U.S. SECURITIES AND EXCHANGE COMMISSION
                    Washington, D.C. 20549
  
  
                         FORM 10-KSB
  
  
  [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934
          For the fiscal year ended August 31, 1996
  
                              OR
  
  [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934

              Commission file number 33-23884-LA
  
  
                   THE WESTWIND GROUP, INC.
  (Name of Small Business Issuer as specified in its charter)

           Delaware                                 95-4171726  
       (State or other jurisdiction of            (I.R.S. Employer
        incorporation or organization)             Identification No.)


               1746 1/2 Westwood Boulevard                  90024       
               Los Angeles, California                   (Zip Code)
               (Address of principal executive offices)
  
  Issuer's telephone number, including area code:  (310) 470-6949
  
  
  Securities registered pursuant to Section 12(b) of the Exchange Act: 
  None
  
  Securities registered pursuant to Section 12(g) of the Exchange Act: 
  None
  
  
     Check whether the Issuer (1) has filed all reports required to be 
  filed by Section 13 or 15(d) of the Exchange Act 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 xx     No ___  
                                                       -----
     Check if there is no disclosure of delinquent filers in response to
  Item 405 of Regulation S-B contained in this form, and no disclosure
  will be contained, to the best of Issuer's knowledge, in definitive
  proxy or information statements incorporated by reference in Part III
  of this Form 10-KSB or any amendment to this Form 10-KSB.     xx
  
     The Issuer's revenues for the fiscal year ending August 31, 1996
            were $611,419
  
     As of February 25, 1997, 7,422,768 shares of the Issuer's common
  stock were issued and outstanding, 1,834,250 of which were held by
  non-affiliates.  As of February 25, 1997, there was
  not an active trading market for the Issuer's common stock.
  
  
          DOCUMENTS INCORPORATED BY REFERENCE:  NONE
  
 <PAGE> 
  
   ITEM 1.  BUSINESS
  
  General
  
     The Westwind Group, Inc. (the "Company") is a producer and
  distributor of motion pictures and television movies.  The Company's
  motion pictures are intended to be distributed in domestic and foreign
  theaters and for release in other markets such as home video, pay-per-view,
  pay television and free television.  Westwind Productions, Inc., a
  wholly-owned subsidiary of the Company, is the Company's production
  division.  Westwind Releasing Corp., another wholly-owned subsidiary of
  the Company, is the Company's distribution division.  Throughout this Form
  10-KSB, the Company and its subsidiaries are sometimes collectively
  referred to as the "Company."
  
     The Company began operations in 1985, and has produced fifteen
  feature length motion pictures since inception.
  
     The Company has primarily financed its pictures through privately
  placed limited partnerships and distribution advances.  
  
     The Company's activities have diminished during the last several
  years due to various causes including changes in market conditions for
  small, independent film production companies and increased competition
  from cable television networks.  The Company's Board of Directors has
  considered, and is considering alternative business opportunities.  Such
  opportunities may result in the sale or termination of the Company's film
  activities, commencement of operations in businesses not involved in the
  film or entertainment industry, a change of the Company's management and
  a change of control of the Company.  The Company has considered several
  proposals relating to alternative business operations but has not entered
  into any definitive agreement considering any such alternative operations
  or change of control.  Furthermore, there can be no assurance that the
  Company will ever change its current business operations.
  
  Film Production During Fiscal Years 1996, 1995 and 1994
  
     During the fiscal years ended August 31, 1996, 1995 and 1994 the
  Company completed production of the following films:
  
                                                                 Fiscal
                                                                  Year 
   Picture                  Description           Released      Completed
  
   Asylum              Thriller starring          Norstar           1996
                       Robert Patrick           Entertainment
                                 
   One Man's Justice   Action film staring      Live Entertainment  1995
                     Brian Boseworth
  
   Ultimate Desire     Erotic thriller               Showcase       1994
                     starring Martin Kemp,         Entertainment
                       Kate Hodge, Deborah Shelton   (Foreign)
  
                                     -2-
<PAGE>

   The Child           Drama thriller           Norstar             1994 
   Co-produced         starring                 Entertainment       
   with Allegro        Darlanne Fluegel,        (Foreign)
   Films               M. Emmett Walsh,    
                       and James Brolin    
  
   
  Current Projects
  
   During the fiscal year ending August 31, 1997, the Company expects
  to complete production of one feature film. 
  
   There can be no absolute assurance that any film scheduled for
  production or release will be completed or released in accordance with the
  anticipated schedule or budget.
  
  Overhead and Ownership
  
   In an effort to maintain overhead costs as low as possible, the
  Company does not maintain a substantial staff of creative or technical
  personnel.  Management believes that sufficient motion picture creative
  and technical personnel, such as screenwriters, directors and performers,
  are available in the market at acceptable prices to enable the Company to
  produce as many motion pictures as it currently plans or anticipates. 
  Currently, the Company does not own or operate sound stages and related
  production facilities generally referred to as a "studio" and does not
  have the fixed payroll, general and administrative and other expenses
  resulting from ownership and operation of a studio.
  
   The initial step in motion picture production is the acquisition of
  the artistic property or story on which the motion picture will be based. 
  An artistic property may consist of a book, screenplay, story or synopses
  of a story.  The Company and its affiliates currently own all or a portion
  of many screenplays and synopses.  The Company may acquire artistic
  properties from various sources.  It may acquire a finished screenplay
  directly from its creator or owner.  The Company may create a story
  synopsis in-house or purchase synopsis from an unaffiliated party.  It may
  then hire a screenwriter to write a motion picture screenplay which can
  potentially be developed into a motion picture.
  
  Distribution
  
    The Company, through Westwind Releasing Corp., makes distribution
  arrangements for its films with the various foreign and domestic U.S.
  homevideo, television and pay-per-view distributors.  Most of the films'
  foreign arrangements are made through foreign sales representatives,
  whereby the representative is the agent whom the various foreign
  distributors contact and pay a non-refundable advance in order to acquire
  the rights to distribute the film in their territory. 

                               -3-
<PAGE>

  Competition
  
    The business of motion picture production and distribution is highly
  competitive.  There are numerous competitive factors in the motion picture
  production and distribution industry, including the quality, variety and
  timing of products and marketing efforts.  The Company competes with
  "major" film studios as well as with independent motion picture and
  television production companies for the acquisition of literary properties
  and for the services of performing artists and technical personnel.  The
  Company competes with others in the sale and distribution of motion
  pictures.  The Company also competes for available production financing. 
  The Company's ability to acquire artistic properties and to engage the
  services of creative and technical personnel and to distribute its motion
  pictures will be limited by its financial resources.  Many of the
  organizations with which the Company competes have far greater financial
  resources than the Company.  During the last two fiscal years, the Company
  has been subject to increased competition, and as a result, has
  contributed to the Company's reduced operations.
  
  Copyrights
  
    Distribution rights to motion pictures are granted legal protection
  under the copyright laws of the United States and most foreign countries,
  which provide substantial civil and criminal sanctions for unauthorized
  duplication and exhibition of motion pictures.  Motion pictures, musical
  works, sound recordings, art work, still photography and motion picture
  properties are each separate works subject to copyright under most
  copyright laws, including the United States Copyright Act of 1976.  The
  Company plans to take appropriate and reasonable measures to secure,
  protect and maintain or obtain agreements to secure, protect and maintain
  copyright protection for all Company pictures under the laws of applicable
  jurisdictions.
  
  Government Regulation
  
    The Code and Ratings Administration of the Motion Picture Association
  of America, an industry trade association, assigns ratings for age-group
  suitability for theatrical distribution of motion pictures.  The Company
  follows the practice of submitting its pictures for such ratings.  Certain
  of the Company's pictures may be given an "R" rating, which means that
  children under certain age may, under rules enforced by the theatrical
  exhibitors, view such pictures only if accompanied by an adult. 
  Management's current policy is to produce motion pictures which qualify
  for a rating no more restrictive than "R".
  
  Employees
  
    At August 31, 1996, the Company employed three (3) full-time employees
  in its Los Angeles office.  During the production of a motion picture as
  many as 40 people are engaged by the Company for periods of six weeks or
  longer.  The Company has granted, and will grant, to actors, directors,
  screen writers, and other important creative and financial elements,
  rights to participate in the net profits or gross revenues of particular
  pictures.
  
  ITEM 2.  DESCRIPTION OF PROPERTY
  
    The Company leases its principal offices at 1746 1/2 Westwood Blvd., Los
  Angeles, California, 90024, on a month-to-month basis and pays $760 per
  month in rent.  The lease is terminable by either the Company or the
  landlord upon thirty days written notice.  The Company's office facilities
  are adequate for its current needs.  The Company believes it could readily
  find suitable replacement office facilities if necessary. 

                            -4-
<PAGE>
  
  ITEM 3.  LEGAL PROCEEDINGS
  
    To the best knowledge of the Company, it is not a party to any pending
  or threatened litigation or proceeding material to the Company.
  
  ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
    No matter was submitted to a vote of the Company's securities holders
  during the fourth quarter of the fiscal year ending August 31, 1996.
  
                           PART II
  
  ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
  
    A.  Market for Common Stock.  There is no active market for the
  Company's securities. The Company's stock has been traded in the
  over-the-counter market.
    
    B.  Holders of Common Stock.  The approximate number of holders of
  record of the Company's Common Stock was 7,422,768 as of February 25, 1997
  was 704.  A number of the Company's record shareholders are broker/dealers
  whom are holding record title of the Company's Common Stock for numerous
  customers.  Accordingly, the Company believes the actual number of
  beneficial holders of its Common Stock is greater than the number of
  shareholders of record.
  
    C.  Dividends.  The Company has never paid a cash dividend to date and
  does not anticipate or contemplate paying dividends in the foreseeable
  future.  It is the present intention of management to utilize all
  available funds for the development of the Registrant's business.
  
  ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS
  
  General
  
    The following discussion should be read in conjunction with the
  consolidated financial statements and notes to those statements attached
  hereto.
    
    The consolidated financial statements include the accounts of the
  Company and its wholly-owned subsidiaries.  The consolidation financial
  statements also include the accounts of several limited and general
  partnerships for which the Company acts as general partner and in which it
  holds ownership, financial or operating control.
  
  Results of Operations for the Years Ended August 31, 1996 and 1995 
  
    Revenues.  The Company's principal objective has been to produce and
  distribute one to four motion pictures each year with commercial subject
  matter.  The Company is now considering alternative business operations,
  but currently its only operations are its film production operations. 
  Film revenues are derived primarily from the distribution of feature films
  in both domestic and foreign markets.  The Company's revenues are derived
  from management and marketing fees relating to specific motion pictures,
  from fees for film production services and from distributive shares in
  partnerships and joint ventures formed to finance motion pictures.  The

                                     -5-
<PAGE>
  
  Company's revenues and net income are dependent upon the level of film
  activity engaged in by the Company as well as by the success of the
  particular motion pictures released by the Company in any given year. 
  Most of the income which will be generated by a motion picture will be
  generated in the year in which it is released and distributed. 
  Thereafter, minimum revenues are received from such motion picture.  
  
  
  
                     1996        1995     1994    1993  1992   
  
  
  Revenues     $611,419  $758,473  $1,720,216   $3,732,046 $1,648,97 
  
  
  Production 
     Costs      516,174  870,917  1,175,729   2,489,694   1,212,704 
  
  
  Gross Profit
     (loss)      95,245  (112,444)  544,487   1,242,352   436,266 
  
  
   Operating
     Expense    395,546   339,895   434,597    726,843    400,150 
  
  
  Other
  Income
     
  (Expense)      42,364   12,273    (91,679)       197    (53,086) 
  
  
  Net Income
   (loss)      (211,511)  (220,263)  (75,359)  180,799   (99,165)
  
  
  Net Income
     (loss)per
      share       (.03)    (.030)      (.01)       .024     (.013)
  
  
    Total revenues for the year ending August 31, 1996, were $611,419 as
  compared with $758,473 for the year ended August 31, 1995, a reduction of
  approximately 19.39%. The decrease in total revenues from 1995 to 1996 was
  primarily the result of fewer films released.  The market for lower priced
  films has changed in recent years and at the same time, the average cost
  of the Company's productions has increased.  The Company's revenues has
  decreased in each of the last three years and it is likely to continue to
  decrease this year as film production will continued to be limited.
  
    The Company's revenues are generated from film distribution in the
  domestic market (the United States and Canada) as well as from films
  distributed in foreign markets.  The Company utilizes the services of two
  principal foreign sales agents.  During the year ended August 31, 1996,
  approximately 35% of the Company's total film revenues were generated by
  the foreign sales as compared to 34% for the year ending August 31, 1995.
  The Company anticipates that it will continue to be dependent upon the
  efforts of foreign sales agents for a significant portion of its total
  film revenues during the current fiscal year.
  
    Interest.  The Company had interest income of $42,364 during the fiscal
  year ended August 31, 1996 compared to interest income of $12,273 for the
  year ended August 31, 1995.
    
    Operating Expenses, Operating Income and Other Income and Expenses. 
  For the year ended August 31, 1996, the Company's operating expenses were
  $395,546 compared to $339,895 for the year ended August 31, 1995.  The
  Company incurred a loss from operations of  $300,301 for the year ending
  August 31, 1996 as compared to income of $452,339 for the year ending
  August 31, 1995.  This loss was a result of decreased film production and
  revenue generation.
 
                              -6-
<PAGE>

 
    Net Loss.  For the fiscal year ended August 31, 1996, the Company had
  a net loss of $211,511 compared to a net loss of $220,563 for the year
  ended August 31, 1995 which included $64,566 for extraordinary income
  related to a forgiveness of a production fee owed by the Company.  The
  Company's income is dependent upon revenues which is dependent upon not
  only on total film activity, but upon the timing of the completion of
  films and the release dates of films.
  
  
    Inflation and Foreign Exchange.  Generally, costs in connection with
  producing and distributing motion pictures have increased during recent
  years.  This may affect results of operations in future periods.  However,
  the Company believes inflation has not had a material affect on the
  Company's operations to date.
  
    The Company does not believe that recent fluctuations in the value of
  the dollar in relationship to foreign currency has had any material impact
  on its operating results or that a continuation of current currency
  exchange levels will have any material adverse impact in the future.
  
  Financial Condition and Capital Resources
  
    The Company's film productions have generally been funded through
  limited and general partnerships and from third party sources.  The
  Company has received revenues from film activities and distributions from
  partnerships in which it is the general partner.
  
    The Company had cash and cash equivalents of $162,309 at August 31,
  1996, as compared to $286,335 at August 31, 1995.    The Company had
  treasury bills of $299,163 at August 31, 1996. Total current assets
  decreased significantly to $825,827 at August 31, 1996, compared to
  $1,090,505 at August 31, 1995. 
  
    The Company has historically financed its productions through limited
  partnership financing, co-production ventures and from other sources.  For
  the fiscal year ended August 31, 1997, the Company anticipates it will be
  involved in the production of one motion picture that will cost
  approximately one million dollars, none of which is expected to be
  provided by the company.  The Company may continue to develop scripts with
  its own funds.
  
    The Company projects its operating expenses for the next 12 months to
  be approximately $250,000 exclusive of investments in film projects.
  Operating expenses increase and decrease as a result of overall film
  activity. The Company believes it will be able to generate sufficient
  funds to meet its current liabilities for the next 12 months. 
  
    The Company's revenues have declined significantly in each of the last
  two years, and management anticipates there will be further decline this
  year.  The Company's current assets have decreased significantly during
  the last year.  The market for lower budget films has changed during the
  last several years and as a consequence, the Company's film production has
  decreased.  
  
  Additional Information 
  
    The Company's activities have diminished during the last several years
  due to various causes including changes in market conditions for small,
  independent film production companies and increased competition from cable
  television networks.  During each of the last three fiscal years, the
  Company's revenues have declined, its film activity has decreased and its
  assets have decreased.  Management believes that the Company cannot
  continue to operate solely as a film production company.

                             -7-
<PAGE>

  
    The Company's Board of Directors has, and is considering alternative
  business opportunities.  Such opportunities may result in the sale or
  termination of the Company's film activities, commencement of operations
  in business not involved in the film or entertainment industry,  may
  result in the change of the Company's management and may result in a
  change of control of the Company.  The Company has considered several
  proposals relating to alternative business operations but has not entered
  into any definitive agreement considering any such alternative operations
  or change of control.  Furthermore, there can be no assurance that the
  Company will ever change its current business operations.
  
  ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
                Index to Financial Statements
  Financial Statements
  
         Independent Auditor's Report
                
         Consolidated Balance Sheet
           Year ended August 31, 1996
  
         Consolidated Statements of Income
           Years ended August 31, 1996 and 1995
                   
         Consolidated Statements of Stockholders' Equity
           Years ended August 31, 1996 and 1995
  
         Consolidated Statements of Cash Flows
           Years ended August 31, 1996 and 1995
  
         Notes to Consolidated Financial Statements
  
  ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
                FINANCIAL DISCLOSURE
  
         None.
  
                           PART III
  
  ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;   
                       COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
  
       A.     Identification of Directors and Executive Officers
  
       The current directors and executive officers of the Company who will
  serve until the next annual meeting of shareholders or until their
  successors are elected or appointed and qualified, are set forth below:


                                    -8-
<PAGE>

  
    Name                 Age           Position
  
    William C. Webb       49           Chairman/President/CEO
  
    James K. Webb         45           Director
  
    Background information concerning the Company's officers and directors
  is as follows:
  
    William C. Webb.  Mr. Webb has been the Chairman of the Board of
  Directors, the President and CEO of the Company since inception. Mr. Webb
  is, and has been since 1976, a motion picture producer, director and
  writer who has worked in Europe and the United States.  Mr. Webb received
  his film training at the London Film School.  He also received a Bachelor
  of Science in Electrical Engineering from Duke University.
  
    James K. Webb.  Mr. Webb was a director of the Company from 1989 to
  1992 when he resigned for professional reasons.  He was reappointed as a
  director of the Company in September 1994.  He is presently based in
  Dallas, Texas, but has formerly worked for First Interstate Bank, Los
  Angeles, Ticor Corp., Los Angeles, among others.  He has received his
  Masters in Business Administration degree from Pepperdine University and
  his Bachelor of Arts degree from Southern Methodist University.  He is the
  brother of William Webb. 
  
    B.  Significant Employees.  None.
    
    C.  Family Relationships.  James K. Webb is the brother of William C.
  Webb.
  
    D.  Other:  Involvement in Certain Legal Proceedings.
  
    There have been no events under any bankruptcy act, no criminal
  proceedings and no judgments or injunctions material to the evaluation of
  the ability and integrity of any director or executive officer during the
  past five years.
  
    E.  Compliance with Section 16(a).  The Company currently has no class
  of securities registered pursuant to Section 12 of the Exchange Act and
  therefore is not subject to Section 16(a).
  
  ITEM 10.  EXECUTIVE COMPENSATION
  
    The following table sets forth the aggregate cash compensation paid by
  the Company for services rendered during the last three years to the
  Company's Chief Executive Officer.
  
  
                  SUMMARY COMPENSATION TABLE
  
                                                                              
                   Long Term Compensation
  
  
  
                   Annual Compensation        Awards         Payouts
                   --------------------    ---------------   ------
(a)         (b)    (c)     (d)   (e)       (f)       (g)      (h)      (i)    
        
                                 Other                                 All
Name and                         Annual   Restrict  Option/   LTIP    Other
Principal          ($)     ($)   Compen-   Stock     SAR'S   Payouts Compen-
Position   Year  Salary   Bonus sation($) Awards($)  (#)      ($)   sation($)
---------  -----  -------  ----  --------  --------   ----   -----   ------- 

William C.  1996  $60,000  $*     $-0-      $-0-       -0-    $-0-    $-0-
Webb,       
            1995  $60,000  $-0-   $-0-      $-0-       -0-    $-0-    $-0-
President,
CEO         1994  $60,000  $-0-   $-0-      $-0-       -0-    $-0-    $-0- 
Chairman   
            
  
                                 -9-

<PAGE>



  * During the year ended August 31, 1996, the Company's Board of Directors
      approved the payment of a $100,000 bonus to William Webb, its
      president.  As of August 31, 1996, such bonus had not been paid.
  
    No options, stock appreciation rights or long-term incentive plan
  awards were issued or granted to the Company's executive officers during
  the fiscal year ended August 31, 1996.  As of August 31, 1996, the end of
  the Company's last fiscal year, the Company's management owned no options
  or stock appreciation rights.  Accordingly, no tables relating to such
  items have been included in this Item 10.
  
  Compensation of Directors
  
    The Company's directors are not compensated for attending Board of
  Directors meetings.
  
  ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  
    A. & B.  Security Ownership of Management and Certain Beneficial Owners
  
    The following table sets forth information regarding shares of the
  Company's Common Stock owned beneficially as of February 25, 1997, by (i)
  each director of the Company, (ii) all officers and directors as a group,
  and (iii) each person known by the Company to beneficially own 5% or more
  of the outstanding shares of the Company's Common Stock:
  
                                                                           
                                                                           
          Name                      Amount
          and Address             and Nature        Percent
          of Beneficial         of Beneficial     of Class*
          Owner                    Ownership                
                   
    William C. Webb (1)            5,588,518          75%
    1746 1/2 Westwood Blvd.
    Los Angeles, CA  90024
    
    James K. Webb (1)                 172,500          2%
    1746 1/2 Westwood Blvd.
    Los Angeles, CA 90024
  
    Robert W. Mann                   423,750           6%
    937 Westholme Ave.
    Los Angeles, CA 90024
  
    All Officers, and Directors    5,761,018          77%
       as a Group (2 persons)
  
    Total Shares Issued 
      and Outstanding              7,422,768           100%
  
    (1)  These individuals are the officers and/or directors of the Company.
  
  ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
    In the fiscal years ending August 31, 1996, 1995 and 1994, the officers
  and directors received the following distributions from investments in
  Company affiliated partnerships:
  
                                    -10-

<PAGE>



                        1996      1995      1994 
    William Webb        $6303     $15,770   $17,518
    Carol Schuler(1)    $5217     $12,096   $10,981
    James Webb          $834      $ 1,839   $10,631
  
    (1)  Ms. Schuler resigned as an officer in 1995.
  
  ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K
  
    A.   No Exhibits are filed in connection with this Form 10-KSB and the
           Company incorporate by reference all applicable Exhibits
           heretofore filed.
  
    B.   No form 8-K was filed by the Company during the quarter ended
           August 31, 1996. 
  




                                   -11-
<PAGE>






                              SIGNATURES
  
  
    In accordance with Section 13 or 15(d) of the Exchange Act, the
  registrant caused this report to be signed on its behalf by the
  undersigned, thereunto duly authorized.
  
                                    THE WESTWIND GROUP, INC.
  
  
  
  Date:  February 28, 1997          By    /S/ WILLIAM C. WEBB            
                                    William C. Webb
                                    Principal Executive Officer
                                    Principal Financial Officer
  
    In accordance with the Exchange Act, this report has been signed below
  by the following persons on behalf of the Issuer and in the capacities and
  on the dates indicated.
  
Signature                    Capacity                     Date
  
/s/ William C. Webb  
                            Chairman/President/          February 28, 1997
William C. Webb                 CEO
  
/s/ James K. Webb  
                             Director                    February 28, 1997
James K. Webb



                             -12-
<PAGE>


                          SIGNATURES
  
  
    In accordance with Section 13 or 15(d) of the Exchange Act, the
  registrant caused this report to be signed on its behalf by the
  undersigned, thereunto duly authorized.
  
                             THE WESTWIND GROUP, INC.
  
  
  
  Date: February 28, 1997              By /s/ William C. Webb            
                                    William C. Webb
                                    Principal Executive Officer
                                    Principal Financial Officer
  
  
    In accordance with the Exchange Act, this report has been signed below
  by the following persons on behalf of the Issuer and in the capacities and
  on the dates indicated.
  
       Signature                 Capacity             Date
  
  
  /s/ William C. Webb    Chairman/President/          February 28, 1997
  William C. Webb                 CEO
  
  
  /s/ James K. Webb      Director                     February 28, 1997
  James K. Webb





                                    -12-
<PAGE>

                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                  THE WESTWIND GROUP, INC.
                              
              CONSOLIDATED FINANCIAL STATEMENTS
                              
                       AUGUST 31, 1996
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
               PRITCHETT, SILER & HARDY, P.C.
                CERTIFIED PUBLIC ACCOUNTANTS


<PAGE>

                  THE WESTWIND GROUP, INC.
                              
              CONSOLIDATED FINANCIAL STATEMENTS
                              
                              
                              
                              
                              
                          CONTENTS

                                                                PAGE


        _  Independent Auditors' Report                           1


        _  Consolidated Balance Sheet, August 31, 1996          2 - 3


        _  Consolidated Statements of Operations, for the
             years ended August 31, 1996 and 1995               4 - 5


        _  Consolidated Statement of Stockholders' Equity, for
             the years ended August 31, 1996 and 1995            6
 

        _  Consolidated Statements of Cash Flows, for the
             the years ended August 31, 1996 and 1995           7 - 8


        _  Notes to Consolidated Financial Statements           9 - 15


<PAGE>


             PRITCHETT, SILER & HARDY, P.C.
                  430 EAST 400 SOUTH
              SALT LAKE CITY, UTAH  84111
                   (801) 328-2727




                INDEPENDENT AUDITORS' REPORT




Board of Directors
THE WESTWIND GROUP, INC.
Los Angeles, California


We  have audited the accompanying consolidated balance sheet
of  The  Westwind  Group, Inc. and its  subsidiaries  as  of
August  31, 1996 and the related consolidated statements  of
operations  stockholders' equity, and  cash  flows  for  the
years  ended  August  31, 1996 and  1995.   These  financial
statements   are   the  responsibility  of   the   Company's
management.  Our responsibility is to express an opinion  on
these financial statements based on our audits.

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

In   our  opinion,  the  consolidated  financial  statements
examined by us present fairly, in all material respects, the
financial  position  of The Westwind  Group,  Inc.  and  its
subsidiaries as of August 31, 1996 and the results of  their
operations, and their cash flows for the years ended  August
31,  1996  and  1995, in conformity with generally  accepted
accounting principles.


/S/ PRITCHETT, SILER & HARDY, P.C.
PRITCHETT, SILER & HARDY, P.C.

November 5, 1996

                            -1-

<PAGE>


                  THE WESTWIND GROUP, INC.
                              
                 CONSOLIDATED BALANCE SHEET
                              
                              
                           ASSETS
                              
                              
                                                       August 31,
                                                          1996
                                                     ____________
CURRENT ASSETS:
  Cash and cash equivalents                            $  162,309
  Treasury bills                                          299,163
  Marketable equity securities available
    for sale                                               18,945
  Advances and other receivables                            2,739
  Advances - related party                                 86,900
  Film inventory                                          153,746
  Deferred tax asset, net                                 102,025
                                                     ____________
        Total Current Assets                              825,827
                                                     ____________
PROPERTY AND EQUIPMENT, net                                 8,164
                                                     ____________
OTHER ASSETS:
  Film script inventory                                     6,205
  Other assets                                              1,580
  Deferred tax asset                                       25,762
                                                     ____________
        Total Other Assets                                 33,547
                                                     ____________
TOTAL ASSETS                                           $  867,538
                                                     ____________
                              
                              
                              
                              
                              
                              
                              
                              
                              
                                                          
                              
    The accompanying notes are an integral part of these
             consolidated financial statements.

                            -2-
<PAGE>

                  THE WESTWIND GROUP, INC.
                              
                 CONSOLIDATED BALANCE SHEET
                              
            LIABILITIES AND STOCKHOLDERS' EQUITY
                              
                              
                                                       August 31,
                                                          1996
                                                     ____________
CURRENT LIABILITIES:
 Accounts payable                                      $   67,905
 Accounts payable - related party                           5,213
 Accrued expenses                                           2,539
 Management bonuses payable                               257,000
                                                     ____________
       Total Current Liabilities                          332,656
                                                     ____________
MINORITY INTEREST                                         309,341
                                                     ____________

STOCKHOLDERS' EQUITY:
 Preferred stock, $.01 par value, 10,000,000
   shares authorized, no shares issued
   and outstanding                                              -
 Common stock, $.004 par value, 50,000,000
   shares authorized, 7,422,768 shares issued
   and outstanding at August 31, 1996                      29,691
 Additional paid-in capital                               124,098
 Retained earnings                                         78,277
 Unrealized holding loss on marketable securities         (6,525)
                                                     ____________
       Total Stockholders' Equity                         225,541
                                                     ____________
TOTAL LIABILITIES AND STOCKHOLDERS'
  EQUITY                                                 $867,538
                                                     ____________
                              
                              
                                                           
                              
                              
                              
                              
                              
    The accompanying notes are an integral part of these
             consolidated financial statements.

                             -3-

<PAGE>


                  THE WESTWIND GROUP, INC.
                              
            CONSOLIDATED STATEMENTS OF OPERATIONS

                                             For the Years Ended
                                                  August 31,
                                        _________________________
                                                 1996      1995
                                            ______________________
REVENUE
  Film revenue                             $    562,432  $708,473
  Film management and marketing income           48,987    50,000
                                             ______________________
        Total Revenue                           611,419   758,473
                                             ______________________
PRODUCTION COSTS:
  Direct costs related to film revenue          511,316   835,333
  Profit participation expenses                   4,858    33,254
  Co-partner production fees                          -     2,330
                                             ______________________
        Total Production Cost                   516,174   870,917
                                             ______________________
GROSS PROFIT (LOSS)                              95,245 (112,444)
                                             ______________________
OPERATING EXPENSE:
  General and administrative                    269,153   308,433
  Accrued management bonuses                    100,000         -
  Professional fees                              26,393    31,462
                                             ______________________
      Total Operating Expense                   395,546   339,895
                                             ______________________
INCOME (LOSS) FROM OPERATIONS                 (300,301) (452,339)
                                             ______________________
OTHER INCOME (EXPENSE):
  Interest income                                42,364    12,273
                                             ______________________
      Total Other Income (Expense)               42,364    12,273
                                             ______________________
INCOME (LOSS) BEFORE MINORITY INTEREST
  AND INCOME TAXES                            (257,937) (440,066)

MINORITY INTEREST IN OPERATIONS
  OF PARTNERSHIPS                               (6,856) (131,242)
                                             ______________________
INCOME (LOSS) BEFORE INCOME TAXES             (251,081) (308,824)

CURRENT TAX EXPENSE (BENEFIT)                  (39,916)         -

DEFERRED TAX EXPENSE ( BENEFIT)                     346  (55,057)
                                             ______________________
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS      (211,511) (253,767)
                                             ______________________
                              
                              
                         [Continued]

                              -4-
<PAGE>

                  THE WESTWIND GROUP, INC.
                              
      CONSOLIDATED STATEMENTS OF OPERATIONS [Continued]


                                             For the Years Ended
                                                  August 31,
                                        _________________________
                                                 1996      1995
                                            ______________________
EXTRAORDINARY ITEM -  Forgiveness of production fee   -    64,566

MINORITY INTEREST IN EXTRAORDINARY ITEM               -    31,062

                                             ______________________
NET INCOME (LOSS)                            $(211,511)  $(220,263)
                                             ______________________
EARNINGS (LOSS) PER COMMON SHARE:
  Income from continuing operations            $  (.03)  $  (.034)
  Extraordinary item forgiveness of production fee  -        .004
                                             ______________________
EARNINGS (LOSS) PER COMMON SHARE               $  (.03)  $  (.030)
                                             ______________________
WEIGHTED AVERAGE NUMBER OF SHARES
  OUTSTANDING                                 7,422,768 7,422,768
                                             ______________________
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                                                         
                              
                              
                    
                              
                              
                              
    The accompanying notes are an integral part of these
             consolidated financial statements.

                              -5-
<PAGE>


                  THE WESTWIND GROUP, INC.
                              
       CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                              
        FOR THE YEARS ENDED AUGUST 31, 1996 AND 1995
                              


                       Common Stock     Additional         Unrealized Loss
                  __________________     Paid-In   Retained  on Marketable
                    Shares   Amount      Capital   Earnings     Securities
                  __________________    _________  ________   __________
BALANCE, August 31,
 1994             7,422,768   29,691       124,098    510,051        -

Net (loss) for the
 year ended August
 31, 1995                -        -             -    (220,263)       -
               _________________________________________________________
BALANCE, August 31,
 1995             7,422,768   29,691       124,098    289,788        -

Unrealized loss on
 marketable securities   -        -            -          -      (6,525)

Net (loss) for the
 year ended August
 31, 1996                -        -            -      (211,511)      -
               _________________________________________________________
BALANCE, August 31,
 1996             7,422,768  $29,691      $124,098    $78,277   $(6,525)
               _________________________________________________________
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                       
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
     The accompanying notes are an integral part of this
                    financial statement.

                            -6-
<PAGE>

                  THE WESTWIND GROUP, INC.
                              
            CONSOLIDATED STATEMENTS OF CASH FLOWS
                              
    Net Increase (Decrease) in Cash and Cash Equivalents
                              
                              
                                             For the Years Ended
                                                  August 31,
                                        _________________________
                                                 1996      1995
                                            ______________________
Cash Flows From (To) Operating Activities:
  Net income (loss)                          $(211,511) $(220,263)
                                             ______________________
  Adjustments to reconcile net income (loss) to
    cash provided (used) by operations:
     Write off of film script inventory           1,824     4,169
     Depreciation and amortization                    -       481
     Loss on dissolution of partnerships         35,745         -
     Minority interests in partnerships         (6,856)  (100,180)
     Write off film inventory to net
      realizable value                          127,822    292,364
     Gain on contingency                       (25,470)         -
     Gain on Sale of Script                           -  (21,732)
     Bad debt expense                                 -     2,750
     Changes in assets and liabilities:
      (Increase) decrease in film inventory     409,192   484,226
      (Increase) decrease in current
        deferred tax asset                       11,385   (27,262)
      (Increase) decrease in advances
          and other receivables                 (2,739)        -
      (Increase) decrease in deferred tax asset   8,291  (27,795)
      Increase (decrease) in accounts payable   (5,983)  (42,857)
      Increase (decrease) in accounts
        payable related party                   (14,691)  (5,096)
      Increase (decrease) in accrued expenses       828   (3,168)
      Increase (decrease) in management bonuses 100,000  (35,000)
      Increase (decrease) in taxes payable            -   (5,825)
                                             ______________________
        Total Adjustments                       639,348   600,789
                                             ______________________
        Net Cash Provided (Used) by Operating
          Activities                            427,837   380,526
                                             ______________________
Cash Flows From (To) Investing Activities:
  Purchase of US Treasury bill                (299,163)         -
  Advances - related party                     (86,900)         -
  Payments for film script inventory            (8,469)  (48,190)
  Purchase of property plant and equipment        (539)   (9,775)
  Proceeds from sale of film script                   -    51,127
  Distributions to limited partners           (156,792) (342,979)
  Contributions from limited partners                 -         -
                                             ______________________
        Net Cash Provided (Used) by Investing
          Activities                          (551,863) (349,817)
                                             ______________________
                              
                              
                         [Continued]
                              -7-
<PAGE>

                  THE WESTWIND GROUP, INC.
                              
      CONSOLIDATED STATEMENTS OF CASH FLOWS [Continued]
                              
      Increase (Decrease) in Cash and Cash Equivalents
                              
                                             For the Years Ended
                                                  August 31,
                                        _________________________
                                                 1996      1995
                                            ______________________
Cash Flows From Financing Activities:
  Proceeds from advances from distributor      $      -  $      -
  Payments for advances from distributor              -         -
                                             _______________________
        Net Cash Provided by Financing Activities     -         -
                                             _______________________
Net Increase (Decrease) in Cash and
  Cash Equivalents                            (124,026)    30,709

Cash and Cash Equivalents at Beginning of Year  286,335   255,626
                                             _______________________
Cash and Cash Equivalents at End of Year    $  162,309    $286,335
                                             _______________________
Supplemental Disclosure of Cash Flow Information:
  Cash paid during the period for:
     Interest                                  $     -   $      -
     Income taxes                              $     -   $  6,165

Supplemental Schedule of Non-cash Investing and Financing
Activities:
  For the Year Ended August 31, 1996:
     None

  For the Year Ended August 31, 1995:
     None
  
  
  
  
  
  
  
  
  
  
    
  
  
  
  
  
    The accompanying notes are an integral part of these
             consolidated financial statements.

                            -8-
<PAGE>

                  THE WESTWIND GROUP, INC.
                              
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
NOTE 1 _ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Business  - The Company is engaged in producing, marketing
  and  distributing commercial feature films.  Story  rights
  and  film  scripts  are  typically  purchased  from  third
  parties.   The Company produces, co-produces  or  arranges
  production  on  these and other scripts  and  occasionally
  sells  scripts  to  third parties.  Production  costs  are
  generally  financed  through  the  formation  of   limited
  partnerships  or  advances  from  distributors.    Feature
  films  developed are distributed by third parties  in  the
  United  States and foreign markets, in the form of  video,
  television, and pay per view rights.
  
  Basis   of   Presentation  -  The  consolidated  financial
  statements  include  the accounts of The  Westwind  Group,
  Inc.  [Group]  and its wholly-owned subsidiaries  Westwind
  Productions,  Inc.  [Productions] and Westwind  Releasing,
  Corp.  [Releasing].  The consolidated financial statements
  also  include limited and general partnerships  for  which
  the  Company acts as general partner and holds  ownership,
  financial  or operating control.  The limited and  general
  partnerships included in the financial statements and  the
  Company's  percentage interest in the partnerships  as  of
  August 31, 1995 are as follows:
  
         D.S.R. Partnership                 51.9%
         Dogged Partnership                 28.3%
  
  All   significant  intercompany  transactions  have   been
  eliminated in consolidation.
  
  During   the  year  ended  August  31,  1995,   the   Pike
  partnership   was   dissolved  in   order   to   eliminate
  administrative   costs  associated  with   its   continued
  operation.  This limited partnership was included  in  the
  statements  of  operations  and the  Company's  percentage
  interest in the partnership  was 67.4%.
  
  Film  Inventory - Costs to produce a film are  capitalized
  as  film inventory and are amortized using the individual-
  film-forecast-computation  method,  which  amortizes  film
  costs  in the same ratio that current gross revenues  bear
  to  anticipated  gross  revenues.   Amortization  of  film
  costs  begin when a film is released and revenues on  that
  film   are  recognized.   Film  inventory  classified   as
  current   assets  include  unamortized   costs   of   film
  inventory  released and allocated to the  primary  market.
  All other capitalized film script costs are classified  as
  noncurrent  assets.   If estimated future  gross  revenues
  from  a film are not sufficient to recover the unamortized
  film  costs,  other  direct  distribution  expenses,   and
  participation's,  the unamortized film costs  are  written
  down to net realizable value.  If it is determined that  a
  property  will not be used in the production  of  a  film,
  the  costs  are  charged  to production  overhead  in  the
  current period.
  
  Revenue  Recognition - The Company's revenues from license
  fees  for  its  motion picture films are  recognized  when
  commitments under the license agreements are due  and  the
  film  is  available for delivery.  The  variance  in  film
  revenues,  from  year  to  year,  can  be  caused  by  the
  releasing  of films just prior or subsequent to  the  year
  end.
                            -9-
<PAGE>

                  THE WESTWIND GROUP, INC.
                              
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              
NOTE 1 _ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[Continued]
  
  Depreciation Methods - The cost of property and  equipment
  is  depreciated  over the estimated useful  lives  of  the
  assets.   Depreciation is computed on  the  straight  line
  method for financial reporting purposes.
  
  Earnings  (Loss) Per Share - The computation  of  earnings
  (loss)  per share of common stock is based on the weighted
  average  number  of shares outstanding during  the  period
  presented.
  
  Cash  and  Cash  Equivalents - For  the  purposes  of  the
  statement of cash flows, the Company considers all  highly
  liquid  debt  investments purchased  with  a  maturity  of
  three  months or less to be cash equivalents.   At  August
  31,  1995  and 1994, the Company has $170,498 and $106,174
  in excess of insured amounts in its investment account.
  
  Minority  Interest - The minority interest represents  the
  amounts invested by non majority limited partners  net  of
  profits or losses allocated to the minority partners.
  
  Income  Taxes - The Company accounts for income  taxes  in
  accordance  with  FASB  Statement  109,  "Accounting   for
  Income Taxes."  [See Note 5]
  
  Treasury  Bills and Marketable Securities  -  The  company
  accounts for investments in debt and equity securities  in
  accordance   with   Statement  of   Financial   Accounting
  Standards SFAS 115 "Accounting for Certain Investments  in
  Debt   and  Equity  Securities."   Under  SFAS   115   the
  Company's treasury bills have been classified as  held  to
  maturity  and  are recorded at amortized  soct.   Held  to
  maturity  securities represent those securities  that  the
  Company  has both the positive intent and ability to  hold
  until  they  mature.  The Company's marketable  securities
  have  been  classified  as  available  for  sale  and  are
  recorded  at their fair market value and unrealized  gains
  and  losses  are  reported  in  a  separate  component  of
  shareholders equity.
  
  Accounting  Estimates  -  The  preparation  of   financial
  statements   in   conformity   with   generally   accepted
  accounting   principles  requires   management   to   make
  estimates   and  assumptions  that  affect  the   reported
  amounts  of  assets  and liabilities, the  disclosures  of
  contingent  assets  and liabilities at  the  date  of  the
  financial  statements and the reported amount of  revenues
  and  expenses during the reporting period.  Actual results
  could differ from those estimated.
  
NOTE 2 _ TREASURY BILLS
  
  At  August  31,  1996 US Treasury bills consisted  of  the
  following  investments  which  are  carried  at  amortized
  cost:
  
          Date       Maturity  Amortized      Market   Maturity
        Acquired       Date       Cost        Value     Value
      ___________   _________  _________    _________ _________
        3/25/96      9/19/96     97,721       99,721   100,000
        6/19/96      9/19/96     99,721       99,721   100,000
        6/19/96      9/19/96     98,721       99,721   100,000

                              -10-
<PAGE>


                  THE WESTWIND GROUP, INC.
                              
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
NOTE 3 _ MARKETABLE SECURITIES
  
  At  August  31,  1996 marketable securities available  for
  sale consisted of the following:
  
                                    Unrealized
                                     Holding       Market
                            Cost       Loss        Value
                         _________ ___________   __________
         Common Stock      25,470     6,525        18,945

NOTE 4 _ RELATED PARTIES TRANSACTION

  During  the  year ended August 31, 1996 the  Company  paid
  various  expenses  on  behalf of its majority  shareholder
  and  president.  These expenses totaled $86,900  and  have
  been recorded as advances related party.
  
  Officers,  significant  shareholders  and  promoters   and
  their   relatives'  ownership  interest  in  the   related
  partnerships at August 31, 1996 is as follows:
  
  
  
                                  Ownership
                                  __________
     Desire Partnership             48%
     Dogged Partnership             49%
  
  At  August  31, 1996 and 1995, the Company has $2,870  and
  $18,594  in  related party accounts payable for production
  services rendered by a former officer and director of  the
  Company.
  
  During the year ended August 31, 1996 the Company's  Board
  of   Directors  approved  the  payment  of   $100,000   in
  management  bonuses to an officer, director and  president
  of  the  Company.  As of August 31, 1996 the  bonuses  had
  not yet been paid.
  
  During the year ended August 31, 1993 the Company's  Board
  of   Directors  approved  the  payment  of   $330,000   in
  management  bonuses to certain officers and key  personnel
  of  the Company.  During 1994 the Company paid $130,000 of
  the  bonuses  and accrued the remaining $200,000.   During
  the  year ended August 31, 1995 and 1994 the Company  paid
  $38,000  and  $5,000  of these bonuses  and  extended  the
  remaining  $157,000  to  be paid  during  the  year  ended
  August 31, 1997.

                            -11-
<PAGE>

                  THE WESTWIND GROUP, INC.
                              
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
NOTE 5 _ FILM INVENTORY
  
  The components of film inventory at August 31, 1996 are:

     Released films                   $ 138,711
     Films completed but not released    15,035
     Films in progress                        -
     Story rights and scenarios           6,205
                                    ___________
     Total Film Inventory               159,951
     Less long-term portion               6,205
                                    ___________
     Total Current Film Inventory     $ 153,746
                                    ___________
  
  Film  cost amortization was $361,578 and $507,959 for  the
  years ended August 31, 1996 and 1995, respectively.
  
  During  the year ended August 31, 1996 and 1995 the  Company
  recorded  an adjustment of $127,823 and $292,364  to  reduce
  the  carrying value of film inventory to its net  realizable
  value.
  
NOTE 6 _ PROPERTY AND EQUIPMENT
  
  The following is a summary of property and equipment -  at
  cost, less accumulated depreciation:
  
                                    August 31,
                                       1996
                                 _____________
      Property and equipment          $ 12,439
      Airplane                           9,775
                                 _____________
                                        22,214
      Less: accumulated depreciation    14,050
                                 _____________
        Total                         $  8,164
                                 _____________
  
  During  June 1995, the Company invested in a 25%  interest
  in  an  airplane.  The plane is rented out through a local
  airport.   The  plane  is managed by the  majority  owner.
  The  Company plans to use the plane in its film operations
  for filming, finding locations for filming and as a prop.
  
  Depreciation expense for the years ended August  31,  1996
  and 1995 was $1,781 and $481, respectively.

                            -12-
<PAGE>

                  THE WESTWIND GROUP, INC.
                              
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
NOTE 7 _ LIMITED PARTNERSHIPS
  
  The  Company organizes limited partnerships to finance the
  production  of its feature films.  The Company  serves  as
  the  general  partner  and has ownership,  operating,  and
  financial  control  of the limited partnerships.   Limited
  partnership  agreements generally limit cash distributions
  to   the   Company   until  limited   partners'   original
  investments  are returned plus interest at a predetermined
  rate.   Profits  are  allocated according  to  partnership
  agreements   with  the  Company's  interest   in   ongoing
  partnerships ranging from 51.9% to 28.3%.

NOTE 8 _ COMMITMENTS AND CONTINGENCIES
  
  Development   Agreements  -  The   Company   enters   into
  development  agreements as a means to obtain story  rights
  for  feature films.  Developers typically are entitled  to
  a  percentage of the net profits of the Company's  general
  partnership  interest  in  the  film.   Amounts  paid   to
  developers for the years ended August 31, 1996  and   1995
  were $8,469 and $48,190, respectively.
  
  Distribution  Agreements - The Company  has  entered  into
  film  distribution  agreements for foreign  markets  as  a
  means   of  financing  production  costs.   These  foreign
  distributor  agreements require an up front advance  which
  is  repaid  by  the  Company at prime  plus  2%  from  the
  proceeds  of  the film.  The foreign distributor  collects
  revenues  from  sublicensees  and  after  withholding  the
  funds  advanced, expenses incurred and a distribution  fee
  of  approximately  15% to 25% of gross revenues,  forwards
  the remainder to the Company.
  
  The  Company  also enters into various other  foreign  and
  domestic  distribution and licensing  agreements  for  its
  films  as  a  means to exhibit it's films to  the  public.
  Distributors  typically receive  12.5%  to  25%  of  gross
  revenues   as   a  distribution  fee  after  predetermined
  minimum  revenues  are received by  the  Company  and  are
  entitled  to be reimbursed for expenses incurred from  the
  proceeds of the film.
  
  The  Company  as a Distributor - The Company  enters  into
  various  agreements to produce, assist in  production  and
  distribute  films  for which it does  not  own  the  story
  rights.   These  agreements  typically  provide  for   the
  Company  to  be  compensated for  its  roll  as  producer,
  entitle  the  Company to receive a percentage  revenue  in
  gross  profits  of the film and occasionally  require  the
  Company  to  advance funds to meet production costs.   The
  advances are to be repaid from the gross revenues  of  the
  film.   At August 31, 1996, there were no amounts advanced
  under these agreements.
  
  Other  -  The  Company  has  a  continuing  obligation  to
  certain  writers  and  actors to pay profit  participation
  amounts  ranging  from  1  to  7.5  percent  based  on   a
  predetermined  level of income and distributions  received
  by  the  Company.   The  Company has recorded  $4,858  and
  $33,254  in  profit participation payments for  the  years
  ended August 31, 1996 and 1995, respectively.

                           -13-
<PAGE>

                  THE WESTWIND GROUP, INC.
                              
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
NOTE 9 _ INCOME TAXES
  
  The  Company  accounts for income taxes in  accordance  with
  Statement   of  Financial  Accounting  Standards   No.   109
  "Accounting  for  Income Taxes" [FASB 109] during  the  year
  ended  August  31, 1994.  FASB 109 requires the  Company  to
  provide  a  net deferred tax asset/liability  equal  to  the
  expected  future tax benefit/expense of temporary  reporting
  differences between book and tax and any available operating
  loss or tax credit carryforwards.
  
  At  August 31, 1996 the total of all deferred tax assets and
  liabilities  are  $129,311  and $1,520,  respectively.   The
  amount of and ultimate realization of the benefits from  the
  deferred tax assets is dependent, in part, upon the tax laws
  in  effect,  the future earnings of the Company,  and  other
  future  events,  the effects of which cannot be  determined.
  Because  of  the uncertainty surrounding the realization  of
  the  deferred asset, the Company has established a valuation
  allowance  of $68,000 as of August 31, 1996 which  has  been
  offset against the deferred tax asset.  The net increase  in
  the  valuation  allowance during the year ended  August  31,
  1996  was  $68,000.  As of August 31, 1996, the Company  has
  approximately  $127,000 of operating loss  carryovers  which
  can  be  applied against prior year net income.   Management
  determined that no valuation allowance was necessary for the
  net deferred tax assets as of August 31, 1996.
  
  The  components  of  income tax  expense  from  continuing
  operations  for the year ended August 31,  1996  and  1995
  consist of the following:
  
                                            1996          1995
                                      _____________  ___________
    Current income tax expense:
     Federal                              $(39,916)     $      -
     State                                        -            -
                                      _____________  ___________
      Net Current Tax Expense              (39,916)            -
                                      _____________  ___________
    Deferred tax expense (benefit) arising from:
    Excess of tax over financial accounting
      depreciation                              933          176
    Excess of tax over financial accounting
      for amortization of production cost     4,437        2,131
     Cash basis reporting of expenses for
        tax purposes                       (55,409)        14,743
     Cash basis reporting of income for
        tax purposes                        (25,612)       (3,020)
     Income from partnerships included in
       book income but not included for
        tax purposes                          2,922      (13,071)
     Net operating loss carryovers             5,075     (56,016)
     Increase in valuation allowance          68,000           -
                                      _____________  ___________
      Net Deferred Tax Expense (Benefit)        346      (55,057)
                                      _____________  ___________
    Total Income Tax Expense (Benefit)    $(39,570)     $(55,057)
                                      _____________  ___________
  
  Deferred   income  tax  expense  primarily  results   from
  temporary   differences  in  the   recognition   of   film
  production  costs  and the Company reporting  taxes  on  a
  cash basis.

                           -14-
<PAGE>

                  THE WESTWIND GROUP, INC.
                              
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
NOTE 9 _ INCOME TAXES [Continued]
  
  A  reconciliation  of income tax expense  at  the  federal
  statutory  rate  to income tax expense  at  the  Company's
  effective rate is as follows:
  
                                            1996          1995
                                      _____________  ___________
    Computed tax at the expected
      federal statutory rate                  34.00%      34.00%
    State income taxes, net of federal benefit 6.00        6.00
    Excess of tax over financial accounting
      depreciation and amortization             .28         .03
    Excess of tax over financial accounting
      for amortization of production cost      1.34         .34
     Cash basis reporting of expenses
       for tax purposes                      (16.69)       2.33
     Cash basis reporting of income
       for tax purposes                       (7.72)       (.48)
     Income from partnerships included in
       book income but not included for tax
       purposes                                  .88       (2.06)
     Net operating loss carryovers              1.53       (8.85)
                                      _____________  ___________
      Effective Income Tax Rates              19.62%      31.31%
                                      _____________  ___________
  
  The  temporary  differences gave  rise  to  the  following
  deferred tax asset (liability) at August 31, 1996:
  
                                            1996          1995
                                      _____________  ___________
    Excess of tax over financial
      accounting depreciation
      and amortization                          (779)          154
    Excess of tax over financial accounting
      for amortization of production cost       (529)        3,908
    Cash basis recording of expenses
      for tax purposes                        51,630         64,221
    Cash basis recording of income
      for tax purposes                         (215)        (25,827)
    Income from partnerships included in book
      income but not included for tax purposes  27,070      29,992
    Net operating loss carryovers                50,611       56,016
  
NOTE 10 _ OPERATING LEASES
  
  The  Company leases office space on a month to month basis
  and  pays  $760 a month in rent.  This lease is terminated
  by  either  the Company or the Landlord upon  thirty  days
  written notice.

                           -15-
<PAGE>

                  THE WESTWIND GROUP, INC.
                              
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
NOTE 11 _ ECONOMIC DEPENDENCY
  
  For  the  year ended August 31, 1995, the Company had  two
  significant customers who represents approximately 87%  of
  the Company's revenue.
  
  The  Company  also receives a substantial portion  of  its
  revenue  from  two  foreign sales agents  who  collect  on
  behalf  of the Company from numerous customers on a world-
  wide  basis.   These  foreign  revenues  relate  to  other
  revenues as follows:

                                    For the Years Ended
                                         August 31,
                                ________________________
                                       1996       1995
                                   ______________________
     Foreign Sales Agents             $197,479  $465,052
     Domestic Customers                362,940   241,619
     Other                               2,013     1,802
                                   ______________________
     Total Film Revenues              $562,432  $708,473
                                   ______________________

NOTE 12 _ EXTRAORDINARY ITEM

  During  the year ended August 31, 1995 the Company forgave
  a   $64,566   receivable  for  production  fees   from   a
  partnerships in which the Company is the general  partner.
  The  net effect of the transaction was to record bad  debt
  expense  of  $64,566 and an extraordinary gain of  $64,566
  net of $31,063 in minority interest.
  
                              -16-

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