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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 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, 1997

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

            For the transition period from __________________ to _______________

                         Commission file number: 0-27556

                           NETWORK EVENT THEATER, INC.
        (Exact Name of Small Business Issuer as Specified in Its Charter)

                 Delaware                                13-3864111
      (State or Other Jurisdiction of       (I.R.S. Employer Identification No.)
      Incorporation or Organization)

   529 Fifth Avenue, New York, New York                    10017
 (Address of Principal Executive Offices)                (Zip Code)

                                 (212) 622-7300
              (Registrant's Telephone Number, Including Area Code)

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

Yes __X__    No ___

At October 30, 1997 there were 9,861,323 shares of Common Stock,  $.01 par value
outstanding.

Transitional Small Business Disclosure Format (check one):

Yes ___    No __X__

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<PAGE>

                           Network Event Theater, Inc.
                                   Form 10-QSB
                                      Index

                                                                           Page
PART I--FINANCIAL INFORMATION                                             Number
                                                                          ------

Item 1     Financial Statements

           Consolidated balance sheets - September 30, 1997
              (unaudited) and June 30, 1997.................................   1

           Consolidated statements of operations - three months
               ended September 30, 1997 and 1996 (unaudited)................   2

           Consolidated statements of cash flows - three months ended
              September 30, 1997 and 1996 (unaudited).......................   3

           Consolidated statement of stockholders' equity - three
              months ended September 30, 1997 (unaudited)...................   4

           Notes to consolidated financial statements.......................   5

Item 2  Management's Discussion and Analysis of Financial Condition
         and Results of Operations..........................................   8

PART II--OTHER INFORMATION

Item 6  Exhibits and Reports on Form 8-K....................................  10

Signatures .................................................................  11

<PAGE>

                                     PART I
                              FINANCIAL STATEMENTS

Item 1. Financial Statements

                           Network Event Theater, Inc
                           Consolidated Balance Sheets
                                  (In thousands)

<TABLE>
<CAPTION>

                                                                   September 30,   June 30,
                                                                       1997          1997
                                                                   -------------   --------
                                                                    (Unaudited)
<S>                                                                 <C>           <C>     
ASSETS
Current Assets:
   Cash and cash equivalents ....................................   $  1,507      $  4,185
   Accounts receivable, net of allowance for doubtful                           
     accounts of $81 and $73 at September 30, 1997                                                        
     and June 30, 1997, respectively ............................      4,372         1,439
   Prepaid expenses .............................................      1,402           341
   Deposits and other current assets ............................         81           120
                                                                    --------      --------
Total current assets ............................................      7,362         6,085
Property and equipment, net of accumulated amortization                         
   of $1,763 and $1,537 at September 30, 1997 and                                                   
   June 30, 1997, respectively ..................................      4,991         4,718
Intangible assets, net of accumulated amortization of $485                      
   and $367 at September 30, 1997 and June 30, 1997, respectively      6,228         6,339
Notes receivable ................................................         34            33
                                                                    --------      --------
Total assets ....................................................   $ 18,615      $ 17,175
                                                                    ========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities:                                                  
   Accounts payable .............................................   $    683      $    542
   Accrued advertising costs ....................................      1,946          --
   Accrued employee compensation ................................        294           321
   Accrued professional fees ....................................        163           320
   Other accrued expenses .......................................        332           484
   Deferred revenues ............................................      1,538           301
   Current portion of long-term debt ............................        826           949
                                                                    --------      --------
Total current liabilities .......................................      5,782         2,917
Long-term debt ..................................................      5,354         5,275
Commitments and contingencies ...................................       --            --
Stockholders' Equity:                                                           
   Preferred stock, $.01 par value, 1,000 shares authorized,                                              
     no shares issued and outstanding ...........................       --            --
   Common stock, $.01 par value, 17,000 shares authorized,                      
     9,861 shares issued and outstanding at September 30, 1997                         
     and June 30, 1997 ..........................................         99            99
   Additional paid-in capital ...................................     20,421        20,421
   Accumulated deficit ..........................................    (13,041)      (11,537)
                                                                    --------      --------
Total stockholders' equity ......................................      7,479         8,983
                                                                    --------      --------
Total liabilities and stockholders' equity ......................   $ 18,615      $ 17,175
                                                                    ========      ========
</TABLE>                
                       See notes to consolidated financial statements.


                                       1
<PAGE>

                           Network Event Theater, Inc.
                      Consolidated Statements of Operations
                    (In thousands, except per share amounts)
                                   (Unaudited)

                                                         Three months ended
                                                            September 30,
                                                       ---------------------
                                                        1997          1996
                                                        ----          ----
Net Revenues ..................................       $ 2,953        $ 1,028
Operating Expenses                                                  
   Selling, general and administrative expenses         3,268          1,025
   Corporate expenses .........................           634            237
   Depreciation and amortization ..............           394             97
                                                      -------        -------
Total operating expenses ......................         4,296          1,359
                                                      -------        -------
Loss from operations ..........................        (1,343)          (331)
Interest income ...............................            40             52
Interest expense ..............................          (155)           (18)
                                                      -------        -------
Loss before provision for income taxes ........        (1,458)          (297)
Provision for income taxes ....................            46             26
                                                      -------        -------
Net loss ......................................       $(1,504)       $  (323)
                                                      =======        =======
Net loss per common share .....................       $ (0.15)       $ (0.04)
                                                      =======        =======
Weighted average common shares outstanding ....         9,861          8,654
                                                      =======        =======
                                                               
                 See notes to consolidated financial statements.


                                       2
<PAGE>


                           Network Event Theater, Inc.
                      Consolidated Statements of Cash Flows
                                 (In thousands)
                                   (Unaudited)

                                                              Three months ended
                                                                 September 30,
                                                            --------------------
                                                            1997          1996
                                                            ----          ----
Cash Flows From Investing Activities
Net loss ...........................................      $(1,504)      $  (323)
Adjustments to reconcile net loss to net cash                         
 used in operating activities:                                          
   Provision for bad debts .........................            9          --
   Depreciation and amortization ...................          394            97
   Changes in assets and liabilities:                                          
     Increase in prepaid expenses ..................       (1,061)         --
     Decrease in deposits and other current assets .           39             9
     Increase in accounts receivable ...............       (2,942)         --
     Increase (decrease) in accounts payable .......          141          (324)
     Increase in accrued advertising costs .........        1,946          --
     Decrease in accrued employee compensation .....          (27)         --
     Decrease in accrued professional fees .........         (157)         --
     Decrease in other accrued expenses ............         (152)         --
     Increase in deferred revenues .................        1,237          --
                                                          -------       -------
Net cash used in operating activities ..............       (2,077)         (541)
Cash Flows From Investing Activities                                
   Capital expenditures ............................         (556)         (274)
   Notes receivable ................................           (1)         --
   Payment for business acquisitions ...............         --          (5,045)
   Sale of investments .............................         --           2,914
                                                          -------       -------
Net cash used in investing activities ..............         (557)       (2,405)
Cash Flows From Financing Activities                                  
                                                                      
   Proceeds from long-term debt ....................          125         4,250
   Repayment of long-term debt .....................         (169)         --
                                                          -------       -------
Net cash (used in) provided by financing activities           (44)        4,250
                                                          -------       -------
Net (decrease) increase in cash and cash equivalents       (2,678)        1,304
Cash and cash equivalents at beginning of period ...        4,185           267
                                                          -------       -------
Cash and cash equivalents at end of period .........      $ 1,507       $ 1,571
                                                          =======       =======
Supplementary cash flow information:                         
   Cash paid for interest ..........................      $   105       $    18
                                                          =======       =======
   Cash paid for income taxes ......................      $    42       $  --
                                                          =======       =======
   Debt assumed in connecction with acquisitions ...      $  --             750
                                                          =======       =======
                                                                
                 See notes to consolidated financial statements.


                                       3
<PAGE>

                           Network Event Theater, Inc.
                 Consolidated Statement of Stockholders' Equity
                For the period July 1, 1997 to September 30, 1997
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                      
                                               Common Stock       Additional
                                          ----------------------    Paid-in    Accumulated
                                           Shares        Amount     Capital      Deficit        Total
                                           ------        -------    ------       -------       ------
<S>                                         <C>            <C>      <C>         <C>            <C>   
Balances at June 30, 1997..............     9,861          $99      $20,421     $(11,537)      $8,983
Net loss...............................       --            --          --        (1,504)      (1,504)
                                            -----          ---      -------     --------       ------
Balances at September 30, 1997.........     9,861          $99      $20,421     $(13,041)      $7,479
                                            =====          ===      =======     ========       ======

</TABLE>

                 See notes to consolidated financial statements.


                                       4
<PAGE>

                          Network Event Theater, Inc.
                   Notes to Consolidated Financial Statements
                               September 30, 1997
                                  (Unaudited)

1.   Organization and Basis of Presentation

     The accompanying  consolidated financial statements include the accounts of
Network Event Theater,  Inc. ("NET") and its wholly-owned  subsidiaries American
Passage Media, Inc. ("American  Passage"),  Campus Voice, Inc. ("Campus Voice"),
Beyond the Wall, Inc.  ("Beyond the Wall") and Pik:Nik Media,  Inc.  ("Pik:Nik")
(collectively,  the "Company").  All significant intercompany  transactions have
been eliminated.

     The Company completed its Initial Public Offering in April,  1996,  whereby
it sold common stock and  warrants  and  realized net proceeds of  approximately
$9.7 million.

     The  Company  was  organized  to  develop,  own and  operate a  proprietary
national network of theaters on college  campuses (the  "Network").  The Network
delivers  entertainment and educational events via satellite for display through
high  resolution  video  projectors on movie theater sized screens.  The Company
presently  provides a comprehensive  marketing service to advertisers,  sponsors
and  entertainment  companies  by helping  them  target  young adult and college
audiences  through a  variety  of media,  some of which are  proprietary  to the
Company,  including  the  sponsorship  of events  presented on the Network,  the
placement of advertisements in college  newspapers,  the placement of posters on
general and  proprietary  bulletin and wallboards on college  campuses,  and the
distribution of free postcards at selected venues, both on and off campuses.

     The accompanying  consolidated  financial  statements have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information and with the  instructions to Form 10-QSB and Item 310 of Regulation
S-B. Accordingly, they do not include all 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 an interim period are not  necessarily  indicative of the
results  that may be  expected  for the year ended June 30,  1998.  Because  the
Company earns most of its revenues during the academic year  (September  through
May), the Company's second and third quarters generally reflect higher levels of
revenues  than  are  earned  in the  first  and  fourth  quarters.  For  further
information,  refer  to the  consolidated  financial  statements  and  footnotes
thereto  included  in  Company's  Form 10-KSB for the fiscal year ended June 30,
1997 filed with the Securities and Exchange Commission on September 29, 1997.

2.  Pro Forma Financial Data

     The following  unaudited pro forma  information  for the three months ended
September 30, 1996 is presented as if the Company had completed the acquisitions
of American  Passage,  Campus  Voice,  Beyond the Wall and Pik:Nik as of July 1,
1996:

                                                            Three months ended
                                                            September 30, 1996
                                                            -------------------
         Net revenue......................................      $1,987,000
         Net loss applicable to common stock..............        (783,000)
         Net loss per common share........................           (0.09)
         Common shares outstanding........................       8,654,000

     The pro forma  information  for the three months ended  September  30, 1996
above is not necessarily indicative of the results of operations that would have
occurred had the transactions actually been made as of July 1, 1996.


                                       5
<PAGE>

                          Network Event Theater, Inc.
             Notes to Consolidated Financial Statements (Continued)
                               September 30, 1997
                                  (Unaudited)

3.  Long-Term Debt

     A summary of long-term debt is as follows:

                                                  September 30,        June 30,
                                                      1997              1997
                                                   ----------       -----------
Note Payable to Bank (A) .....................     $3,500,000       $ 3,500,000
Subordinated Promissory Note (B) .............        375,000           469,000
Junior Secured Promissory Notes ( C) .........      1,720,000         1,671,000
Senior Indebtedness - Working Capital Line (D)        385,000           360,000
Other (E) ....................................        200,000           224,000
                                                   ----------       -----------
                                                    6,180,000         6,224,000
Less current portion .........................       (826,000          (949,000)
                                                   ----------       -----------
                                                   $5,354,000       $ 5,275,000
                                                   ==========       ===========
                                                             
     (A) In September  1996,  in  conjunction  with the  acquisition  of certain
assets,  American  Passage  entered into a five year $3.5 million bank loan (the
"Loan").  The  Loan  is  secured  by all of  American  Passage's  assets  and is
guaranteed by NET. The Loan is payable in quarterly  installments with the final
installment  due in September 2001. In August 1997, the bank agreed to delay the
principal  payments  aggregating  $350,000 due in June 1997 and December 1997 to
the final maturity of the loan in September 2001. Interest is payable monthly at
a variable  rate of  interest  set each  ninety  days based  either on 400 basis
points above LIBOR for U.S.  Dollar deposits of ninety day maturity or 100 basis
points above the prime rate of the bank. At September 30, 1997, the current rate
of interest was 9.8% per annum.

     (B)  Additionally,  in September 1996,  American Passage issued a two-year,
unsecured subordinated  promissory note to the seller in the principal amount of
$750,000 bearing interest thereon at the rate of 8% per year, guaranteed by NET.
The note is payable in eight  equal  quarterly  installments  of  principal  and
accrued interest commencing in December 1996.

     (C ) In February  1997,  in  conjunction  with the  acquisition  of certain
assets, Campus Voice issued two junior secured promissory notes in the aggregate
amount of  $1,563,000  with a maturity date in December  2006.  The debt accrues
interest at the rate of 12.0%, but no interest or principal  payments are due to
be paid until June 1999.  Subsequent to such date,  interest is payable  monthly
and principal  payments must be made annually  until full  repayment in December
2006.  Accrued  interest of $117,000 and $68,000 at September  30, 1997 and June
30, 1997, respectively is included in the outstanding amount shown above.

     (D) In connection with the Campus Voice  acquisition,  the seller agreed to
advance up to $660,000 of senior  indebtedness which was to be used as a working
capital line for Campus Voice.  This senior debt accrues interest at the rate of
8.0% per annum and  requires  that the  interest  be paid  monthly and is due in
December  1999.  Campus  Voice is  obligated  to apply  its Free Cash  Flow,  as
defined,  to  prepayment of the senior  indebtedness.  As of September 30, 1997,
$385,000 of such senior indebtedness had been advanced to Campus Voice.

     All of the Campus Voice debt is secured  solely by the assets and cash flow
of Campus Voice and is not an obligation of NET. If Campus Voice were to default
on any of its debt,  the lender  could  foreclose  on the assets and future cash
flows of Campus Voice,  but could not look to any of the assets or cash flows of
either NET or any of its other subsidiaries.

     (E) In April 1997, in conjunction  with the  acquisition of certain assets,
Pik:Nik  assumed  notes  to  certain  of  the  seller's  creditors,  aggregating
$240,000. These notes bear interest at the rate of 8.0% per annum. Principal and


                                       6
<PAGE>

                          Network Event Theater, Inc.
             Notes to Consolidated Financial Statements (Continued)
                               September 30, 1997
                                  (Unaudited)


accrued interest are payable in monthly installments over 36 months,  commencing
in June 1997. The final maturity of the notes is in May 2000.

     At September 30, 1997,  the aggregate  principal  amounts of long-term debt
due during the next five years are as follows:

         Year Ending June 30,

         1998......................................................  $  826,000
         1999......................................................     700,000
         2000......................................................   1,281,000
         2001......................................................     876,000
         2002 and thereafter.......................................   2,497,000
                                                                     ----------
                                                                     $6,180,000
                                                                     ==========
4.  Loss Per Common Share

     Loss per common  share is based on the net loss for the  period  divided by
the  weighted  average  number of shares of  common  stock  outstanding  for the
period.  Shares  issuable upon the exercise of all common stock  equivalents and
other  potentially  dilutive  securities  are not  included in the  accompanying
consolidated statements of operations since their effect is not dilutive.

     In February 1997, the Financial Accounting standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS 128"). FAS
128  establishes  standards  for  computing  and  presenting  earnings per share
("EPS") and supersedes APB Opinion No. 15,  "Earnings Per Share" ("Opinion 15").
FAS 128 replaces the  presentation  of primary EPS with a presentation  of basic
EPS which  excludes  dilution  and is computed by dividing  income  available to
common  stockholders by the weighted average number of shares outstanding during
the period.  This  statement  also requires dual  presentation  of basic EPS and
diluted  EPS on the face of the  income  statement  for all  periods  presented.
Diluted EPS is computed  similarly to fully  diluted EPS pursuant to Opinion 15,
with some  modifications.  FAS 128 is effective for financial  statements issued
for periods ending after December 15, 1997,  including  interim  periods.  Early
adoption is not permitted and the statement  requires  restatement  of all prior
period  EPS data  presented  after the  effective  date.  The  Company  does not
anticipate that the implementation of FAS 128 will have a material impact on the
Company's net loss or net loss per share.


                                       7
<PAGE>

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

     The  following  discussion  of  the  financial  condition  and  results  of
operations of the Company  should be read in conjunction  with the  consolidated
financial  statements  and  related  notes  thereto.  The  following  discussion
contains   certain   forward-looking   statements   that   involve   risks   and
uncertainties.  The Company's actual results could differ  materially from those
discussed  herein.  Factors that could cause or contribute  to such  differences
include, but are not limited to, the ability to obtain financing, integration of
recently  completed  acquisitions,  the management of growth,  changing consumer
tastes and general economic conditions.  The Company undertakes no obligation to
publicly  release  the  results  of  any  revisions  to  these   forward-looking
statements that may be made to reflect any future events or circumstances.

     The Company's consolidated financial statements are not directly comparable
from  period to period due to  acquisition  activity.  The  following  financial
analysis  compares  the  three  months  ended  September  30,  1997  (unaudited)
hereinafter referred to as ("1997") to the three months ended September 30, 1996
(unaudited) hereinafter referred to as ("1996").

Results of Operations

     In 1997,  net revenues  were  $2,953,000 as compared to $1,028,000 in 1996.
The increase of  $1,925,000 is primarily  due to the  acquisition  of Beyond the
Wall, which accounted for $984,000 of the increase.  Additionally,  net revenues
for Campus  Voice and  Pik:Nik  accounted  for  approximately  $376,000  of that
increase.  The remaining  $565,000 of the increase was generated by revenues for
American  Passage for a full quarter in 1997 as compared to a two week period in
1996.

     In 1997,  selling,  general and administrative  expenses were $3,268,000 as
compared to $1,025,000 in 1996.  The increase of $2,243,000 was primarily due to
the  acquisitions  of  American  Passage,  Beyond  the  Wall and  Pik:Nik  which
accounted for  approximately  $739,000,  $654,000 and $534,000 of this increase,
respectively. The remaining increase of $316,000 was due to the expansion of the
theater  network and  increases in the number of sales,  management  and support
staff.

     In 1997,  corporate expenses were $634,000 as compared to $237,000 in 1996.
The increase of $397,000 is due to increased staff and overhead expenses.

     In 1997,  depreciation and amortization was $394,000 as compared to $97,000
in 1996, representing an increase of $297,000. The increase was primarily due to
acquisitions of Campus Voice,  Pik:Nik and Beyond the Wall,  which accounted for
$170,000 of the total.  The  remainder of $127,000 was the result of  additional
Network theater installations.

     In 1997, total operating expenses were $4,296,000 as compared to $1,359,000
in 1996.  The increase of $2,937,000  was primarily due to the  acquisitions  of
Campus  Voice,  Pik:Nik  and  Beyond  The  Wall.  Operating  expenses  for these
subsidiaries were approximately $148,000,  $552,000 and $661,000,  respectively.
Additionally,  American Passage  reported three months of operating  expenses in
1997 as  compared  with 2 weeks in 1996,  which  accounted  for  $833,000 of the
increase.  The  remaining  increase of $743,000 was due to the  expansion of the
theater  network and  increases in the number of sales,  management  and support
staff.

     In 1997,  interest  income was $40,000 as compared to $52,000 in 1996.  The
income represents interest on cash balances.

     In 1997,  interest  expense  was  $155,000  as compared to $18,000 in 1996.
Interest  expense  relates  primarily  to  the  debt  incurred  related  to  the
acquisitions of American Passage, Campus Voice, and Pik:Nik.

     In 1997,  provision  for income taxes was $46,000 as compared to $26,000 in
1996. The provision represents state taxes imposed on revenues and net assets.

     In 1997,  net loss was  $1,504,000  as compared  to  $323,000 in 1996.  The
increase  of  $1,181,000  was a result  of  increased  operating  expenses  from
acquisitions,  an increase in the number of management,  sales and support staff
resulting therefrom and the costs of further expansion of the theater Network.


                                       8
<PAGE>

Liquidity and Capital Resources

     The Company  consummated an initial public offering of its common stock and
warrants on April 9, 1996 (the "Initial Public Offering"),  pursuant to which it
raised net proceeds of approximately $9.7 million, of which $500,000 was used to
repay  previously  existing  Company  indebtedness.  Since  the  Initial  Public
Offering,  the  Company  has  purchased  approximately  $1.5  million of Network
theater equipment and invested approximately $1.3 million in the acquisitions of
American  Passage,  Campus Voice,  Beyond the Wall and Pik:Nik (the remainder of
the cash portion of the purchase  prices having been  borrowed).  The balance of
the proceeds have otherwise been used to fund the Company's operations.

     On June 24, 1997, the Company sold an aggregate of 1,015,873  shares of its
common  stock.  The net  proceeds of that sale of $3.8 million are being used to
fund the Company's operations.

     The Company used approximately $2.1 million in operating activities in 1997
as compared to $541,000 in 1996.  The  increase of  approximately  $1.6  million
represents the increase in net loss,  accounts  receivable and prepaid  expenses
offset  substantially  by  increases  in  short-term  liabilities.  Cash used in
investing activities in 1997 of approximately  $557,000 is composed primarily of
capital expenditures. Cash used in financing activities in 1997 is primarily due
to the repayment of long-term debt.

     The Company's  primary capital  requirement  with respect to its operations
have been for  acquisitions  and for the  purchase and  installation  of theater
equipment  for its Network of campus  theaters.  In the event that the Company's
plans  and  assumptions  with  respect  to its  Network  change  or  prove to be
inaccurate,  if its assumptions with respect to American Passage,  Campus Voice,
Beyond the Wall and Pik:Nik being able to fund their operations and to make debt
service  payments out of their own cash flow prove to be  inaccurate,  or if the
working  capital  or  capital  expenditure  requirements  of Beyond  the Wall or
Pik:Nik prove to be greater than  anticipated,  the Company could be required to
seek additional  financing.  The inability to obtain  additional  financing will
have a material adverse effect on the Company,  including possibly requiring the
Company to significantly curtail or cease its operations.

     As of September  30, 1997,  the Company had  approximately  $1.5 million in
cash and cash  equivalents.  The  Company  believes  that such  amounts  will be
sufficient  to  fund  working  capital,  including  debt  service  and  interest
requirements, for the year ended June 30, 1998. The Company's ability to improve
its operation  will be subject to prevailing  economic  conditions and to legal,
financial, business,  regulatory,  industry and other factors, many of which are
beyond the Company's control.

     The Company may also seek additional  debt or equity  financing to fund the
cost of  additional  expansion  of its  Network  and the cost of  developing  or
acquiring additional media and marketing services businesses. To the extent that
the Company finances its requirements  through the issuance of additional equity
securities,  including  the  exercise of warrants  issued in the Initial  Public
Offering,  any such  issuance  would result in dilution to the  interests of the
Company's shareholders.

     Additionally,  to the extent that the Company incurs indebtedness or issues
debt  securities in connection  with financing  activities,  the Company will be
subject to all of the risks associated with incurring substantial  indebtedness,
including  the risk  that  interest  rates  may  fluctuate  and cash flow may be
insufficient to pay principal and interest on any such indebtedness. The Company
has  no  current  arrangements  with  respect  to,  or  sources  of,  additional
financing.  There can be no  assurance  that any  additional  financing  will be
available to the Company on acceptable terms, if at all.


                                       9
<PAGE>

                                     PART II

                               OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K.

     (a)  Exhibits.

         27.1  Financial Data Schedule.

     (b) Reports on Form 8-K.

         None.


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<PAGE>

                                   SIGNATURES

     In accordance with the requirements of the Securities Exchange Act of 1934,
the  registrant  has  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

November 3, 1997

                                               BY:       /S/ HARLAN D. PELTZ
                                                   -----------------------------
                                                           Harlan D. Peltz
                                                        Chairman of the Board

                                                     and Chief Executive Officer

                                               BY:       /S/ BRUCE L. RESNIK
                                                   -----------------------------
                                                           Bruce L. Resnik
                                                      Executive Vice President

                                                     Chief Financial Officer and
                                                      Chief Accounting Officer



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