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 9/30/97       Commission file number 333-6440

                           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)

          2046 E Murray Holladay Rd.
                  Suite 202                             
             Salt Lake City, Utah                        84117  
        Address of principal executive                 (Zip Code)
                   offices)

          Issuer's telephone number, including area code (801) 272-5174

            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 October 25, 1997, the issuer had outstanding  4,334,000 shares
of its Common Stock, $0.001 par value.


<PAGE>
                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

            The  unaudited  balance sheet of  Downstream  Incorporated-DSI  (the
   "Company") as of September 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  nine  month  periods  ended
   September 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  September  30,  1997,  the  Company
   experienced  a net loss in the amount of $11,315.  The Company's net loss for
   the nine months  ended  September  30, 1997 was  $14,726.  Loss per share was
   approximately  $0.003 for the three months  ended  September  30,  1997,  and
   approximately $0.004 for the nine months ended September 30, 1997.

            The  Company's  losses during the three and nine month periods ended
   September  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  commence  operations  by  locating  and
   beginning to work with its initial clients.

            The Company had  revenues  of $240 from  interest on a money  market
   account  during the three and nine month time  periods  ended  September  30,
   1997. The Company had no other revenues during this time period. However, the
   Company has  developed a  relationship  with a large,  national food and drug
   company,  and entered  into  contracts  with that  company,  that the Company
   believes will create significant revenues for at least the next two quarters.
   Other such clients are being pursued.

            General  and  administrative  expenses  for the three  months  ended
   September 30, 1997, were $11,473. General and administrative expenses for the
   nine months ended September 30, 1997 were $14,734.

            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  September  30, 1997, the  Company reported  total  assets  of
   $28,635,  up $22,567,  from the $6,068,  reported as of December 31, 1996.

            Current  assets as of September 30, 1997 were  $27,205,  up $21,440,
   from the $5,765 reported as of December 31, 1996. Fixed assets were $1,173 as
   of September 30, 1997, up $1,173,  from the $0.00 of fixed assets reported as
   of December 31, 1996.

            Other assets were $257 as of September  30, 1997,  down $46 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,  less general and  administrative  costs
   incurred during the quarter.

            The  change  in  current  assets  during   the  three  months  ended
   September 30, 1997,  reflects an increase in cash of $21,260.

            Other assets represent organizational costs net of amortization.

            Liabilities

            The Company had  liabilities of $2,639  as of September 30, 1997, an
   increase of $2,080 from the $559 reported as of December 31, 1996.

   Liquidity and Capital Resources - September 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
   September  30,  1997.  This has  provided  the  Company  with the  ability to
   actively  pursue  its  business  purpose of general  business  and  financial
   consulting,  and as previously stated,  contracts have been entered into that
   should produce  significant  revenues for the Company for at least the next 6
   months.

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



<PAGE>


                           PART II - OTHER INFORMATION



   Use of Proceeds from the Sale of Securities.

            Effective  September  2, 1997 the SEC  rescinded  the use of Form SR
   stating that the forms were "no longer  necessary or  appropriate",  but that
   the use of proceeds was "to be reported in each  periodic  report  thereafter
   until the registrant has disclosed the use of all of the proceeds".

            For the  period  ending  July  28,  1997 a Form SR was  filed by the
   Company  in which it  reported  that  after  deducting  the  expenses  of its
   underwriting  the Company was left with net offering  proceeds of $40,516.00.
   Other expenses of approximately  $5,450.00 were then reported in that filing.
   Since that time,  and for the period ending  September 30, 1997,  the Company
   has spent net proceeds from the offering as follows:

                    Rent:                                  600.00
                    Legal:                                  74.00
                    Accounting:                            132.00
                    Salaries:                            4,000.00
                    Misc. G&A:                           2,423.00
                    Travel expenses:                     1,667.00
                    Expenses incurred in
                    search for new clients:                968.00

            The  aforementioned  uses of  proceeds  do not  represent a material
   change in the use of proceeds described in the prospectus.

   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 September 30, 1997.




                      (This Space Intentionally Left Blank)


<PAGE>

Appendix "A"

                                DOWNSTREAM, INC.
                          (A Development Stage Company)

                              FINANCIAL STATEMENTS

                    September 30, 1997 and December 31, 1996




                                        1

<PAGE>




                                 C O N T E N T S


Independent Auditors' Report ..........................................  3

Balance Sheets ........................................................  4

Statements of Operations ..............................................  5

Statements of Stockholders' Equity ....................................  6

Statements of Cash Flows ..............................................  7

Notes to the Financial Statements .....................................  9



                                        2

<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 September 30, 1997 and the related statements of operations, stockholders'
equity and cash flows for the three months and nine months ended  September  30,
1997 and 1996 and from inception on November 26, 1996 through September 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
October 16, 1997


                                        3

<PAGE>
<TABLE>
<CAPTION>



                                                 DOWNSTREAM, INC.
                                           (A Development Stage Company)
                                                  Balance Sheets

                                                      ASSETS


                                                                          September 30,         December 31,
                                                                                1997                1996
                                                                             (Unaudited)
CURRENT ASSETS

<S>                                                                     <C>                  <C>               
  Cash                                                                  $          27,205    $            5,765
                                                                        -----------------    ------------------

     Total Current Assets                                                          27,205                 5,765
                                                                        -----------------    ------------------

 FIXED ASSETS, net (Note 7)                                                         1,173                  -
                                                                        -----------------    ------------------

OTHER ASSETS

  Organizational cost, net (Note 4)                                                   257                   303
                                                                        -----------------    ------------------

     Total Other Assets                                                               257                   303
                                                                        -----------------    ------------------

     TOTAL ASSETS                                                       $          28,635    $            6,068
                                                                        =================    ==================


                                        LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

  Accounts payable                                                      $           2,639    $              559
                                                                        -----------------    ------------------

     Total Current Liabilities                                                      2,639                   559
                                                                        -----------------    ------------------

     TOTAL LIABILITIES                                                              2,639                   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                                                       47,379                13,200
  Deficit accumulated during the development stage                                (25,717)              (10,991)
                                                                        -----------------    ------------------

     Total Stockholders' Equity                                                    25,996                 5,509
                                                                        -----------------    ------------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $          28,635    $            6,068
                                                                        =================    ==================
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                                         4

<PAGE>
<TABLE>
<CAPTION>



                                DOWNSTREAM, INC.
                          (A Development Stage Company)
                            Statements of Operations
                                   (Unaudited)

                                                                                                                    From
                                                                                                                 Inception on
                                             For the Three                          For the Nine                 November 26,
                                             Months Ended                           Months Ended                 1996 Through
                                             September 30,                          September 30,                September 30,
                                       1997               1996                1997                1996                1997
                                 ---------------    ----------------    ----------------    ----------------    ----------------

<S>                              <C>                <C>                 <C>                 <C>                 <C>             
REVENUES                         $          240     $          -        $            240    $          -        $            240
                                 --------------     ----------------    ----------------    ----------------    ----------------

EXPENSES

   General and administrative             11,473               -                  14,734               -                  25,705
   Depreciation and
     amoritization                            82               -                     232               -                     252
                                 ---------------    ----------------    ----------------    ----------------    ----------------

       Total Expenses                     11,555               -                  14,966               -                  25,957
                                 ---------------    ----------------    ----------------    ----------------    ----------------

NET LOSS                         $       (11,315)   $           -       $        (14,726)   $           -       $        (25,717)
                                 ===============    ================    ================    ================    ================

NET LOSS PER SHARE               $        (0.003)   $          (0.00)   $         (0.004)   $          (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


                                        5

<PAGE>
<TABLE>
<CAPTION>



                                                  DOWNSTREAM, INC.
                                            (A Development Stage Company)
                                         Statements of Stockholders' Equity
                                                     (Unaudited)
                                                                                                     Deficit
                                                                                                    Accumulated
                                                                                    Additional      During the
                                                         Common Stock                Paid-in        Development
                                                  Shares              Amount         Capital           Stage
                                                  ------              ------         -------           -----
<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                                    -                -              (16,487)           -

Net loss for the nine months
  ended September 30, 1997                              -                -                -              (14,726)
                                               -------------    --------------   --------------   --------------

Balance, September 30, 1997                         4,334,000   $        4,334   $       47,379   $      (25,717)
                                               ==============   ==============   ==============   ==============
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                        6

<PAGE>
<TABLE>
<CAPTION>



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

CASH FLOWS FROM
 OPERATING ACTIVITIES

<S>                                  <C>               <C>                 <C>                 <C>                 <C>           
  Net loss                           $      (11,315)   $          -        $         (14,726)  $           -       $     (25,717)

  Adjustments to Reconcile
    Net Income
  (Loss) to Net Cash Used in
    Operating Activities:
  Stock issued for services                   -                   -                    -                    -              7,500
  Depreciation and amortization
    expense                                      82               -                      232                -                238
  Increase (decrease) in
    accounts payable                          2,639               -                    2,080                -              2,639
                                     --------------    ----------------    -----------------   -----------------   -------------

     Net Cash (Used) Provided
       by Operating Activities               (8,594)              -                  (12,414)               -            (15,340)
                                     --------------    ----------------    -----------------   -----------------   -------------

CASH FLOWS FROM
  INVESTING ACTIVITIES

  Fixed assets purchased                       (170)               -                  (1,359)               -             (1,359)
  Organization costs paid                     -                    -                    -                   -               (309)
                                     --------------    ----------------    -----------------   -----------------   -------------

     Net Cash (Used) Provided
       By Investing Activities                 (170)               -                  (1,359)               -             (1,668)
                                     --------------    ----------------    -----------------   -----------------   -------------

CASH FLOWS FROM
  FINANCING ACTIVITIES

  Stock offering costs                       (6,106)               -                 (16,487)               -            (16,487)
  Common stock issued for cash                 -                   -                  51,700                -             60,700
                                     ----------------------------------    -----------------   -----------------   -------------

     Net Cash Provided By
       Financing Activities                  (6,106)               -                  35,213                -             44,213
                                     --------------    ----------------    -----------------   -----------------   -------------

NET INCREASE IN CASH AND
   CASH EQUIVALENTS                         (14,870)               -                  21,440                -             27,205

CASH AND CASH EQUIVALENTS
   AT BEGINNING OF PERIOD                    42,075                -                   5,765                -               -
                                     --------------    ----------------    -----------------   -----------------   -------------

CASH AND CASH
  EQUIVALENTS AT END
  OF PERIOD                          $       27,205    $           -       $          27,205   $            -      $      27,205
                                     ==============    ===============     =================   =================   =============
</TABLE>


    The accompanying notes are an integral part of these financial statements


                                        7

<PAGE>
<TABLE>
<CAPTION>



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


                                        8

<PAGE>



                                DOWNSTREAM, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                    September 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  clients  in  assessing  the client's  current financial
              condition  as well  as the  client's  future  financial needs. The
              Company is currently a  development  stage  company.

              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 September  30,1997,  the Company had net  operating  loss carry
              forwards  of  approximately  $23,078  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.

                                                                 9

<PAGE>


                                DOWNSTREAM, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                    September 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
              nine months ended September 30, 1997 was $52.

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 presently pays $300.00 per month office rent to
              Intermountain Mortgage. Intermountain Mortgage is owned by Mr. Joe
              Thomas and Mr. Rob Karz.  Mr. Thomas is an officer and director of
              Downstream Inc., and Mr. Karz is a controlling shareholder.

              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 nine months ended September
              30, 1997 was $180.

                                                                 10

<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: October 25, 1997             By:   /s/ Barry A. Ellsworth
                                           -----------------------
                                            Barry A. Ellsworth
                                            President