SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
(MARK ONE)

_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 SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934
         For the Transition period from                  to
         Commission File Number:  33-15097-D
                          BASIC NATURAL RESOURCES, INC.
             (Exact name of registrant as specified in its charter)

          Colorado                                 84-10457105
(State or other Jurisdiction of                  (I.R.S. Employer
 incorporation or organization)               Identification Number)


      2450 South Shore Boulevard
       Suite 210, Houston Texas                                77573
(Address of Principal Executive Offices)                     (Zip Code)

        Registrant's telephone number, including area code: (713) 877-8080

     Check whether the issuer (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. Yes No X

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
stock as of the latest practicable date.

Common Stock, $.00005 Par Value                          2,376,287
                                              (Shares outstanding as of
                                                  September 30, 1996)

Transitional Small Business Disclosure Format (Check One)   Yes        No   X



                                        1

<PAGE>


                          BASIC NATURAL RESOURCES, INC.
                 QUARTERLY REPORT ON FORM 10-QSB FOR THE INTERIM
                         PERIOD ENDED SEPTEMBER 30, 1996

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                             Page
                                                                                                             Number

Part I. Financial Information

Item I. Financial Statements
<S>                                                                                                            <C>
                  Balance Sheets at September 30, 1996 and June 30, 1996......................................... 3

                  Statements of Operations for the Three Months Ended September  30,
                  1996 and 1995...................................................................................4

                  Statements of Changes in Stockholders' Deficit for the Year Ended
                  June 30, 1996 and Three Months Ended September 30, 1996.........................................5

                  Statements of Cash Flows for the Three Months Ended September 30,
                  1996 and 1995...................................................................................6

                  Notes to  Financial Statements..................................................................7

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

Part II.          Other Information

Item 1.           Legal Proceedings...............................................................................8

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

                  Signatures......................................................................................9
</TABLE>





                                        2

<PAGE>


                          BASIC NATURAL RESOURCES INC.
                                 Balance Sheets


<TABLE>
<CAPTION>

                                                                                  September 30, 1996    June 30, 1996
                                                                                     (Unaudited)            (Audited)
ASSETS

<S>                                                                              <C>                    <C>
Current Assets:

     Cash and cash equivalents                                                    $               0     $               0
                                                                                  -----------------     -----------------

                                                          Total Current Assets                    0                     0
                                                                                  -----------------     -----------------

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

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:

     Accounts payable and accrued liabilities                                     $          28,009     $          28,009
     Loan payable                                                                            13,200                13,200
     Income taxes payable                                                                         0                 3,299
                                                                                  -----------------     -----------------

                                                     Total Current Liabilities               41,209                41,209

Stockholders' Deficit:

     Preferred Stock - $1 par value 10,000,000 shares authorized; 174,865 shares
         of Series A Voting Preferred Stock
         outstanding at September 30, 1996 and June 30, 1996                                174,865               174,865

     Common Stock - $.00005 par value, 536,000,000 shares authorized;  2,376,287
         shares issued and outstanding at September 30, 1996
         and 2,376,287 shares issued and outstanding at June 30, 1996                           119                   119

     Additional paid-in capital                                                           4,610,729             4,610,729
     Retained earnings (deficit)                                                         (4,826,922)           (4,826,922)
                                                                                  -----------------     -----------------

                                                   Total Stockholders' Deficit              (41,209)              (41,209)
                                                                                  -----------------     -----------------

                                   TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT    $               0                     0
                                                                                  =================     =================
</TABLE>


See Accompanying Notes to the Financial Statements.

                                        3

<PAGE>


                          BASIC NATURAL RESOURCES INC.
                            Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                            Three Months Ended
                                                                                               September 30,
                                                                                        1996                  1995
                                                                                     (Unaudited)           (Unaudited)
<S>                                                                               <C>                   <C>
REVENUES                                                                          $               0     $               0

Cost and Expenses:                                                                                0                     0
                                                                                  -----------------     -----------------

                                                      Total Costs and Expenses                    0                     0
                                                                                  -----------------     -----------------

Income (loss) from Continuing Operations:                                                         0                     0

     Income tax expense (benefit)                                                                 0                     0
                                                                                  -----------------     -----------------

                                                             Net Income (Loss)    $               0     $               0
                                                                                  =================     =================

Income (loss) per share (continuing operations)                                   $            (.00)    $            (.00)

Income (loss) per share (discontinued operations)                                               .00                   .00
                                                                                  -----------------     -----------------

                                                       Income (Loss) Per Share    $            (.00)    $            (.00)
                                                                                  =================     =================

</TABLE>



See Accompanying Notes to the Financial Statements.

                                        4

<PAGE>


                          BASIC NATURAL RESOURCES INC.
                       STATEMENT OF STOCKHOLDERS' DEFICIT

                    For Year Ended June 30,1996 (audited) and
                  For the Three Months Ended September 30, 1996
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                        Additional      Retained         Total
                                    Common                        Preferred               Paid-in       Earnings     Stockholders'
                            Shares          Amount         Shares         Amount          Capital       (Deficit)       Deficit
                         -------------  -------------  --------------  -------------  -------------  --------------  ----------
<S>                      <C>            <C>            <C>             <C>            <C>            <C>             <C>
Balances at June 30,
   1995                      2,176,289  $         109         174,865  $     174,865  $   4,570,739  $   (4,760,740) $     (15,027)
Common Stock sold
   for cash                    200,000             10                                        39,990                         40,000
Rounding related to
   stock reverse                    (2)
Net loss                                                                                                    (66,182)       (66,182)
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------

Balances at June 30,
   1996                      2,376,287            119         174,865        174,865      4,610,729      (4,826,922)       (41,209)
Net income (loss)                                                                                                                0
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------

Balances at September
   30, 1996                  2,376,287  $         119         174,865  $     174,865  $   4,610,729  $   (4,826,922) $     (41,209)
                         =============  =============  ==============  =============  =============  ==============  =============

</TABLE>



See Accompanying Notes to the Financial Statements.

                                        5

<PAGE>


                          BASIC NATURAL RESOURCES INC.
                             Statements of Cash Flow
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                                 Three Months Ended
                                                                                                    September 30,
                                                                                             1996                  1995
CASH FLOWS OPERATING ACTIVITIES:
<S>                                                                                   <C>                   <C>
     Net income (loss)                                                                $                0    $            3,100
     Adjustments to reconcile net income (loss) to net cash used in
         operating activities                                                                          0                     0

     Changes in Assets and Liabilities:
              Income taxes payable                                                                     0                (3,098)
                                                                                      ------------------    ------------------

                                          Net Cash Provided by Operating Activities                    0                     2

CASH FLOW FROM INVESTING ACTIVITIES:
     Cost of securities traded                                                                         0                     0
     Increase (decrease) in restricted certificates of deposit                                         0                     0
                                                                                      ------------------    ------------------

                                          Net Cash Provided by Financing Activities                    0                     0
                                                                                      ------------------    ------------------

                                                    Net Increase (Decrease) in Cash                    0                     2

CASH AT BEGINNING OF YEAR                                                                              0                   642
                                                                                      ------------------    ------------------

CASH AT END OF PERIOD                                                                 $                0    $              644
                                                                                      ==================    ==================

SUPPLEMENTAL CASH FLOW INFORMATION
     Interest paid                                                                    $                0    $              225
     Income taxes paid                                                                                 0                     0
                                                                                      ------------------    ------------------

                                                                                      $                0    $              225
                                                                                      ==================    ==================
</TABLE>



See Accompanying Notes to the Financial Statements.

                                        6

<PAGE>


                          BASIC NATURAL RESOURCES INC.
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1996


1.   Basis of Presentation

     The financial  statements of Basic Natural  Resources Inc. (the "Company"),
included  herein,  are unaudited  for all periods  ended  September 30, 1996 and
1995. They reflect all adjustments  (consisting of normal recurring adjustments)
which are, in the opinion of management,  necessary to fairly depict the results
for the periods presented.  Certain  information and note disclosures,  normally
included in financial  statements prepared in accordance with generally accepted
accounting  principles,  have been  condensed  or omitted  pursuant to rules and
regulations  of the  Securities  and Exchange  Commission.  It is suggested that
these  financial  statements be read in conjunction  with the audited  financial
statements for the years ended June 30, 1996 and 1995, which are included in the
Company's  annual report.  The Company believes that the disclosures made herein
are adequate to make the information presented not misleading.

2.   Earnings per Common and Common Equivalent Share

     Earnings  per common and common  equivalent  share is based on the  average
number of common shares and dilutive  common share  equivalents  outstanding for
the three months ended September 30, 1996 and 1995.

Item 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

General

     The Company ceased all oil and gas  operations in June 1994,  following the
disposition  of its  oil  and  gas  interests.  The  Company  continues  to seek
acquisitions  and  mergers  in  the  area  of  computer  related   technologies.
Management  believes  that  an  acquisition  of  this  nature  will  provide  an
opportunity to enhance stockholder value.

Results of Operations

     Analysis of Three Months ended  September 30, 1996 Compared to Three Months
     ended September 30, 1995

     Costs and expenses for the three months ended  September  30, 1996 declined
significantly  compared  to the same  period in 1995.  The  decline in costs and
expenses is due to management's decision to cease all of the Company's operating
activities during the period ended March 31, 1995.


                                        7

<PAGE>



Liquidity and Capital Resources

     There were no recorded  revenues for the three months ended  September  30,
1996.  For the period  from June 30,  1996 to  September  30,  1996 there was no
change  in the  Company's  working  capital.  At  June  30,  1996,  the  Company
maintained a negative  liquidity  position which is evidenced by a current ratio
of .006 to 1. The Company has no major capital  commitments at the present time.
Management  continues to review  potential  acquisition  candidates  in computer
related  technologies in its endeavor to restructure  the Company,  increase the
Company's current ratio and liquidity,  and generate capital which would provide
cash flow for future expansion.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

     This  Company is involved in a lawsuit in the State of Texas which  relates
to an  environmental  matter.  The  Company has been  advised  that it will cost
approximately  $80,000 to perform a study to determine the extent of damage. The
estimated cost related to clean-up  could be in excess of $500,000.  The Company
currently has no means to pay any costs associated with this lawsuit. Management
is  negotiating a settlement  agreement with the parties to resolve this matter.
The  proposed  settlement  provides for a payment of $10,000 and the issuance of
3,000,000 shares of the Company's common stock.

Item 6. Exhibits and Reports on Form 8-K

A.   Exhibits
     None

B.   Reports on Form 8-K
     None


                                        8

<PAGE>


                                   SIGNATURES

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

                                          BASIC NATURAL RESOURCES, INC.



Dated: December 20, 1996                  By:     /s/ Samuel M. Skipper
                                             --------------------------
                                                   Samuel M. Skipper
                                                   Chairman of the Board

                                        9