<PAGE>
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION

                             Washington, DC 20549

                                  FORM 10-QSB
                                       
[X]      Quarterly Report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934. For the quarterly period ended September 30, 1996

[ ]      Transition Report pursuant to 13 or 15(d) of the Securities Exchange
         Act For the transition period from ________________ to ______________

Commission File Number 33-55254

                           Essential Resources, Inc.
            ------------------------------------------------------
            (Exact name of Registrant as specified in its charter)

             Nevada                                         87-0485317
-------------------------------                   ----------------------------
(State or other jurisdiction of                   (IRS Employer Identification
     incorporation)                                            No.)

412 Pleasant Valley Way, Suite 205, West Orange, NJ                   07052
------------------------------------------------------------------------------
(Address of principal executive offices)                            (Zip Code)

Registrant's telephone number, including area code: (201) 669-2809

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

Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.

                                                             Outstanding as of
                Class                                        December 12, 1996
------------------------------------                         -----------------
$.001 par value Class A Common Stock                         3,795,179 Shares


<PAGE>



                  ESSENTIAL RESOURCES, INC. AND SUBSIDIARIES

                                     INDEX


                                                                         Page

Part I.  Financial Information

         Item 1.  Consolidated Financial Statements

         Balance Sheets as of June 30, 1996 and September 30, 1996.......1

         Statement of Operations for the Three
           Months Ended September 30, 1996...............................2

         Statement of Stockholders' Equity for the Three Months
           Ended September 30, 1996......................................3

         Statement of Cash Flows for the Three
           Months Ended September 30, 1996...............................4

         Summary of Accounting Policies and
           Notes to Financial Statements.................................5

         Item 2.  Management's Discussion and Analysis of
                    Financial Condition and Results of Operations.......12

Part II. Other Information..............................................14


<PAGE>




                  ESSENTIAL RESOURCES, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                       June 30,    September 30,
                                                         1996          1996
                                                     ------------  -------------
                                                                    (Unaudited)
<S>                                                  <C>           <C>
ASSETS
Current:

       Cash                                          $  218,195    $  107,771
       Receivables from factors                          73,601        58,795
       Accounts receivable                              148,496       431,094
       Inventories                                      329,597       681,183
       Prepaid expenses                                 456,608       470,467
       Deferred plantation management costs              62,299       120,357
       Other current assets                              94,237       106,012
                                                     ------------  -------------
                   Total current assets               1,383,033     1,975,679

                                                     ------------  -------------

Property, plant and equipment, at cost less 
  accumulated depreciation                               76,291       286,319
Investment in Queensland Essential Oils Limited         133,250       141,969
Other assets                                             62,813       142,725
                                                     ------------  -------------
                                                     $1,655,387    $2,546,692
                                                     ------------  -------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:

       Accounts payable, accruals and other          $  477,152    $  748,164
       Income taxes payable                              91,000       123,543
       Loans payable to related parties                 525,113       271,355
       Loans payable                                                  300,000
       Dividends payable                                 52,376       112,744
       Current portion of capitalized lease obligations                29,031
       Deferred income taxes                             79,000        79,473
                                                     ------------  -------------

                   Total current liabilities          1,224,641     1,664,310
                                                     ------------  -------------
       Accounts payable, long-term                       98,680        27,980
       Capitalized lease obligations                                  132,848
                                                     ------------  -------------
                   Total liabilities                  1,323,321     1,825,138
                                                     ------------  -------------
Commitments and contingencies
Stockholders' equity

       Common stock, $.001par value - 
       shares authorized 25,000,000; issued
       2,519,058 and 2,885,084 respectively               2,519         2,855
       Additional paid-in capital                       863,960     1,350,324
       Retained earnings                                370,182       314,954
       Foreign currency translation adjustment           63,778        21,794
       Receivable from Collage                         (488,548)     (418,756)
                                                     ------------  -------------
                                                        811,891     1,271,171
       Less:  Treasury stock, 238,662 shares 
and 265,139 shares at cost respectively                (479,825)     (549,617)
                                                     ------------  -------------
                   Total stockholders' equity           332,066       721,554
                                                     ------------  -------------
                                                     $1,655,387    $2,546,692
                                                     ------------  -------------
</TABLE>

           See accompanying summary of accounting policies and notes
                     to consolidated financial statements.

                                        1



<PAGE>




                  ESSENTIAL RESOURCES, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENT OF OPERATIONS

                     Three months ended September 30, 1996
                                  (UNAUDITED)

<TABLE>
<S>                                                                <C>
SALES                                                              $1,187,542

COST OF SALES                                                         509,877
                                                                   ----------
          GROSS PROFIT                                                677,665
                                                                   ----------
OPERATING EXPENSES:

      Selling, general and administrative                             590,911
      Depreciation                                                      9,268
                                                                   ----------
          TOTAL OPERATING EXPENSES                                    600,179
                                                                   ----------

          OPERATING INCOME                                             77,486

OTHER INCOME (EXPENSE):

      Export grant                                                     39,610
      Loss on foreign currency transactions                            (6,640)
      Interest expense                                                (20,940)
                                                                   ----------

          NET INCOME BEFORE INCOME TAXES                               89,516

INCOME TAXES                                                           32,000
                                                                    ----------
NET INCOME                                                         $   57,516
                                                                   ----------

Earnings per common share - primary and fully diluted                   $0.02
                                                                   ----------

Weighted average common shares outstanding                          2,382,121

Weighted average common stock equivalents outstanding (options)     1,802,844
                                                                   ----------
Weighted average common shares outstanding and weighted 

      average common stock equivalents outstanding                  4,184,965
                                                                   ----------
</TABLE>

         See accompanying summary of accounting policies and notes to
                      consolidated financial statements.

                                        2


<PAGE>


                  ESSENTIAL RESOURCES, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                     Three months ended September 30, 1996
                                  (UNAUDITED)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                  Foreign
                                        Common stock     Additional   Retained    currency     Receivable                  Total
                                     -----------------    paid-in     earnings   translation     from      Treasury    stockholders'
                                      Shares    Amount    capital     (deficit)   adjustment    Collage      stock         equity
------------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>        <C>      <C>          <C>        <C>           <C>         <C>         <C>
   Balance, July 1, 1996             2,519,058  $2,519   $  863,960   $370,182     $63,778     ($488,548)  ($479,825)    $332,066

   Net income for the period                                            57,516                                             57,516

   Foreign currency translation
     adjustment                                                                    (41,984)                               (41,984)

   Issuance of shares pursuant to
     conversion of debt                170,200     170      370,530                                                       370,700

   Issuance of shares pursuant to
     exercise of warrants              165,826     166      115,834                                                       116,000

   Dividends                                                          (112,744)                                          (112,744)
------------------------------------------------------------------------------------------------------------------------------------
                                     2,855,084   2,855    1,350,324    314,954      21,794      (488,548)   (479,825)     721,554

   Purchase of treasury stock                                                                     69,792     (69,792)

------------------------------------------------------------------------------------------------------------------------------------
   Balance September 30, 1996        2,855,084  $2,855   $1,350,324   $314,954     $21,794     ($418,756)  ($549,617)    $721,554
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>






                See accompanying summary of accounting policies
                and notes to consolidated financial statements.

                                       3


<PAGE>

                  ESSENTIAL RESOURCES, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENT OF CASH FLOWS

                     Three months ended September 30, 1996
                                  (UNAUDITED)


<TABLE>
<S>                                                                <C>
CASH FLOWS FROM OPERATING ACTIVITIES

  NET INCOME                                                       $ 57,516
                                                                   ----------
Adjustments to reconcile net income to net cash provided by 
  operating activities:

     Depreciation                                                     9,268
     Loss on foreign currency transactions                            6,640
     Deferred income taxes                                              473
     Shares issued for services rendered                             23,200
     Foreign currency translation adjustment and other              (48,624)

     (Increase) decrease in:
        Receivable from factors                                      14,806
        Accounts receivable                                        (282,598)
        Inventories                                                (351,586)
        Prepaid expenses                                             78,941
        Deferred plantation management costs                        (58,058)
        Other current assets                                        (11,775)
        Other assets                                                (79,912)

     Increase (decrease) in:
        Accounts payable, accruals and other                        271,012
        Income taxes payable                                         32,543
                                                                   ----------
              Total adjustments                                    (395,670)
                                                                   ----------
              Net cash used in operating activities                (338,154)
                                                                   ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of property, plant and equipment                      (57,417)

  Investment in Queensland Essential Oils                            (8,719)
                                                                   ----------
              Net cash used in investing activities                 (66,136)
                                                                   ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Dividends paid                                                    (52,376)
  Loans payable                                                     346,242
                                                                   ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                           293,866
                                                                   ----------
NET DECREASE IN CASH                                               (110,424)
CASH, BEGINNING OF PERIOD                                           218,195
                                                                   ----------
CASH, END OF PERIOD                                                $107,771
                                                                   ----------
</TABLE>



                See accompanying summary of accounting policies
                and notes to consolidated financial statements.

                                       4


<PAGE>


                  ESSENTIAL RESOURCES, INC. AND SUBSIDIARIES

                 SUMMARY OF ACCOUNTING POLICIES - INFORMATION
                 AS OF SEPTEMBER 30, 1996 AND FOR THE PERIODS
                ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED

Organization and Business         Essential Resources, Inc. ("Essential"),
                                  through its wholly- owned subsidiaries,
                                  Collage International Health Pty Ltd.
                                  ("Collage International Health") and Essential
                                  Nature Products Pty Ltd. ("Essential Nature
                                  Products"), collectively referred to
                                  hereinafter as the "Company", develops,
                                  markets and distributes a wide variety of
                                  health, nutritional, beauty-aid and lifestyle
                                  products derived from the extracts and tissues
                                  of Asian-Pacific region plants, flowers and
                                  animals. The Company's products are sold
                                  primarily in duty-free and tax-free stores in
                                  Australia, New Zealand, Korea, Japan, Egypt,
                                  Qatar and the United Kingdom.

Interim Financial Statements      The financial statements for the Company
                                  have been prepared in accordance with
                                  generally accepted accounting principles for

                                  interim financial information and with the
                                  instructions to Form 10-Q and Article 10 of
                                  Regulation S- X.  Accordingly, they do not
                                  include all of the information and footnotes
                                  required by generally accepted accounting
                                  principles for complete financial statements. 
                                  In the opinion of management, all adjustments
                                  (consisting of normal recurring accruals)
                                  considered necessary for a fair presentation
                                  have been included.  Operating results for the
                                  three month period ended September 30, 1996
                                  are not necessarily indicative of the results
                                  that may be expected for the year ended June
                                  30, 1997.  All significant intercompany
                                  balances and transactions have been eliminated
                                  in consolidation.  For further information,
                                  refer to the audited consolidated financial
                                  statements of the Company as of June 30, 1996.

Principles of Consolidation       The consolidated financial statements include
                                  the accounts of Essential, and its
                                  wholly-owned Australian subsidiaries,
                                  Essential Nature Products and Collage
                                  International Health. All significant
                                  intercompany balances and transactions have
                                  been eliminated on consolidation.

                                       5


<PAGE>


                  ESSENTIAL RESOURCES, INC. AND SUBSIDIARIES

                 SUMMARY OF ACCOUNTING POLICIES - INFORMATION
                 AS OF SEPTEMBER 30, 1996 AND FOR THE PERIODS
                ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED

Change in Fiscal Year             In January 1996, the Company elected to
                                  change from a December 31 to a June 30
                                  year-end to correspond to the fiscal year of
                                  its Australian subsidiaries.

Earnings Per Common Share         Primary and fully diluted earnings per common
                                  share are computed using the treasury stock
                                  method, modified for stock options outstanding
                                  in excess of 20% of the total outstanding
                                  shares of common stock. Under this method, the
                                  aggregate number of shares outstanding
                                  reflects the assumed use of proceeds from the
                                  hypothetical exercise of the outstanding
                                  options and warrants, unless the effect on
                                  earnings is anti-dilutive. The assumed

                                  proceeds are used to repurchase shares of
                                  common stock at the average market value
                                  during the period to a maximum of 20% of the
                                  shares outstanding. The balance of the
                                  proceeds, if any, is used to reduce
                                  outstanding debt and invest in treasury bills
                                  with the assumed interest expense savings and
                                  interest income being added to the results of
                                  operations for the reported period.

                                  Fully diluted earnings per share also reflects
                                  the assumed use of proceeds from the
                                  hypothetical exercise of options to purchase
                                  common stock at the ending market price for
                                  the reported period.

Inventories                       Inventories are valued at the lower of cost or
                                  market. Cost for raw materials and finished
                                  goods are determined by the first-in,
                                  first-out (FIFO) method.

Property, Plant and Equipment     Assets are stated at cost. Depreciation and
                                  amortization is computed over the estimated
                                  useful lives of the assets on the
                                  straight-line method for financial reporting
                                  purposes.

Foreign Currency Translation      The Company's subsidiaries in Australia use
                                  the Australian dollar as the functional
                                  currency and translate all assets and
                                  liabilities at year-end exchange rates, all
                                  income and

                                       6


<PAGE>

                                       
                  ESSENTIAL RESOURCES, INC. AND SUBSIDIARIES

                 SUMMARY OF ACCOUNTING POLICIES - INFORMATION
                 AS OF SEPTEMBER 30, 1996 AND FOR THE PERIODS
                ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED

                                  expense accounts at average rates and record
                                  adjustments resulting from the translation as
                                  a separate component of stockholders' equity
                                  titled, "Foreign currency translation
                                  adjustments."

Export Grants                     Grants received from the Australian
                                  government relating to expenses incurred in
                                  connection with export market development are

                                  recognized as income when conditions for
                                  receipt are met.

Taxes on Income                   The Company does not provide taxes on
                                  unremitted earnings of its Australian
                                  subsidiaries since the Company's intention is
                                  to indefinitely reinvest these earnings.

Fair Value of 
Financial Instruments             The carrying value of financial instruments at
                                  June 30, 1996, including cash, trade and other
                                  receivables, accounts payable, other payables
                                  and loans payable to related parties,
                                  approximate fair value due to the timing of
                                  expected settlement of these financial
                                  instruments.

                                       7


<PAGE>


                  ESSENTIAL RESOURCES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - INFORMATION
                 AS OF SEPTEMBER 30, 1996 AND FOR THE PERIODS
                ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED
                                       
1. Receivables from Factors  The Company factors a significant portion of its
                             trade accounts receivable, with recourse, up to
                             maximums established by the factors for individual
                             accounts.

2. Inventories               Inventories are summarized as follows:

                                               September 30, 1996  June 30, 1996
                                                  (Unaudited)
                             -------------------------------------------------
                             Raw materials           $ 375,536       $ 117,141
                             Packaging and supplies    154,645         108,140
                             Finished goods            151,002         104,316
                             -------------------------------------------------
                             Total                   $ 681,183       $ 329,597
                                                     =========       =========

3. Property, Plant and
Equipment                    Property, plant and equipment are summarized by
                             major classifications as follows:

                                               September 30, 1996  June 30, 1996
                                                  (Unaudited)
                             -------------------------------------------------
                             Plant and equipment      $ 49,864       $ 40,765

                             Display equipment          42,894         31,978
                             Office equipment           41,598         10,065
                             Furniture and fixtures     10,499          7,703
                             Motor vehicles              2,066          2,066
                             Equipment under capital
                             leases                    164,952
                             ------------------------------------------------
                                                       311,873         92,577
                             Less:
                             Accumulated depreciation   25,554         16,286
                                                      --------       --------
                             Total                    $286,319       $ 76,291
                                                      ========       ========

4. Dividends Payable         On September 12, 1996, dividends payable on October
                             30, 1996 of $.05 per share of common stock (on a
                             post-split basis) were declared.

5. Commitments and
   Contingencies         (a) In August 1996, the Company entered into an
                             agreement to purchase 200,000 kilograms of tea tree
                             oil annually for a period of ten years.

                                       8

<PAGE>


                  ESSENTIAL RESOURCES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - INFORMATION
                 AS OF SEPTEMBER 30, 1996 AND FOR THE PERIODS
                ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED

                         (b) The Company has an oral agreement (which terminates
                             in April 1997) to purchase for approximately
                             $1,000,000 the 248.6 acres of plantation land
                             currently being leased by Queensland Oils. Closing
                             is subject to execution of an agreement
                             satisfactory to the Company, delivery of clear
                             title to the property and the securing of
                             Australian Government Foreign Investment Review
                             Board approval (Australian law prohibits ownership
                             of land by foreign corporations without government
                             approval). The Company does not currently possess
                             sufficient funds for this purchase and is currently
                             seeking equity and/or asset based financing to
                             purchase the property. There can be no assurance
                             that the Company will be able to obtain such
                             funding.

                         (c) The Company entered into a sales agreement as of
                             November 15, 1996 with C.B. & P. Pty Ltd.

                             ("C.B.P."), which is an overseas wholly-owned
                             subsidiary of China National Export Bases
                             Development Corporation, a state owned enterprise
                             of the Peoples Republic of China.  The contract
                             covers the period November 15, 1996 to February 15,
                             1998 (a total of 27 months) for the supply
                             principally of Omega-3 oil capsules under the
                             Company's brand -Mother Nature.  The initial order
                             is for approximately $1,600,000 which is scheduled
                             to be shipped in December 1996.  The agreement
                             provides for a minimum purchase of $3,750,000 for
                             the first 15 months of the agreement.

6. Stockholders' Equity      Stock Split 

                             On August 14, 1996, the Company's Board
                             of Directors approved a two-for-one split of the
                             common stock. The additional shares resulting from
                             the stock split were distributed on September 23,
                             1996, to all stockholders of record at the close of
                             business on August 26, 1996. The consolidated
                             balance sheet as of September 30, 1996 and the
                             consolidated statement of stockholders' equity for
                             the three months ended September 30, 1996 reflect
                             the recording of the stock split as if it had
                             occurred on January 1, 1996. Further, all
                             references in the consolidated financial statements
                             to average number of shares outstanding and related
                             prices, per share amounts and stock option data
                             have been restated for all periods to reflect the
                             stock split.

                                       9


<PAGE>


                  ESSENTIAL RESOURCES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - INFORMATION
                 AS OF SEPTEMBER 30, 1996 AND FOR THE PERIODS
                ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED

7. Related Party
   Transactions              In January 1996, the Company acquired assets
                             consisting of inventories, receivables, plant and
                             equipment from Collage in consideration of the
                             issuance of 448,148 shares of common stock. In June
                             1996, Collage agreed to transfer 238,662 of such
                             shares to the Company in consideration of the
                             Company's assumption of payment of certain trade
                             payables of Collage totalling approximately
                             $479,825 which has been classified as treasury

                             stock at June 30, 1996. At September 30, 1996,
                             $27,980 of such payables are classified as
                             long-term since certain vendors have agreed to
                             accept payment from the proceeds of sale of the
                             treasury shares. In addition, in July 1996, Collage
                             pledged the balance (185,338) of its shares of the
                             Company's common stock as security for monies owed
                             by Collage to the Company for purchases of goods
                             totalling $488,548. The $488,548 receivable from
                             Collage, a stockholder, has been classified as a
                             reduction of stockholders' equity at June 30, 1996.
                             Under the agreement the Company is entitled to 1/7
                             of the 185,338 shares pledged each month commencing
                             September 1996, for each month in which Collage
                             fails to pay the Company for the indebtedness.
                             Collage failed to pay the Company in September and
                             October and, accordingly, the Company is entitled
                             to 52,954 of such shares to date which have been
                             classified as treasury stock as of September 30,
                             1996.  In addition, the allocable portion of the
                             receivable from Collage has been reclassified to
                             treasury stock.

                             The accompanying consolidated statement of
                             operations for the three months ended September 30,
                             1996 does not include any compensation to the
                             Company's Chief Executive Officer since the Company
                             did not pay and it did not accrue any compensation
                             to him since it was not obligated to do so. An
                             employment agreement for the period subsequent to
                             September 30, 1996 is currently being negotiated.

Statements of Cash Flows     Supplemental Disclosures of Cash Flow Information:
                             -------------------------------------------------
                             Cash paid during the three months ended September
                             30, 1996 for:

                             Interest            $19,500
                             Taxes               -

                                      10
                                       

<PAGE>


                  ESSENTIAL RESOURCES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - INFORMATION
                 AS OF SEPTEMBER 30, 1996 AND FOR THE PERIODS
                ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED

                             Supplemental Schedule of Non-Cash Investing and
                             Financing Activities:


                             Capital lease obligations of $161,879 were incurred
                             for equipment during the three months ending
                             September 30, 1996.

                             During the quarter ended September 30, 1996 the
                             Company issued 170,200 shares pursuant to
                             conversion of debt in the amount of $370,700 and
                             issued 165,826 shares pursuant to the exercise of
                             warrants for services rendered in the quarter
                             ($23,200) and services to be rendered in later
                             quarters ($92,800).

                                      11
                                       

<PAGE>


                  ESSENTIAL RESOURCES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - INFORMATION
                 AS OF SEPTEMBER 30, 1996 AND FOR THE PERIODS
                ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED

Item 2.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations

           Effective January 1, 1996 the Company acquired certain assets of
Collage in a transaction accounted for as a reverse acquisition. The following
discussion and analysis of financial condition and results of operations are
for the three month period ending September 30, 1996 (post acquisition)
compared to the three month period ending September 30, 1995 (pre-acquisition).

<TABLE>
<CAPTION>
(dollars in thousands)    Three months ending     Three months ending
                          September 30, 1996      September 30, 1995
                              (Unaudited)             (Unaudited)
                          -------------------------------------------
<S>                       <C>                     <C>
Sales                         $  1,187                $    728

Cost of Sales                      510                     239
                               -------                --------
Gross Profit                       677                     489

Operating Expenses                 600                     400
                               -------                --------
Operating Income                    77                      89

Other Income/(Expense)              12                      (3)
                               -------                --------


Net Income Before Taxes             89                      86

Income Taxes                        32                      30
                               -------                --------
Net Income                    $     57                $     56
                               =======                ========
</TABLE>

           Results of Operations

           Operating revenues increased by approximately $459,000 (62.9%)
for the three months ended September 30, 1996 as compared to the same period
ended September 30, 1995. The increase in sales was primarily to sales to
additional customers, in particular Korean Airlines, as a result of increased
sales and marketing efforts.

           The net increase in gross margin of approximately $188,000 resulted
from an increase in gross margin from additional sales of approximately $262,000
offset by a reduction in gross margin percentage of approximately $74,000. The
reduction in the gross margin percentage was due to the pricing strategies
utilized to increase sales volume to new customers. The Company anticipates
sustaining the gross margin for the three months ending September 30, 1996 as
the Company grows in revenues.

           Operating expenses increased by approximately $200,000 due primarily
to an increase in sales and marketing expenses to support additional sales and
marketing efforts to generate sales.

                                      12


<PAGE>


                  ESSENTIAL RESOURCES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - INFORMATION
                 AS OF SEPTEMBER 30, 1996 AND FOR THE PERIODS
                ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED

           Other income and expenses increased by approximately $15,000
primarily due to an increase in income from export grants.

           Liquidity and Capital Resources

           The Company's working capital increased by $152,000 from June 30,
1996 to September 30, 1996 primarily due to an increase in current assets of
approximately $592,000 offset by an increase in current liabilities of
approximately $271,000.

           The increase in current assets consisted primarily of an increase in
accounts receivable by approximately $283,000 and an increase in inventory of
$350,000 offset by a reduction in cash of $110,000. The increase in current
liabilities were primarily due to an increase in accounts payable by

approximately $271,000, a decrease in loans to related parties by $257,000
(principally as a result of converting of a $300,000 stockholder loan, net of
additional advances of $46,000). In addition, the Company received loans of
$300,000 for the three months ended September 30, 1996.

           Accounts payable, long-term was reduced by $70,700 due to a vendor
accepting the Company's stock in payment.

                                      13



<PAGE>


                  ESSENTIAL RESOURCES, INC. AND SUBSIDIARIES

Part II.     Other Information

             Item 1.  Legal Proceedings - None

             Item 2.  Changes in Securities - None

             Item 3.  Defaults upon Senior Securities - None

             Item 4.  Submission of Matters to a Vote of Securityholders - None

             Item 5.  Other Information - None

             Item 6.  Exhibits and Reports to Form 8-K

                      (a) Exhibits

                          Exhibit 1.  Distributorship Agreement between Collage
                          International Health Pty and C.B. & P. Pty Ltd

                      (b) Reports on Form 8-K - None

                                      14


<PAGE>


                  ESSENTIAL RESOURCES, INC. AND SUBSIDIARIES
                  
                     
SIGNATURES

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

Essential Resources, Inc.              December 12, 1996
-------------------------
Registrant

By: /s/ Phillip G. Cook
    -------------------
    Phillip G. Cook
    President, Chief Executive
    Officer, Chief Financial
    Officer and Chairman of the
    Board and a Director (Principal
    Executive and Financial Officer)


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