SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB
                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

  For the quarterly period ended             Commission file number 333-6440
              6/30/97

                           DOWNSTREAM INCORPORATED-DSI
        (Exact name of small business issuer as specified in its charter)


                   Utah                                 87-0567618
     (State or other jurisdiction of           (IRS Employer Identification
      incorporation or organization)                      Number)

           6337 Highland Drive
           Salt Lake City, Utah                            84121
      Address of principal executive                    (Zip Code)
                 offices)

          Issuer's telephone number, including area code (801) 567-1196


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

Yes  [ X ]          No [   ]


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

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

         As of August 13, 1997, the issuer had outstanding  4,334,000  shares of
its Common Stock, $0.001 par value.



                                 Page 001 of ___

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

         The  unaudited  balance  sheet  of  Downstream   Incorporated-DSI  (the
"Company")  as of June 30, 1997 and the  related  audited  balance  sheet of the
Company as of December 31, 1996, the unaudited related  statements of operations
and cash flows for the three and six month periods ended June 30, 1997,  and the
notes to the  financial  statements  are  attached  hereto as  Appendix  "A" and
incorporated herein by reference.

         The accompanying  financial  statements  reflect all adjustments  which
are, in the opinion of  management,  necessary to present  fairly the  financial
position of the Company.

         The Company was  organized on November 26,  1996,  and soon  thereafter
issued  3,300,000  shares  of its  common  stock  to its  founders  and to other
shareholders.  The Company  commenced a public  offering of its common  stock on
April 28, 1997 pursuant to which it raised  $51,700 in gross  offering  proceeds
and issued an  additional  1,034,000  shares of its  common  stock at the public
offering price of $0.05 per share.

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

Results of Operations.

         During the three months ended June 30, 1997, the Company  experienced a
net loss in the  amount of  $1,433.  The  Company's  net loss for the six months
ended June 30, 1997 was $3,411.  Loss per share was approximately  $0.00 for the
three  months ended June 30, 1997,  and  approximately  $0.00 for the six months
ended June 30, 1997.

         The Company's  losses during the three and six month periods ended June
30, 1997 are attributed to incurring general and administrative  expenses during
the time period in which the Company was seeking to complete its initial  public
offering, and during which time period the Company had no revenues.

         The Company had no revenues during the three and six month time periods
ended June 30, 1997.

         General and administrative expenses for the three months ended June 30,
1997, were $1,358. General and administrative  expenses for the six months ended
June 30, 1997 were $3,261.

         General  and  administrative  expenses  should  generally  be viewed as
likely to recur in the normal  course of business,  although the amounts of such
expenditures will vary.

         Professional fees represent one component of general and administrative
expenses. Professional fees reflect legal, accounting and other consulting costs
associated with the preparation and filing of reports to the U.S. Securities and
Exchange  Commission,  services  rendered in connection with capital raising and
financing transactions, and other general legal and accounting work.

Balance Sheet Information

         Assets

         As of June 30, 1997, the Company  reported total assets of $43,417,  up
$37,349 from the $6,068  reported as of December 31, 1996.  Current assets as of
June 30, 1997 were $42,075,  up $36,310 from the $5,765  reported as of December
31, 1996. Fixed assets were $1,070 as of June 30, 1997, up $1,070 from the $0.00
of fixed assets  reported as of December 31, 1997.  Other assets were $272 as of
June 30, 1997,  down $31 from the $303  reported as of December  31,  1996.  The
change in total assets  reflects  primarily an infusion of cash  received as net
offering proceeds from the Company's initial public offering.

                                       2
<PAGE>

         The change in current  assets  during the three  months  ended June 30,
1993, reflects an increase in cash of $36,010.

         Other assets represent organizational costs net of amortization.

         Liabilities

         The Company had no  liabilities  as of June 30, 1997, a decease of $559
from that reported as of December 31, 1996.

Liquidity and Capital Resources - June 30, 1997

         The Company  received an  infusion of a  significant  amount of capital
from the Company's  initial  public  offering in the three months ended June 30,
1997.  This has  provided  the Company  with the ability to actively  pursue its
business purpose of financial consulting.

         The Company's most  significant  cash needs in 1997 include  payment of
general and administrative expenses,  marketing expenses to expand the Company's
client base,and other expenses  relating to the Company's  financial  consulting
business.

         The Company may choose to seek in the future to expand its resources to
take advantage of other  opportunities as they may develop.  No assurance can be
given that the  Company's  resources  will be adequate to take  advantage of any
such opportunity, or that such opportunities will ever materialize.




                      (This Space Intentionally Left Blank)





                                        3

<PAGE>


                                DOWNSTREAM, INC.
                          (A Development Stage Company)

                              FINANCIAL STATEMENTS

                       June 30, 1997 and December 31, 1996




                                        4

<PAGE>


                                 C O N T E N T S


Independent Auditors' Report .........................................  6

Balance Sheet ........................................................  7

Statement of Operations ..............................................  8

Statement of Stockholders' Equity ....................................  9

Statement of Cash Flows .............................................. 10

Notes to the Financial Statements .................................... 12

                                        5
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Downstream, Inc.
(A Development Stage Company)
Salt Lake City, Utah

The accompanying balance sheet of Downstream, Inc. (a development stage company)
as of June 30,  1997 and the related  statements  of  operations,  stockholders'
equity and cash flows for the six months  ended June 30,  1997 and 1996 and from
inception on November 26, 1996 through June 30, 1997 were not audited by us and,
accordingly,  we do not  express an opinion on them.  The  accompanying  balance
sheet as of December 31, 1996 was audited by us and we expressed an  unqualified
opinion on it in our report dated August 7, 1997.


/s/ Jones, Jensen & Company

Jones, Jensen & Company
August 12, 1997

                                     6
<PAGE>
<TABLE>
<CAPTION>
                                                 DOWNSTREAM, INC.
                                           (A Development Stage Company)
                                                  Balance Sheets

                                                      ASSETS


                                                                               June 30,       December 31,
                                                                                1997                 1996
                                                                        ----------------      ------------ 
                                                                            (Unaudited)

CURRENT ASSETS

<S>                                                                     <C>                  <C>               
  Cash                                                                  $          42,075    $            5,765
                                                                        -----------------    ------------------

     Total Current Assets                                                          42,075                 5,765
                                                                        -----------------    ------------------

 FIXED ASSETS, net (Note 7)                                                         1,070                  -
                                                                        -----------------    ---------------

OTHER ASSETS

  Organizational cost, net (Note 4)                                                   272                   303
                                                                        -----------------    ------------------

     Total Other Assets                                                               272                   303
                                                                        -----------------    ------------------

     TOTAL ASSETS                                                       $          43,417    $            6,068
                                                                        =================    ==================

<CAPTION>

                                        LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

<S>                                                                     <C>                  <C>               
  Accounts payable                                                      $           -        $              559
                                                                        -----------------    ------------------

     Total Current Liabilities                                                      -                       559
                                                                        -----------------    ------------------

     TOTAL LIABILITIES                                                              -                       559
                                                                        -----------------    ------------------

STOCKHOLDERS' EQUITY

  Preferred stock: 50,000,000 shares
   authorized of $0.001 par value, -0-
   shares issued and outstanding                                                    -                    -
  Common stock: 100,000,000 shares authorized of
   $0.001 par value, 4,334,000 and 3,300,000
   shares issued and outstanding, respectively                                      4,334                 3,300
  Additional paid-in capital                                                       53,485                13,200
  Deficit accumulated during the development stage                                (14,402)              (10,991)
                                                                        -----------------    ------------------

     Total Stockholders' Equity                                                    43,417                 5,509
                                                                        -----------------    ------------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $          43,417    $            6,068
                                                                        =================    ==================
</TABLE>

    The accompanying notes are an integral part of these financial statements

                                       7

<PAGE>

<TABLE>
<CAPTION>
                                                       DOWNSTREAM, INC.
                                                (A Development Stage Company)
                                                  Statements of Operations
                                                          (Unaudited)

                                                                                                                     From
                                                                                                                 Inception on
                                             For the three                           For the Six                 November 26,
                                             months ended                            Months Ended                1996 Through
                                               June 30,                                June 30,                     June 30,
                                       1997               1996                1997                1996                1997
                                 ---------------    ----------------    ----------------    ----------------    ----------------

<S>                              <C>                <C>                 <C>                 <C>                 <C>           
REVENUES                         $         -        $          -        $          -        $          -        $          -

EXPENSES

   General and administrative              1,358               -                   3,261               -                  14,246
   Depreciation and
     amoritization                            75               -                     150               -                     156
                                 ---------------    ----------------    ----------------    ----------------    ----------------

       Total Expenses                      1,433               -                   3,411               -                  14,402
                                 ---------------    ----------------    ----------------    ----------------    ----------------

NET LOSS                         $        (1,433)   $           -       $         (3,411)   $           -       $        (14,402)
                                 ===============    ================    ================    ================    ================

NET LOSS PER SHARE               $         (0.00)   $          (0.00)   $          (0.00)   $          (0.00)
                                 ===============    ================    ================    ================

WEIGHTED AVERAGE
  NUMBER OF SHARES
  OUTSTANDING                          4,334,000                -              3,493,165                -
                                 ===============    ================    ================    =============
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                       8

<PAGE>
<TABLE>
<CAPTION>

                                                  DOWNSTREAM, INC.
                                            (A Development Stage Company)
                                         Statements of Stockholders' Equity
                                                     (Unaudited)


                                                                                    Additional
                                                        Common Stock                Paid-in        Accumulated
                                                     Shares           Amount         Capital         Deficit
                                                   -----------    ------------     ------------    ----------              
<S>                                               <C>            <C>              <C>              <C>    
Balance, November 26, 1996                             -          $       -        $       -        $     -

Common stock issued for services
 rendered valued at $0.005 per share                1,500,000            1,500            6,000           -

Common stock issued for cash
 valued at $0.005 per share                         1,800,000            1,800            7,200           -

Net loss from inception on
  November 26, 1996 through
  December 31, 1996                                    -                  -                -            (10,991)
                                               --------------   --------------   --------------   --------------

Balance, December 31, 1996                          3,300,000            3,300           13,200          (10,991)

Common stock issued for cash
  valued at $ 0.05 per share                        1,034,000            1,034           50,666            -

Stock offering costs                                    -                -              (10,381)           -

Net loss for the six months
  ended June 30, 1997                                   -                -                -               (3,411)
                                               -------------    --------------   --------------   --------------

Balance, June 30, 1997                              4,334,000   $        4,334   $       53,485   $      (14,402)
                                               ==============   ==============   ==============   ==============
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                       9

<PAGE>

<TABLE>
<CAPTION>
                                                           DOWNSTREAM, INC.
                                                   (A Development Stage Company)
                                                      Statements of Cash Flows
                                                             (Unaudited)
                                                                                                                        From
                                                                                                                    Inception on
                                                For the Three                           For the Six                 November 26,
                                                Months Ended                            Months Ended               1996 Through
                                                  June 30,                                June 30,                    June 30,
                                          1997               1996                 1997                1996              1997
                                     --------------    ----------------    -----------------   -----------------   --------------

CASH FLOWS FROM
 OPERATING ACTIVITIES

<S>                                  <C>               <C>                 <C>                 <C>                 <C>           
  Net loss                           $       (1,433)   $          -        $          (3,411)  $           -       $     (14,402)

  Adjustments to Reconcile
    Net Income
  (Loss) to Net Cash Used in
    Operating Activities:
  Stock issued for services                   -                   -                    -                    -              7,500
  Depreciation and amortization
    expense                                      75               -                      150                -                156
  Increase (decrease) in
    accounts payable                           (356)              -                     (559)               -               -
                                     --------------    ----------------    -----------------   -----------------   -------------

     Net Cash (Used) Provided
       by Operating Activities               (1,714)              -                   (3,820)               -             (6,746)
                                     --------------    ----------------    -----------------   -----------------   -------------

CASH FLOWS FROM
  INVESTING ACTIVITIES

  Fixed assets purchased                      -                    -                  (1,189)               -             (1,189)
  Organization costs paid                     -                    -                    -                   -               (309)
                                     --------------    ----------------    -----------------   -----------------   -------------

     Net Cash (Used) Provided
       By Investing Activities                -                    -                  (1,189)               -             (1,498)
                                     --------------    ----------------    -----------------   -----------------   -------------

CASH FLOWS FROM
  FINANCING ACTIVITIES

  Stock offering costs                       (8,622)               -                 (10,381)               -            (10,381)
  Common stock issued for cash               51,700                -                  51,700                -             60,700
                                     --------------    ----------------    -----------------   -----------------   -------------

     Net Cash Provided By
       Financing Activities                  43,078                -                  41,319                -             50,319
                                     --------------    ----------------    -----------------   -----------------   -------------

NET INCREASE IN CASH AND
   CASH EQUIVALENTS                          41,364                -                  36,310                -             42,075

CASH AND CASH EQUIVALENTS
   AT BEGINNING OF PERIOD                       711                -                   5,765                -               -
                                     --------------    ----------------    -----------------   -----------------   -------------

CASH AND CASH
   EQUIVALENTS AT END
  OF PERIOD                          $       42,075    $           -       $          42,075   $            _      $      42,075
                                     ==============    ===============     =================   =================   =============
</TABLE>


    The accompanying notes are an integral part of these financial statements


                                       10

<PAGE>
<TABLE>
<CAPTION>

                                DOWNSTREAM, INC.
                          (A Development Stage Company)
                      Statements of Cash Flows (Continued)
                                   (Unaudited)
                                                                                                                         From
                                                                                                                     Inception on
                                                 For the Three                           For the Six                 November 26,
                                                 Months Ended                            Months Ended               1996 Through
                                                  June 30,                                June 30,                    June 30,
                                          1997               1996                 1997                1996               1997
                                     --------------    ----------------    -----------------   -----------------   --------------

Cash Paid For:

<S>                                  <C>               <C>                 <C>                 <C>                 <C>           
  Interest                           $         -       $           -       $            -      $            -      $            -
  Income taxes                       $         -       $           -       $            -      $            -      $            -
</TABLE>

    The accompanying notes are an integral part of these financial statements

                                       11

<PAGE>

                                DOWNSTREAM, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                       June 30, 1997 and December 31, 1996


NOTE 1 -      ORGANIZATION AND HISTORY

              a.     Organization

              The financial statements  presented are those of Downstream,  Inc.
              (a development stage company).  The Company was incorporated under
              the laws of the State of Utah on November  26,  1996.  The Company
              was   incorporated   to  engage  in  the   business  of  financial
              consulting.  This  activity  includes,  but  is  not  limited  to,
              assisting  their  clients  in  assessing  their  client's  current
              financial  condition  as well  as the  client's  future  financial
              needs.  The Company is currently a  development  stage  company as
              operations have not commenced.

              b.     Accounting Method

              The Company's financial  statements are prepared using the accrual
              method of  accounting.  The Company has elected a December 31 year
              end.

              c.     Cash and Cash Equivalents

              Cash  equivalents include short-term,  highly  liquid  investments
              with   maturities  of  three  months  or  less  at  the  time   of
              acquisition.

              d.     Net Loss Per Share

              The computations of net   loss   per   share   of   common   stock
              are based  on  the  weighted  average number of shares outstanding
              during the period of the financial statements.

              e.     Provision for Taxes

              At June 30,1997, the Company had net operating loss carry forwards
              of approximately $14,402 that may be offset against future taxable
              income  through  2012.  No tax  benefit  has been  reported in the
              financial  statements  because the Company believes there is a 50%
              or greater chance the net operating loss carryforwards will expire
              unused.  Accordingly,  the  potential  tax  benefits  of  the  net
              operating loss  carryforwards are offset by a valuation  allowance
              of the same amount.

              f.     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  and  disclosure of contingent  assets and
              liabilities  at the  date  of the  financial  statements  and  the
              reported  amounts of revenues  and expenses  during the  reporting
              period. Actual results could differ from those estimates.

                                       12

<PAGE>

                                DOWNSTREAM, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                       June 30, 1997 and December 31, 1996

NOTE 2 -      GOING CONCERN

              The  Company's financial  statements are prepared  using generally
              accepted accounting principles applicable to a going concern which
              contemplates  the  realization  of  assets   and  liquidation   of
              liabilities in the normal course of business. However, the Company
              does not have significant cash or other material assets,  nor does
              it have an established  source of revenues sufficient to cover its
              operating  costs and to allow it to continue as  a going  concern.
              The  accompanying  financial   statements  do   not  include   any
              adjustments  that   might  result   from   the  outcome  of   this
              uncertainty.  Management  has  begun  offering  its  services   to
              potential  clients with  the expectation  that revenues will cover
              future costs.

NOTE 3 -      STOCK TRANSACTIONS

              On  December 10, 1996,  the  Company  issued  1,500,000  shares of
              common stock for services rendered by a related party.  The shares
              were valued at $0.005 per share.

              On December 10, 1996, the Company issued 1,800,000 shares of stock
              for cash at $0.005 per share.

NOTE 4 -      ORGANIZATION COSTS

              The Company is amortizing the non-recurring costs  of   organizing
              the Company over a five year period. Amortization expense  for the
              six months  ended June 30, 1997 was $31.

NOTE 5 -      PUBLIC OFFERING

              The Company completed a public offering of 1,034,000 shares of its
              previously unissued common stock to the public at $0.05 per share.
              The Company  received gross proceeds in the amount of $51,700 as a
              result of the public offering.

NOTE 6 -      COMMITMENTS

              Rent - the Company has agreed to pay its President  $300 per month
              for the use of his home as its office until the  completion of the
              public stock offering.

              Officer compensation - the Company has agreed to pay its President
              a salary of $2,000 per month.  In  addition  to the  salaries  the
              Company has agreed to pay its President  and the other  officers a
              commission of up to 20% of revenues generated by their efforts.

NOTE 7 -      FIXED ASSETS

              The Company purchased  office equipment for the operations  of its
              business.  The  Company  has  capitalized   these  assets  and  is
              depreciating them over a five  year  period  using  the   straight
              line method. Depreciation  expense  for the six months  ended June
              30, 1997 was $119.

                                       13

<PAGE>
                           PART II - OTHER INFORMATION



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

         (a)      There are no exhibits included with this report.

         (b)      The Company has filed no reports on Form  8-K  during  the
                  quarter ended June 30, 1997.










                      (This Space Intentionally Left Blank)




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<PAGE>


                                   SIGNATURES

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

                           DOWNSTREAM INCORPORATED-DSI
                                  (Registrant)



Date:  August 13, 1997                      By:   /s/ Barry A. Ellsworth
                                                 -----------------------
                                                  Barry A. Ellsworth
                                                  President

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