<PAGE>

                                   FORM 10-K

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

             Annual Report Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

     For the fiscal year                                    Commission file
     ended JUNE 30, 1996.                                   No. 33-17679-D

                           PIERCE INTERNATIONAL, INC.
           (Exact name of registrant as specified in its charter)

           COLORADO                                           84-1067694
(State or other jurisdiction of                          (I.R.S. Employer ID.)
 incorporation or organization)

               13275 E. FREEMONT PLACE #101A, ENGLEWOOD, CO  80112
            (Address of principal executive offices)       (Zip Code)

Registrants's telephone number, including area code (303)-792-0719

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  None

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the proceeding 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
                                               ---     ---

    As of June 30, 1996, 5,980,703 shares were outstanding and the aggregate
market value of stock held by non-affiliates of the Registrant computed by
reference to the average bid and asked price was $0.

     Documents incorporated by reference:  NONE.

     This Form 10-K consists of 29 pages.

     Exhibits are indexed on page 12.

<PAGE>


                                     PART I
ITEM 1. BUSINESS.

HISTORY AND ORGANIZATION

    Pierce International, Inc. (The "Company") was organized under the laws of
the State of Colorado July 22, 1987, for the purpose of creating a corporate
vehicle to acquire business opportunities.

    In February, 1988 the Company completed a public offering of 40,000,000
shares of its no par value common stock at an offering price of $.01 per share. 
The net proceeds to the Company from the initial offering were approximately
$332,900.

     Currently, the Company is concentrating its business efforts in two areas:

               1.   Industrial Development
               2.   Natural Resources

NATURAL RESOURCES


     The Company owns an interest in the Como Property through its 100% owned 
subsidiary, Como, Inc.  Como consists of gold and gravel mining leases on a 
property situated approximately 50 miles southwest of Denver, Colorado, near 
Como, Colorado in Park County.  The Company had sold the property to a 
subsidiary under a stock purchase agreement, however, the subsidiary 
defaulted on the agreement and the Company reclaimed the property as of June 
11, 1996. The Company continues to carry $200,000 in debt related to the 
original purchase of the Como leases.  This $200,000 will be paid from the 
net profits generated by the property.  Further, a shareholder is entitled to 
10% of net profits received by the Company on this project.

INDUSTRIAL DEVELOPMENT

     EASIWALL (STRAWBOARD)


     On May 23, 1994, the Company agreed to purchase a used strawboard 
factory for $50,000.  A payment of $10,000 was paid at execution, and the 
balance of $40,000 was paid in a series of payments, with the final payment 
being made September 30, 1994. This equipment was part of an operation in 
Yuba City, California.  The Company has an agreement with Stramit Industries 
Ltd. of Yaxley, England, who will refurbish the equipment and supervise the 
proper installation of the equipment at a site yet to be determined.  The 
equipment has an estimated market value of $900,000.

<PAGE>

     The machine produces a product known internationally as "strawboard".  The
Company's trade marked names for its products are "Easiboard" and "Easiwall". 
The product has a history of use in the building industry for more than 40
years.  A number of the plants are currently operating worldwide.  However,
there is no such operating manufacturing plant in the United States.  The
technology includes the use of wheatstraw in a compressed state to produce
building panels.

     The Company is engaged in marketing factories, technical expertise, and
exclusive sales of the product.  Although no deals have yet been completed, the
Company has had serious negotiations with several rural communities who are
interested in financing a factory in their area.

     Easiboard is a solid, versatile domestic partitioning system ideally suited
to the needs of today's contractor.  The system is simple to install and
replaces the use of timber and studwork in residential and commercial
applications.  It offers cost benefits and provides excellent sound and thermal
insulation properties in all types of dwellings.  It is also a fire retardant. 
According to building contractors and building specialty products professionals,
Easiboard may very well replace drywall, wood studs and in some instances,
plywood.  But more importantly, Easiboard's primary component is straw, and
ever-renewing, largely wasted agricultural by-product.

     The Company is also entering into a relationship with Stramit Industries
LTD to introduce even more technological applications for Easiboard and to
provide for technological changes in the equipment.  Details regarding this
agreement will be forthcoming.


EMPLOYEES

     The Company and its subsidiaries do not currently have any employees.  All
services are provided by various individuals on a consulting basis.

COMPETITION

     The Company and its subsidiaries compete against many significantly larger
enterprises with respect to their business activities.   Nearly all such
entities have significantly greater financial resources, technical expertise and
managerial capabilities than the Company and its subsidiaries, and,
consequently, the Company and its subsidiaries are at a competitive
disadvantage.

ITEM 2.   PROPERTIES.

   The Company leases it office space which consists of approximately 500 square
feet from a non-affiliated party.   The office is located at 13275 E. Freemont
Place, Suite 101A, Englewood, CO.  The lease is on a month to month basis.  
Current rent is $478 per month.

ITEM 3.   LEGAL PROCEEDINGS.

     The Company, is not engaged in any material pending legal proceedings.


<PAGE>

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     No matter was submitted during the forth quarter of the fiscal year covered
by this report to a vote of security holders.

<PAGE>

                                     PART II


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     (a)  PRINCIPAL MARKET OR MARKETS.  There is not a current market for 
the Company's stock.  The Company is in the process of getting relisted on 
the OTC Bulletin Board.

     (b)  APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK.  The number of 
beneficial holders of the Company's no par value common stock at June 30, 
1996, were approximately 450.

     (c)  DIVIDENDS.  Holders of common stock are entitled to receive such 
dividends as may be declared by the Company's Board of Directors.  No 
dividends have been paid with respect to the Company's common stock and no  
dividends are anticipated to be paid in the foreseeable future.

ITEM 6.   SELECTED FINANCIAL DATA.

     The following table sets forth certain selected financial data with respect
to the Company.


Balance Sheet Data:           At June 30,
--------------------------------------------------------------------------------
                                  1996      1995      1994      1993      1992

Total Assets                    570,562   584,041   599,737   395,767   268,155
Long Term Debt                  200,000   200,000   200,000   200,000   205,325
Working Capital                (170,819) (220,578) (171,729) (241,872) (408,968)
Total Liabilities               446,429   453,130   594,441   575,192   616,122
Stockholder's Equity            124,133   130,911  (134,626) (298,017) (465,349)
Deferred Revenue                      0         0    66,187         0         0


Statement of Operations Data:             For the year ended June 30,
--------------------------------------------------------------------------------
                                 1996      1995      1994      1993      1992

Revenues                        245,947   210,357   148,421   271,366    34,898 
Net Earnings (Loss)              (6,778)   52,465    67,039   167,322  (295,922)
Net Earnings (Loss) Per
  Common Share                   (0.001)    0.009     0.012     0.001    (0.002)


<PAGE>

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION OF THE YEAR ENDED JUNE 30, 1996.

INTRODUCTION

     The Company is concentrating on its two major industries, natural 
resources and industrial development.  The Company is making a concentrated 
effort to sell strawboard equipment, and to presell strawboard.

LIQUIDITY

     Working capital at June 30, 1996 was a negative $170,819.  A significant 
portion of current liabilities are advances from stockholders.  Cash flow 
continues to be irregular and the Company will continue to rely heavily on 
its current investments to produce future cash flow.
     

RESULTS OF OPERATIONS

     For the year ended June 30, 1996, the Company had a net loss of $6,778. 
The Company generated $205,144 in revenues related to the sale of strawboard 
equipment.  The Company made an allowance for uncollectable related party 
receivables (PIDI) of $162,200.  In addition, as the operations of PIDI have 
become highly questionable, the Company reclaimed the property in Como 
realizing a gain of $434,918 and simultaneously writing off its investment in 
PIDI of $381,695.  As the Company develops its two primary business 
operations, costs have increased in the areas of legal, accounting, travel, 
and outside consulting fees.


<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.

     The financial statements and schedules are set forth on pages F-1 through
S-3 hereto.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

<PAGE>

                                 PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICER OF THE REGISTRANT.

     The Directors and Officers of the Company are as follows:

          NAME               AGE           POSITION
          ----               ---           --------
     Pierce D. Parker         69     Director, Chairman of the Board, and
                                     President

     Nancy A. Cooper          37     Director, Vice President
                                     and Secretary

     Mark S. Cooper           37     Director


     Dr. Parker should be considered a "parent and organizer" of the Company (as
such term is defined by Rule 405 under the Securities Act of 1933), in as much
as he has taken significant initiative in founding and organizing the business
of the Company and because of his control position in the Company.  Dr. Parker
devotes full time to the operations of the Company.  Ms. Cooper devotes only a
limited amount of time to the Company on an as-needed basis.

     There is no family relationship between any director or executive officer
except:  Ms. Cooper is the daughter of Pierce D. Parker and the spouse of Mark
Cooper.

PIERCE D. PARKER

     Dr. Parker has served as the President, Treasurer and as a Director of the
Company since its inception on August 10, 1987.  Dr. Parker became Vice-
President and Chairman of the Board  on August 15, 1988.  He continues as
Chairman of the Board and has been President of the Company since April 1, 1990.
In addition, he serves as President and Director of Pierce International
Discovery, Inc. since its inception April, 1989.  From October, 1988 until
March, 1992,  Dr. Parker was President, Treasurer and a Director of Pierce
International Gold, Inc., a publicly-held company which was a majority-owned
subsidiary of Pierce International, Inc., and held certain gold and silver
mineral rights.  Since his retirement in May, 1986 as President of AMAX
Exploration, Inc. and Chief Geologist of AMAX, Inc., Dr. Parker has been
consulting for the natural resources industry under the name Parker Consulting
Services, Inc.  His consulting clients include AMAX, Inc. and several small
mining groups.  Dr. Parker was employed by AMAX, Inc. over 26 years prior to
his retirement.  His first 13 years with AMAX, Inc. included positions as
Geologist, Project Manager, Regional Manager, and Manager of Technical and
Coordinating Services.  From 1972 until 1978, he served as Chief Geologist,
AMAX Exploration, Inc.  From 1978 until 1982, he served as Senior Vice
President, AMAX Exploration, Inc. and Chief Geologist, AMAX, Inc.   From 1982
until May, 1986, he served as President of AMAX Exploration, Inc. and Chief
Geologist of AMAX, Inc.  As President of AMAX Exploration, Inc., he was in
charge of evaluations and recommendations for major mining projects, and was
responsible for monitoring and approving ore reserves throughout the 


<PAGE>

world.  Dr. Parker received a Bachelor of Science Degree with Honors in 
Geological Engineering and Mining Engineering in 1951 from Montana College of 
Mineral Science and Technology, Butte, Montana.  He received his Masters of 
Science Degree (Magna Cum Laude) in Geology from the University of Wisconsin 
in 1956 and his Ph.D. (Magna Cum Laude) in Geology from that same university 
in 1960.  Dr. Parker has authored several technical publications and given 
numerous talks and seminars in the natural resources and minerals economics 
area.

MARK S. COOPER

     Mr. Cooper has served as Vice President and Director of the Company since
January, 1990.  He is also an Officer and Director of Pierce International
Discovery, Inc. He obtained his real estate license in the state of Colorado in
1993. Currently, he is President of an unrelated Real Estate Company.   Mr.
Cooper was a professional football player in the National Football League from
1983 through the 1989 season.  From 1987 to 1989, he played for the Tampa Bay
Buccaneers.  From 1983 to 1987 he played for the Denver Broncos.  He received a
Bachelor of Science Degree in Communications from the University of Miami in
1983.  Mr. Cooper is available to work for the Company on a consulting basis.

NANCY A. COOPER

     Ms. Cooper began working for Pierce Financial (then MRG Financial) in
November of 1987. Ms. Cooper was a full time employee of the company until
August 15, 1991.  She is currently employed as a Regional Sales Manager for
Health Script.  Ms. Cooper oversees the sales and marketing of Health Script's
product lines in the midwest and central regions of the U.S. Ms. Cooper received
her Bachelor of Science degree with a major in Human Resources from Colorado
State University.  She is available to work for the Company on a consulting
basis.

     All directors of the Company will hold office until the next annual meeting
of the shareholders and until their successors have been elected and qualified.

     The Officers of the Company are elected by the Board of Directors at the
first meeting after each annual meeting of the shareholders, and hold office
until their death, or until they shall resign or have been removed from office.

ITEM 11.  EXECUTIVE COMPENSATION

RENUMERATION

     None of the Company's Officers and Directors currently receives a salary
from the Company and its subsidiaries.  They may receive fees for consulting
work, however, none have received fees in excess of $60,000 per year.

     Although Directors do not receive compensation for their services as
Directors as such, Directors may be reimbursed for expenses incurred in
attending Board meetings.

<PAGE>

INCENTIVE STOCK OPTION PLAN

     On August 10, 1987, the Company adopted an Incentive Stock Option Plan (the
"Plan") under which options granted are intended to qualify as "incentive stock
options" under Section 422A of the Internal Revenue code of 1954, as amended
(the "Code"). Pursuant to the Plan, options to purchase up to 400,000 shares of
the Company's Common Stock may be granted to employees of the Company.  The Plan
is administered by the Board of Directors which is empowered to determine the
terms and conditions of each option, subject to the limitation that the exercise
price cannot be less than the market value of the Common Stock on date of the
grant (110% of the market value in the case of options granted to an employee
who owns 10% or more of the Company's outstanding Common Stock)  and no option
can have a term in excess of 10 years (5 years in the case of options granted to
employees who own 10% or more of the company's Common Stock).

     As of the date of this report, no options have been granted under this
Plan.

<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table sets forth, as of June 30, 1996, the stock ownership 
of each person known by the Company to be the beneficial owner of five 
percent or more of the Company's Common Stock, each Director individually and 
all Directors and Officers of the Company as a group.  Each person has sole 
voting and investment power with respect to the shares shown.

Name and Address              Amount of                  Percent of Class
of Beneficial Owner           Beneficial Ownership       Currently Outstanding

Pierce D. Parker              2,061,602 (1)                      34.47%
13041 N. Travois Trail
Parker, CO  80134

Nancy A. Cooper                 119,550                           2.00%
19754 E. Euclid Dr.
Aurora, Co  80016

Mark S. Cooper                  599,550                          10.02%
19754 E. Euclid Dr.
Aurora, CO  80016

Alan Wakefield                  400,000                           6.69%
122 Waterway
Willis, TX  77378

All Directors and Officers as
a Group  (4 Persons)           3,180,702 (1)                     53.18%

1)  Includes 1,200,000 shares owned directly by Dr. Parker, and 861,602 shares
owned by Parker Consulting Services (Dr. Parker is the primary shareholder).

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The Company continues to owe Pierce D. Parker/Parker Consulting Services,
an officer and director, $230,649 from advances made over a period of time.  In
addition, the Company owes $200,000 to Parker Consulting Services Profit Sharing
Plan for amounts directly related to the Como property.  See the business
description under the heading, "Natural Resources".

<PAGE>

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a)1.  The financial statements filed as a part of this 10-K are as follows:

                                                                          Page
Independent Auditor's Report                                               F-1
                         
Balance Sheets, June 30, 1996 and 1995.                                    F-2
    
Statement of Operations, for the years ended June 30, 1996,
1995, and 1994.                                                            F-3

Statement of Changes in Stockholders' Equity, for the years
ended June 30, 1996, 1995, and 1994.                                       F-4

Statement of Cash Flows, for the years ended June 30, 1996,
1995 and 1994.                                                             F-5

Notes to Financial Statements                                              F-6

(a)2.     Financial Statement Schedules:

     Independent Auditor's Report on Additional Information                S-1
     Schedule V - Property and Equipment                                   S-2
     Schedule VI - Accumulated Depreciation on Property and Equipment      S-3
     

All other schedules have been omitted because they are inapplicable, not
required or the information is included elsewhere in the financial statements 
or notes thereto.

(a)3.  The exhibits required by Item 601 of Regulation S-K are as follows:

               DESCRIPTION                   LOCATION
               -----------                   --------

  (3)  Articles of Incorporation and Bylaws--incorporated by reference from Form
S-18 effective with the Commission on January 20, 1988, (SEC File No. 33-17679-
D).

  (11) Statement re: computation of per share earnings


<PAGE>

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.

     No annual report or proxy material has been sent to security holders.  If
any annual report or proxy material is furnished to security holders subsequent
to this filing, copies of such material will be furnished to the commission when
they are sent to shareholders.


<PAGE>

                                 SIGNATURES


     Pursuant to the requirements of the Section 13 or 15(d) of the Securities
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                       PIERCE INTERNATIONAL, INC.

Dated:  October 15, 1996                BY: /s/ Pierce D. Parker
                                           --------------------------------
                                           Pierce D. Parker,
                                           President


     Pursuant to the requirements of the Securities Act of 1934, this Report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.

         SIGNATURE                            CAPACITY
         ---------                            --------

 /s/ Pierce D. Parker              Chairman of the Board, President and Director
-----------------------------      (Chief Executive Officer, and Principal
Pierce D. Parker                   Financial and Accounting Officer)

-----------------------------
Date


 /s/ Nancy A. Cooper               Vice President, Secretary and Director
-----------------------------
Nancy A. Cooper

-----------------------------
Date


 /s/ Mark S. Cooper                Vice President and Director
-----------------------------
Mark S. Cooper

-----------------------------
Date



<PAGE>

                           PIERCE INTERNATIONAL, INC.

                              FINANCIAL STATEMENTS
                          JUNE 30, 1996, 1995, AND 1994






<PAGE>

                           PIERCE INTERNATIONAL, INC.
                                        
                          INDEX TO FINANCIAL STATEMENTS

                                                                           PAGE
                                                                           ----
INDEPENDENT AUDITOR'S REPORT                                                F-1

BALANCE SHEETS, June 30, 1996 and 1995                                      F-2

STATEMENTS OF OPERATIONS - For the Years ended
June 30, 1996, 1995, and 1994.                                              F-3

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY -
For the Years ended June 30, 1996, 1995, and 1994.                          F-4

STATEMENTS OF CASH FLOWS - For the Years ended
June 30, 1996, 1995 and 1994.                                               F-5

NOTES TO THE FINANCIAL STATEMENTS                                           F-6

INDEPENDENT AUDITOR'S REPORT ON ADDITIONAL INFORMATION                      S-1

SCHEDULE V - PROPERTY AND EQUIPMENT                                         S-2

SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY 
          AND EQUIPMENT                                                     S-3

<PAGE>

                               [LETTERHEAD]

                       INDEPENDENT AUDITORS' REPORT

To the Stockholders and Directors
Pierce International, Inc.

We have audited the accompanying balance sheets of Pierce International, Inc. 
as of June 30, 1996 and 1995, and the related statements of operations, 
changes in stockholders' equity and cash flows for the years ended June 30, 
1996, 1995 and 1994. 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 audit.

We conducted our audit 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 misstatements. 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 audit provides a 
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of Pierce International, Inc. 
as of June 30, 1996, and 1995 and the results of their operations and cash 
flows for the years ended June 30, 1996, 1995 and 1994 in conformity with 
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the 
Company will continue as a going concern. As discussed in Note 1, to the 
financial statements, the Company has suffered recurring losses from 
operations that raise substantial doubt about its ability to continue as a 
going concern. The financial statements do not include any adjustments that 
might result from the outcome of this uncertainty.


                                /s/  Doran Peck, C.P.A., P.C.
                                -----------------------------
                                Doran Peck, C.P.A., P.C.

Denver, Colorado
October 12, 1996

                                     F-1

<PAGE>

                               PIERCE INTERNATIONAL, INC.
                                     BALANCE SHEETS

                                        ASSETS

                                                        June 30,      June 30,
                                                          1996          1995
                                                        ---------     ---------
CURRENT ASSETS:
  Cash                                                  $  13,004     $     808
  Investments and Stocks                                   15,747         5,084
  Accounts Receivable                                      46,492        26,293
  Other                                                       367           367
                                                        ---------     ---------
          Total current assets                             75,610        32,552

PROPERTY AND EQUIPMENT:  (Note 1)
  Undeveloped land mineral property (Note 2)              434,918             -
  Furniture and equipment                                   7,705         7,705
  Leased equipment                                              -             -
  Strawboard equipment (Note 3)                            57,120        55,995
                                                        ---------     ---------
                                                          499,743        63,700
  Less accumulated depreciation and
    amortization                                           (4,791)       (3,908)
                                                        ---------     ---------
                                                          494,952        59,792
OTHER ASSETS
  Long Term Investments (Note 4)                                -       381,695
  Related Party Receivable (Note 5)                             -       110,002
                                                        ---------     ---------
                                                        $ 570,562     $ 584,041
                                                        ---------     ---------
                                                        ---------     ---------

                             LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable and accrued
    liabilities                                            15,780         5,538
  Advances from officers/directors/
    stockholders (Note 5)                                 230,649       247,592
                                                        ---------     ---------
          Total current liabilities                       246,429       253,130

NOTE PAYABLE (Note 6)                                     200,000       200,000

STOCKHOLDERS' EQUITY (Notes 7 & 8)
  Preferred stock, not par value;
    400,000 shares authorized;
    no shares issued
  Common stock, no par value;
    30,000,000 shares authorized;
    5,980,703 and 5,980,703
    shares issued and outstanding
    as of June 30, 1996 and June 30,
    1995, respectively                                    844,542       844,542
  Accumulated deficit                                    (720,409)     (713,631)
                                                        ---------     ---------
                                                          124,133       130,911
                                                        ---------     ---------
                                                         $570,562      $584,041
                                                        ---------     ---------
                                                        ---------     ---------


                                 See notes to financial statements.

                                           F-2
<PAGE>

                         PIERCE INTERNATIONAL, INC.
                          STATEMENTS OF OPERATIONS


                                                        FOR THE YEAR
                                                        ENDED JUNE 30,
                                           ------------------------------------
                                               1996        1995        1994
REVENUE:
    Net Sales                                 $205,144          $0          $0
    Cost of goods sold                         $64,685
                                           ------------------------------------
GROSS MARGIN                                   140,459           0           0

EXPENSES:
   Administrative                               58,654      41,265      93,939
   Bad debt reserve                            162,200      -           -
   Outside services                             36,300      78,354      86,995
   Advertising and promotion                     4,310       2,239       5,969
   Other                                        -            1,689      -
                                           ------------------------------------
            Total expenses                     261,464     123,547     186,903

NET OPERATING INCOME(LOSS)                    (121,005)   (123,547)   (186,903)

  Other income                                  40,803     210,357     148,421
   Loss on subsidiary                           -           (9,381)     -
   Foreign exchange gain(loss)                    (184)        346      -
   Loss on investment   (Note 4)              (381,695)    (25,310)     -
   Gain on asset claim  (Note 2)               434,918      -           -
   Gain on disposition of assets                20,385      -           56,337
                                           ------------------------------------
NET INCOME(LOSS) BEFORE MINORITY INTEREST       (6,778)     52,465      17,855

MINORITY INTEREST                               -           -           49,184
                                           ------------------------------------
NET INCOME (LOSS)                              ($6,778)    $52,465     $67,039
                                           ------------------------------------
                                           ------------------------------------
NET INCOME(LOSS) PER COMMON SHARE              ($0.001)     $0.009      $0.012
                                           ------------------------------------
                                           ------------------------------------
WEIGHTED AVERAGE NUMBER OF 
   SHARES OUTSTANDING                        5,980,703   5,980,703   5,582,703
                                           ------------------------------------
                                           ------------------------------------

                      See notes to financial statements.

                                     F-3


<PAGE>

                            PIERCE INTERNATIONAL, INC. 
                    STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                   FOR THE YEARS ENDED JUNE 30, 1994, 1995 & 1996

<TABLE>
                                                                                    TOTAL
                                        COMMON STOCK     AMOUNT     ACCUMULATED  STOCKHOLDERS'
                                           SHARES                     DEFECIT      EQUITY
<S>                                     <C>            <C>          <C>           <C>
BALANCES, JUNE 30, 1993                  136,317,572   $  955,861   $(1,253,878)  $(298,017)

   Conversion of Wakefield Debt           10,000,000       94,027         -           94,027

   Stock issued as compensation
   $0.00 per share                         3,000,000       -              -           -

   Additional Paid in Capital to 
   Subsidiary                                -              2,574          (249)      2,325

   Net income for the year                   -             -             67,039      67,039
                                        ------------   ----------   -----------   ---------
BALANCES, JUNE 30, 1994                  149,317,572    1,052,462    (1,187,088)   (134,626)

   Additional Paid in Capital to
   Subsidiary                                -             34,719         -          34,719

   Adj. for foreign sub. translation         -             -              -           1,769

   Chg. in minority interest                 -             15,000         -          15,000

   Chg. in foreign sub. translation          -             -              -         (10,256)

   Stock in lieu of compensation             200,000       -              -           -
   (no market value)

   PIDI investment to Equity Method
   from Consolidated                         -           (257,639)      420,992     171,840

   Net income  for the year                  -                           52,465      52,465
                                        ------------   ----------   -----------   ---------
BALANCES, JUNE 30, 1995                  149,517,572      844,542      (713,631)    130,911

   25 for 1 Reverse split
   March 13, 1996                       (143,536,869)       -             -           -

   Net loss for the year                                                 (6,778)     (6,778)
                                        ------------   ----------   -----------   ---------
BALANCES, JUNE 30, 1996                    5,980,703   $  844,542   $  (720,409)  $ 124,133
                                        ------------   ----------   -----------   ---------
                                        ------------   ----------   -----------   ---------
</TABLE>

                      See notes to financial statements.

                                     F-4


<PAGE>

                          PIERCE INTERNATIONAL, INC.
                           STATEMENT OF CASH FLOWS


                                                 FOR THE YEAR ENDED JUNE 30,
                                              ---------------------------------
                                                 1996       1995        1994
                                              ---------   ---------   ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Income (Loss)                          $  (6,778)  $  52,465   $  67,039
   Adjustments to reconcile net loss to
    cash used in operating activities:
     Depreciation and amortization                  883         618         930
     Subsidiary loss                              -           9,381       -
     Minority interest in net
      income (loss)                               -           -         (49,184)
   Changes in operating assets
    and liabilities:
   Decrease (Increase) in
    accounts receivable                         (20,199)    (25,472)       (821)
   Decrease (Increase) in
    related party receivable                    110,002    (106,771)      -
   Decrease (Increase) in other
    current assets                                -           -         (21,388)
   (Decrease) Increase in accounts
    payable and accrued
    expenses                                     10,242     (16,004)      4,377
   Increase (Decrease) in deferred revenue                               66,187
   (Gain)Loss on sale of investments           (455,303)     25,310       -
     Net cash used in operating               ---------   ---------   ---------
      activities                               (361,153)    (60,473)     67,140

CASH FLOWS FROM INVESTING ACTIVITIES:
  (Purchase) Disposal of land, property
   and equipment                                  -           -           -
  Acquisition of equipment                        -          (4,415)    (95,470)
  (Increase) decrease in investments            391,417      99,405     (53,346)
  Investment in Strawboard                       (1,125)    (45,995)    (20,038)
    Net cash used in investing                ---------   ---------   ---------
     activities                                 390,292      48,995    (168,854)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Receipts/payments on advances from
   officers/directors/stockholders              (16,943)     14,847     102,888
  Receipts (Payments) on notes payable            -          (5,059)    (87,200)
  Repayments of capital lease obligations         -           -            (816)
  Additional capital from minority interest       -           -           6,652
  Conversion of note payable to stock             -           -          94,027
    Net cash provided by                      ---------   ---------   ---------
     financing activities                       (16,943)      9,788     115,551


(DECREASE) INCREASE IN CASH                      12,196      (1,690)     13,837

CASH, beginning of period                           808       2,498           0
                                              ---------   ---------   ---------
CASH, end of period                           $  13,004   $     808   $  13,837
                                              ---------   ---------   ---------
                                              ---------   ---------   ---------

               See notes to the consolidated financial statements.

                                    F-5


<PAGE>

                         PIERCE INTERNATIONAL, INC.

                        NOTES TO FINANCIAL STATEMENTS
                                JUNE 30, 1996

1.   OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     OPERATIONS - Pierce International, Inc. (PI) was incorporated under the
     laws of the State of Colorado on July 22, 1987, for the purpose of
     obtaining capital to seek potentially profitable business opportunities. 
     Currently, PI has business interest in two industries, natural resources
     and industrial development.

     NET INCOME PER COMMON SHARE - Net income (loss) per common share is
     computed based upon the weighted average number of shares outstanding
     during the period.  Common stock equivalents were not considered (for
     losses only), as their effect would be anti-dilutive.

     PROPERTY, EQUIPMENT, DEPRECIATION AND AMORTIZATION - Property and equipment
     are stated at cost.  Depreciation is being provided by the straight-line
     method over estimated useful lives of three to five years.  All costs
     related to the acquisition (including associated legal and other costs),
     exploration, evaluation, and development, of the mineral properties have
     been capitalized.  These costs will be amortized by the units-of-production
     method of accounting based upon estimated recoverable reserves.
     
     CONTINUING OPERATIONS - The accompanying financial statements have been
     prepared on a going concern basis, which contemplates continuity of
     operations and realization of assets and satisfaction of liabilities in the
     normal course of business.  The continuation of the Company as a going
     concern is dependent upon the Company raising additional capital, and
     attaining and maintaining profitable operations.  The Company has suffered
     recurring losses from operations that raise substantial doubt about its
     ability to continue as a going concern.

2.   UNDEVELOPED MINERAL PROPERTY:

     On June 11, 1996, PI reclaimed the "Como" property from Pierce
     International Discovery, Inc. (PIDI).  PIDI, a 17.24% owned subsidiary,
     failed to comply with the stock purchase agreement.  Como consists of gold
     and gravel mining leases on a property situated approximately 50 miles
     southwest of Denver, Colorado, near Como, Colorado in Park County. 

                                     F-6

<PAGE>

                           PIERCE INTERNATIONAL, INC.
                                        
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 1996

3.   STRAWBOARD INVESTMENT:

     The Company purchased strawboard equipment for $57,120.  This
     equipment is seen as an investment and the Company intends to resell
     the equipment.

4.   LONG TERM INVESTMENTS:

     The balance of $381,695 invested in PIDI has been marked to $0.  The
     future of PIDI remains uncertain.

5.   RELATED PARTY PAYABLE AND RELATED PARTY TRANSACTIONS:

     Advances include $179,649 due Piece D. Parker, officer and director, or his
     company, Parker Consulting Services, and $51,000 is accrued consulting fees
     due Pierce D. Parker.  The related pary receivable from PIDI of $162,200
     has been fully reserved for, as the future of PIDI is uncertain.

6.   COMMITMENTS:

     As of June 30, 1996, PI had the following long term note payable:

          PCS Profit Sharing Plan  $200,000

     PI is obligated to pay $200,000 to Parker Consulting Services Profit
     Sharing Plan, owned by Pierce D. Parker, for funds it pledged for the
     purpose of funding the Como project.  This debt is to be paid from net
     profits generated by the Como property.

7.   STOCKHOLDERS' EQUITY:

     As of June 30, 1996, PI had 5,980,703 common shares issued and outstanding.
     There are 30,000,000 shares authorized.  A reverse split of 1 for 25 shares
     was approved on March 13, 1996.
     
     Of the total shares outstanding, 160,000 shares were issued as part of PI's
     initial public offering and are free trading stock.  All other shares have
     been held a minimum of 2 years and could be sold under Rule 144.

     The preferred stock may be issued by the Board of Directors in one or more
     series.  The Board shall determine the distinguishing features of each, 
     including preferences, rights and restrictions, upon the establishment of
     such series.

                                     F-7

<PAGE>

                           PIERCE INTERNATIONAL, INC.
                                        
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 1996

8.   INCENTIVE STOCK OPTION PLAN:
     
     On August 10, 1987, the Company adopted an Incentive Stock Option Plan (the
     "Plan") under which options granted are intended to qualify as "incentive
     stock options" under Section 422A of the Internal Revenue code of 1954, as
     amended (the "Code"). Pursuant to the Plan, options to purchase up to
     400,000 shares of the Company's Common  Stock may be granted to employees
     of the Company.  The Plan is administered by the Board of Directors which
     is empowered to determine the terms and conditions of each option, subject
     to the limitation that the exercise price cannot be less than the market 
     value of the Common Stock on date of the grant (110% of the market value in
     the case of options granted to an employee who owns 10% or more of the
     Company's outstanding Common Stock) and no option can have a term in excess
     of 10 years (5 years in the case of options granted to employees who own
     10% or more of the company's Common Stock).

     As of the date of this report, no options have been granted under this
     Plan.

9.   INCOME TAXES:

     At June 30, 1996, the Company has available to reduce future taxable
     income, a net operating loss carryforward of approximately $554,432 which
     expires in the years 2003 through 2011.

                                     F-8

<PAGE>
                                      
                                [LETTERHEAD]



                       INDEPENDENT AUDITORS' REPORT
                        ON ADDITIONAL INFORMATION 


To the Stockholders and Directors
Pierce International Discovery, Inc.

Our report on our audit of the basic financial statements of Pierce 
International, Inc. for the years ended June 30, 1996, and 1995, appears on 
Page F-1. The audit was made for the purpose of forming an opinion on the 
basic financial statements, taken as a whole. The accompanying supplementary 
schedules are presented for purposes of additional analysis and are not a 
required part of the basic financial statements and is fairly stated in all 
material respects in relation to the basic financial statements taken as a 
whole.

The accompanying financial statements have been prepared assuming that the 
Company will continue as a going concern. As discussed in Note 1 to the 
financial statements, the Company's ability to continue in existence is 
dependent upon their obtaining additional equity capital and ultimately 
attaining and maintaining profitable operations. The Company has suffered 
recurring losses from operations that raise substantial doubt about its 
ability to continue as a going concern. The financial statements do not 
include any adjustments that might result from the outcome of this 
uncertainty.


                                          /s/  Doran Peck, C.P.A., P.C.
                                          ----------------------------------- 
                                          Doran Peck, C.P.A., P.C.

Denver, Colorado
October 12, 1996





                                     S-1 
<PAGE>

                                                                 SCHEDULE V 

                          PIERCE INTERNATIONAL, INC.
                            PROPERTY AND EQUIPMENT  

<TABLE>

       COLUMN A             COLUMN B   COLUMN C     COLUMN D           COLUMN E          COLUMN F 

                           BEGINNING   ADDITIONS                    OTHER CHANGES                 
    CLASSIFICATION         BALANCES     AT COST    RETIREMENTS   ADD (DEDUCT)-DESCRIBE   BALANCES 
    --------------         ---------   ---------   -----------   ---------------------   -------- 
<S>                        <C>         <C>         <C>           <C>                     <C>      
Year Ended June 30, 1996 
  Mineral properties       $      0     $     0     $      0          $ 434,918 e        $434,918 
  Furniture & equipment       7,705           0            0                  0             7,705 
  Strawboard equipment       55,995       1,125            0                  0            57,120 
  Leased equipment                0           0            0                  0                 0 
                           --------     -------     --------          ---------          -------- 
                           $ 63,700     $1,125      $      0          $ 434,918          $499,743 
                           --------     -------     --------          ---------          -------- 
                           --------     -------     --------          ---------          -------- 
Year Ended June 30, 1995 
  Mineral properties       $352,242     $     0     $      0          $(352,242)c        $      0 
  Furniture & equipment      44,206       4,415      (40,916)d                -             7,705 
  Strawboard equipment       10,000      45,995            -                  -            55,995 
  Leased equipment           15,451           -      (15,451)d                -                 0 
                           --------     -------     --------          ---------          -------- 
                           $421,899     $50,410     $(56,367)         $(352,242)         $ 63,700 
                           --------     -------     --------          ---------          -------- 
                           --------     -------     --------          ---------          -------- 
Year Ended June 30, 1994 
  Mineral properties       $261,531     $90,711 a   $      0          $       0          $352,242 
  Furniture & equipment      44,206       4,759 b          -                  -            48,965 
  Leased equipment           15,451           -            -                  -            15,451 
                           --------     -------     --------          ---------          -------- 
                           $321,188     $95,470     $      0          $       0          $416,658 
                           --------     -------     --------          ---------          -------- 
                           --------     -------     --------          ---------          -------- 
</TABLE>

a  Represents additional investment in properties owned by PIDI.
b  Represents equipment purchased by PIDI subsidiary.
c  Represents elimination of mineral properties because of change to equity 
     method of accounting for PIDI.
d  Fully depreciated and/or retired.
e  Seized property for non-compliancee with purchase agreement.















                                      S-2
<PAGE>


                                                                     SCHEDULE VI
                           PIERCE INTERNATIONAL, INC. 
     ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY AND EQUIPMENT

<TABLE>
         COLUMN A             COLUMN B    COLUMN C     COLUMN D        COLUMN E          COLUMN F
      CLASSIFICATION          BEGINNING   ADDITIONS  RETIREMENTS  OTHER CHANGES ADD      ENDING
                              BALANCES                            (DEDUCT)-DESCRIBE      BALANCES
<S>                        <C>            <C>        <C>          <C>                    <C>
Year ended June 30, 1995

     Minerals properties         $0             $0         $0           $0                     $0
     Furniture & equipment    3,908            883       -            -                     4,791
     Leased equipment             0           -          -            -                         0
                           ---------      ---------  ---------    ---------              ---------
                             $3,908           $883         $0           $0                 $4,791
                           =========      =========  =========    =========              =========
Year ended June 30, 1995

     Minerals properties         $0             $0         $0           $0                     $0
     Furniture & equipment   44,206          3,908    (44,206)        -                     3,908
     Leased equipment        15,451           -       (15,451)        -                         0
                           ---------      ---------  ---------    ---------              ---------
                            $59,657         $3,908   ($59,657)          $0                 $3,908
                           =========      =========  =========    =========              =========

Year ended June 30, 1994

     Minerals properties         $0             $0         $0           $0                     $0
     Furniture & equipment   44,206           -          -            -                    44,206
     Leased equipment        15,451           -          -            -                    15,451
                           ---------      ---------  ---------    ---------              ---------
                            $59,657             $0         $0           $0                $59,657
                           =========      =========  =========    =========              =========
</TABLE>