the following factors: (1) the Company was not able to secure adequate
financing to complete new product under development, including a Windows version
of SuperCard, and to maintain effective marketing strategies,  (2) the Company's
existing  products  are sold into a market  segment  that has, in the past year,
experienced significant sales declines, and (3) sales of Macintosh computers and
related Macintosh software in general have continued to decline.

Cost of revenue includes the cost of manuals,  diskettes and their  duplication,
packaging materials,  assembly,  paper goods, bundled products,  and shipping as
well as  royalties  and  reserves for  inventory  obsolescence.  Cost of revenue
decreased  from $92,307 to $62,195 (as a percentage of net revenues it increased
from 21% to 45%) for the first three  months of 1997 as  compared  to 1996.  The
absolute  dollar  decrease  is due to the  reduction  in sales.  The  percentage
increase is primarily  due to the change in costs  associated  with other vendor
products that were bundled with  SuperCard  from time to time and the write down
of obsolete inventory.

Sales and marketing expenses include the costs of advertising,  promotion, trade
shows and printed  collateral  materials,  salaries and the costs of  contracted
services.  Total sales and marketing  costs  decreased from $304,123 to $48,443
(as a percentage  of net  revenues it  decreased  from 69% to 35%) for the first
three months of 1997 as compared to 1996.  The  reduction in  expenditures  is a
direct result of inadequate financial resources. The percentage increase is as a
result  of a  reduction  in sales  and fixed  salaries  attributed  to sales and
marketing.

Research and development  expenditures consisted of personnel expenses, costs of
independent   contractors  and  supplies   required  to  conduct  the  Company's
development  efforts.  Research  and  development  expenditures  decreased  from
$233,142 to $53,938 (from 53% of net revenues to 39%) for the first three months
of 1997 as compared to 1996. The decrease in research and  development  costs is
directly attributable to the decrease in engineering and support level staff.

General  and  administrative  expenses  consist  primarily  of the  costs of the
Company's finance and  administrative  personnel,  including the chief executive
officer. General and administrative expenses decreased from $263,337 to $166,809
(as a percentage  of net  revenues it increased  from 60% to 120%) for the first
three months of 1997 as compared to 1996.  General and  administrative  expenses
have  substantially  decreased as a result of steps  undertaken by management to
reduce costs.

As at June 30, 1997,  the  Company's  ability to continue as a going  concern is
uncertain.  Product sales have decreased  substantially  and it is expected that
sales will continue to be adversely affected. After reasonable investigation and
inquiry,  management  concluded  that the  future  realization  of the  costs of
intangible  assets through product sales is substantially in doubt and therefore
decided  to  write-off  and  charge to  earnings,  in the  current  period,  the
unamortized balance of such costs.

During the period the  Company  disposed  of certain  fixed  assets,  comprising
furniture and  fixtures,  in  connection  with an agreement to sub-lease  office
space at no cost,  and it adjusted the value of certain other assets that are no
longer in use to an estimate of their realizable value.
<PAGE>
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996

Net revenue includes revenues from sales of software products and services, less
reserves for  anticipated  product  returns and future vendor support  services.
Total net revenues  decreased by 50% from $909,796 for the six months ended June
30, 1996 to $454,357 for the six months ended June 30, 1997. The decrease is due
to the  following  factors:  (1) the  Company  was not able to  secure  adequate
financing to complete new product under development, including a Windows version
of SuperCard, and to maintain effective marketing strategies,  (2) the Company's
existing  products  are sold into a market  segment  that has, in the past year,
experienced significant sales declines, and (3) sales of Macintosh computers and
related Macintosh software in general have continued to decline.

Cost of revenue includes the cost of manuals,  diskettes and their  duplication,
packaging materials,  assembly,  paper goods, bundled products,  and shipping as
well as  royalties  and  reserves for  inventory  obsolescence.  Cost of revenue
decreased  from  $193,210  to  $149,770  (as a  percentage  of net  revenues  it
increased from 21% to 33%) for the first six months of 1997 as compared to 1996.
The absolute  dollar  decrease is due to the reduction in sales.  The percentage
increase is primarily  due to the change in costs  associated  with other vendor
products that were bundled with  SuperCard  from time to time and the write down
of obsolete inventory.

Sales and marketing expenses include the costs of advertising,  promotion, trade
shows and printed  collateral  materials,  salaries and the costs of  contracted
services.  Total sales and marketing  costs  decreased from $955,684 to $240,435
(from 105% of net  revenues to 53%) for the first six months of 1997 as compared
to 1996.  The  reduction  in  expenditures  is a  direct  result  of  inadequate
financial resources.

Research and development  expenditures consisted of personnel expenses, costs of
independent   contractors  and  supplies   required  to  conduct  the  Company's
development  efforts.  Research  and  development  expenditures  decreased  from
$483,016 to $216,024  (from 53% of net revenues to 48%) for the first six months
of 1997 as compared to 1996. The decrease in research and  development  costs is
directly attributable to the decrease in engineering and support level staff.

General  and  administrative  expenses  consist  primarily  of the  costs of the
Company's finance and  administrative  personnel,  including the chief executive
officer. General and administrative expenses decreased from $512,128 to $406,216
(as a percentage of net revenues it increased from 56% to 89%) for the first six
months of 1997 as compared to 1996.  General and  administrative  expenses  have
been  substantially  as a result of steps  undertaken  by  management  to reduce
costs.

As at June 30, 1997,  the  Company's  ability to continue as a going  concern is
uncertain.  Product sales have decreased  substantially  and it is expected that
sales will continue to be adversely affected. After reasonable investigation and
inquiry,  management  concluded  that the  future  realization  of the  costs of
intangible  assets through product sales is substantially in doubt and therefore
decided  to  write-off  and  charge to  earnings,  in the  current  period,  the
unamortized balance of such costs.

During the period the  Company  disposed  of certain  fixed  assets,  comprising
furniture and  fixtures,  in  connection  with an agreement to sub-lease  office
space at no cost,  and it adjusted the value of certain other assets that are no
longer in use to an estimate of their realizable value.



<PAGE>
PART II.  OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

The Company has received  notices of legal  proceedings that have been commenced
against the Company by several of its  creditors  for failure to pay amounts due
for the purchase of goods or services. Such amounts are properly recorded in the
Company's accounts as due and payable. In addition,  several former employees of
the Company have filed formal  complaints  with the California  Labour Board for
failure to pay amounts due in respect of unpaid  salaries,  accrued vacation pay
and severance.  All such amounts are properly recorded in the Company's accounts
as due and payable.

ITEM 2.  CHANGES IN SECURITIES

Item 2 is not applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

The Company borrowed the sum of $100,000  pursuant to a secured  promissory note
dated  February  13,  1997.  The terms of the note  provided  for the payment of
interest  quarterly  commencing on July 15, 1997. The Company failed to make any
payment  of  interest  on or since  July 15,  1997.  The  note is  secured  by a
registered lien against all of the assets of the Company. The lender has not, as
at the date hereof,  commenced any action against the Company as a result of the
default.  The Company has  commenced  negotiations  with the lender to amend the
terms of the note.

There is no assurance that an agreement will be made.
<PAGE>
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The  Company  held its Annual  General  Meeting on June 10,  1997 to present the
audited financial statements of the Company for the year ended December 31, 1996
together with the auditors' report thereon, and to vote upon certain matters set
out below.  The total  number of common  shares  represented  at the  meeting by
shareholders in person or by proxy was 5,295,350 which represented approximately
63% of the total number of common shares issued and outstanding.

The following persons, all of whom were nominated by management,  were appointed
to the board of directors of the Company to hold office until the Company's next
Annual General Meeting.

NAME OF DIRECTOR             VOTES FOR        VOTES AGAINST     VOTES WITHHELD

Joel Staadecker              5,055,450          234,000               5,900
William McCartney            5,289,450               -                5,900
Leonard Petersen             5,055,450          234,000               5,900
William Appleton             5,245,450           44,000               5,900
Edward Lewis                 5,155,450           90,000              44,000


In addition,  David Coggeshall was nominated from the floor and received 319,000
votes for and 4,976,350  against and as a  consequence  was not appointed to the
board of directors.

The following  other matters were also voted upon and agreed to by  shareholders
at the Meeting.

1.   To  approve  Ernst & Young  LLP as  auditors  for the  ensuing  year and to
     authorize the directors to fix the remuneration to be paid to the auditors.

 VOTES FOR 5,293,350       VOTES AGAINST       -    VOTES WITHHELD  2,000

2.   To approve,  subject to the approval of the Vancouver  Stock  Exchange,  an
     amendment  to the  Company's  existing  stock  option plan to increase  the
     maximum  number  of  shares  issuable  under  the plan  from  2,187,688  to
     2,517,902.[ Insiders abstained from voting]

 VOTES FOR  2,202,949      VOTES AGAINST 157,400     VOTES WITHHELD 2,935,000

3.   To  authorize  the  directors  to carry  out a private  placement  or other
     issuance(s)  of an amount of  shares or units  that is equal to or  greater
     than 20% of the  issued  share  capital  of the  Company,  at such price or
     prices  and to such  persons  on such  terms  as may be  determined  by the
     Directors, subject to the approval of the Vancouver Stock Exchange.

VOTES FOR 5,002,950         VOTES AGAINST 158,400     VOTES WITHHELD 134,000


ITEM 5.  OTHER INFORMATION

On July 7,  1997  Edward  Lewis  resigned  from the  Board of  Directors  of the
Company.

On July 15, 1997 the Company received early notice to vacate its premises in San
Diego on or before  September  15,  1997  pursuant  to the terms of a  sub-lease
agreement.

On July 30, 1997 William  Appleton  resigned  from the Board of Directors of the
Company.

ITEM 6.  EXIHBITS AND REPORTS ON FORM 8-K

None filed during the period ended June 30, 1997


                                    SIGNATURE

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,  thereunto duly authorized, in the City of San Diego,
State of California, on August 12, 1997.

                                    ALLEGIANT TECHNOLOGIES INC.

                                 By: /s/ William D. McCartney
                                     William D. McCartney
                                      Chief Financial Officer