UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      For the quarterly period ended December 31, 1996

                                       or

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      For the transition period from N/A to N/A

                          Commission File No. 33-29340

                     UNIVERSAL SERVICES & ACQUISITIONS, INC.
             (Exact name of registrant as specified in its charter)

          Colorado, USA                                 84-1100774
    (State of Incorporation)                (IRS Employer Identification No.)

           21800 Oxnard Street, #440, Woodland Hills, California 91367
                    (Address of principal executive offices)

                  Registrant's Telephone Number, (818) 598-6780

                       2643 17th Street, Denver, CO 80211
                       ----------------------------------
  (Former name, former address and fiscal year, if changed since last report)

Indicate by check mark if 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 preceding 12 months (or 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 ISSUERS INVOLVED IN BANKRUPTCY
              PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. |_| Yes |_| No

              APPLICABLE ONLY TO CORPORATE ISSUERS

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

      Class                        Outstanding at December 31, 1996
Common Stock, $.001                        2,232,500 shares
    par value                              ----------------
                                        Outstanding Securities

Transitional Small Business Disclosure Format (check one): Yes |_| No |X|

<PAGE>

UNIVERSAL SERVICES & ACQUISITIONS, INC.

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

Financial statements are unaudited and included herein beginning on page F1 and
are incorporated herein by this reference.

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

Except for disclosures that report the Company's historical results, the
statements set forth in this section are forward-looking statements. Actual
results may differ materially from those projected in the forward-looking
statements. Additional information concerning factors that may cause actual
results to differ materially from those in the forward-looking statements are in
the Company's annual report on Form 10-K for the year ended March 31, 1995 and
in the Company's other filings with the Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company assumes no
obligation to update any forward-looking statements or comments on the reasons
why actual results may differ therefrom.

Universal Services & Acquisitions, Inc. (the "Company") was incorporated under
the laws of the State of Colorado in June 27, 1988 for the purpose of completing
a public offering to raise funds to acquire or merge with an operating business.
Since inception, the Company's primary efforts have been directed to
organizational efforts, obtaining initial financing and the identification and
evaluation of merger/acquisition candidates.

On August 17, 1995, the Company executed a letter of intent to acquire a
privately held operating company in a reverse acquisition. The proposed merger
was conditional upon the following events: (1) the operating company would plan,
finance, construct, and operate a 200 bed hospital in Bahrain, (2) the hospital
is to be used as a teaching hospital in conjunction with the Arabian Gulf
University (AGU) Medical School, (3) the land for the project is to be donated
by AGU, (4) the operating company would have the cooperation of the Bahrain
government and required licensing authorities, and (5) the operating company
would have authorization of the local military hospital to open and operate the
facility, and the funds and purchasing ability to acquire the personnel,
equipment and supplies for that purpose. In connection with the proposed merger,
the Company advanced $50,000 to a merger candidate. The advance was evidenced by
a promissory note due August 17, 1996, at 8 percent interest. As of August 17,
1996, the merger candidate had failed to repay the advance. The Company planned
to acquire 100 percent of the stock of the operating company by issuing
approximately 20,092,000 shares of its $.001 par value common stock to
shareholders of the operating company. Upon completion of the transaction,
approximately 90 percent of the shares of the Company's common stock would be
held by shareholders of the operating company. To ensure that shares held by the
shareholders of the operating company are not diluted by the exercise of
warrants, the company planned to issue nine shares of common stock to the
shareholders of the operating company for each share of common stock obtained
through the exercise of warrants. Due to the delinquency of its note receivable
from merger candidate, the Company recorded an allowance for doubtful accounts
for $26,250 which equals fifty percent of the face value of the note plus
accrued interest.

The Company was ultimately unsuccessful in its effort to acquire the privately
held company and eventually wrote off the remaining amount of the promissory

<PAGE>

note.

There were no material changes in financial condition in the current quarter.
The Company's working capital is not sufficient to meet the obligations of
identifying and evaluating prospective merger candidates.

Results of Operations

There were no material changes in the results of operations as compared with the
corresponding period of the previous year.

The Company had no operating revenues, however, it earned interest on its cash
accounts.

The Company realized a net profit of $23 from operations for the three month
period ended December 30, 1996 compared to a net loss of ($433) for the three
month period ended December 30, 1995. For the three month period ended December
31, 1996, the Company had revenues of $23. The Company had revenues of ($403)
for the three month period ended December 31, 1995. The net gain and net loss
per share for the three month periods ended December 31, 1996 and 1995 was nil.

The Company realized a net loss of ($391) from operations for the nine month
period ended December 31, 1996 compared to a net gain of $1,158 for the nine
month period ended December 31, 1995. For the nine month period ended December
31, 1996, the Company had revenues of $53, composed mostly of interest income.
The Company had revenues of $3,415 for the nine month period ended December 31,
1995. The net loss and gain per share for the nine month periods ended December
31, 1996 and 1995 was nil.

The Company had no development costs for the three month period ended December
31, 1996 compared to costs and expenses of $30 for the three month period ended
December 31, 1995.

The Company's assets at December 31, 1996 were $29,692 compared to assets of
approximately $56,500 at December 31, 1995. The difference is due to the
Company's write off of a portion of the $50,000 loan it made which was not paid
back timely. The Company's liabilities at December 31, 1996 were approximately
$2,024 compared to liabilities of approximately $1,383 at December 31, 1995. The
difference is attributable to development costs.

Total shareholder equity decreased from $55,074 at December 31, 1995 to $27,668
at December 31, 1996.

Liquidity and Capital Resources

As of December 31, 1996, the Company had working capital of approximately $900
consisting of $2,942 in current assets and $2,024 in current liabilities. The
Company had working capital of approximately $54,500 at December 31, 1995
consisting of $55,957 in current assets and $1,383 in current liabilities. The
Company had adequate working capital for its current operations. Presently, the
Company has no working capital.

Effect of Inflation

Inflation did not have any significant effect on the operations of the Company
during the three months ended December 31, 1996. Further, inflation is not
expected to have any significant effect on future operations of the Company.

PART II OTHER INFORMATION

<PAGE>

Items 1, 2, 3, 4 and 5 are Inapplicable.

Item 6. Exhibits and Reports on Form 8-K

No reports on Form 8-K were filed for the relevant period.

                                   SIGNATURES

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

                                         UNIVERSAL SERVICES & ACQUISITIONS, INC.


Date January 31, 2001                    /s/ Mehrdad Alborz
                                         ---------------------------------------
                                         Mehrdad Alborz, CEO, CFO

<PAGE>

                   UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                         (A DEVELOPMENT STAGE COMPANY)
                              FINANCIAL STATEMENTS
                               DECEMBER 31, 1996

<PAGE>

                                TABLE OF CONTENTS

                                                                        Page No.
                                                                        --------

INDEPENDENT ACCOUNTANTS' REVIEW REPORT............................         1

FINANCIAL STATEMENTS

       Balance Sheet..............................................         2

       Statements of Operations...................................         3

       Statement of Changes in Stockholders' Equity...............       4 - 5

       Statements of Cash Flows...................................       6 - 7

       Notes to Financial Statements..............................       8 - 12

<PAGE>

                     INDEPENDENT ACCOUNTANTS' REVIEW REPORT

To the Board of Directors and Stockholders
Universal Services and Acquisitions, Inc.
(A Development Stage Company)
Woodland Hills, California

We have reviewed the accompanying balance sheet of Universal Services and
Acquisitions, Inc. as of December 31, 1996, and the related statements of
operations, changes in stockholders' equity and cash flows for the three and
nine months then ended and for the period from June 27, 1988 (Date of Inception)
to December 31, 1996, in accordance with Statements on Standards for Accounting
and Review Services issued by the American Institute of Certified Public
Accountants. All information included in these financial statements is the
representation of the management of Universal Services and Acquisitions, Inc.

A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.


Moffitt & Company, P.C.
Scottsdale, Arizona

May 1, 2000

<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET
                                DECEMBER 31, 1996
                                   (UNAUDITED)

                                     ASSETS

CURRENT ASSETS
       Cash and cash equivalents                                       $  2,942

OTHER ASSETS
       Note receivable, less allowance for doubtful accounts           $ 26,250
       Intangible assets                                                    500
                                                                       --------

            TOTAL OTHER ASSETS                                           26,750
                                                                       --------

            TOTAL ASSETS                                               $ 29,692
                                                                       ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
       Accounts payable                                                $  2,024
                                                                       --------

              TOTAL CURRENT LIABILITIES                                $  2,024

STOCKHOLDERS' EQUITY
       Preferred stock, par value $0.001 per share
          Authorized - 40,000,000 shares
          Issued and outstanding - 0 - shares                                 0
       Common stock, par value $0.001 per share
          Authorized 100,000,000 shares
          Issued and outstanding - 2,232,500 shares                       2,233
       Paid in capital in excess of par value of stock                   68,373
       Deficit accumulated during the development
          stage                                                         (42,938)
                                                                       --------

            TOTAL STOCKHOLDERS' EQUITY                                   27,668
                                                                       --------

            TOTAL LIABILITIES AND STOCKHOLDERS'
              EQUITY                                                   $ 29,692
                                                                       ========

       See Accompanying Notes and Independent Accountants' Review Report.


                                       2
<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF OPERATIONS
              FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 1996
                      AND FOR THE PERIOD FROM JUNE 27, 1988
                    (DATE OF INCEPTION) TO DECEMBER 31, 1996
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                        Three                 Nine             June 27, 1988
                                        Months               Months              (Date of
                                        Ended                Ended             Inception) to
                                  December 31, 1996    December 31, 1996     December 31, 1996
                                  -----------------    -----------------     -----------------
<S>                                  <C>                  <C>                   <C>
REVENUE - INTEREST INCOME            $        23          $        53           $    14,522

DEVELOPMENT COST                               0                  444                57,460
                                     -----------          -----------           -----------

NET INCOME (LOSS)                    $        23          $      (391)          $   (42,938)
                                     ===========          ===========           ===========

NET INCOME (LOSS)  PER
   COMMON SHARE                      $      .000           $     (.001)
                                     ===========           ===========

WEIGHTED AVERAGE NUMBER
   OF COMMON SHARES
   OUTSTANDING

      Basic and diluted                2,232,500            2,232,500
                                     ===========           ===========
</TABLE>

       See Accompanying Notes and Independent Accountants' Review Report.


                                       3
<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
              FOR THE PERIOD FROM JUNE 27, 1988 (DATE OF INCEPTION)
                              TO DECEMBER 31, 1996
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                        Paid in       Deficit
                                                                                      Capital in    Accumulated
                                   Preferred Stock              Common Stock           Excess of     During the
                               -----------------------     -----------------------     Par Value    Development
                                 Shares       Amount         Shares       Amount       of Stock        Stage
                               ---------     ---------     ---------     ---------    ----------    -----------
<S>                                    <C>   <C>           <C>           <C>           <C>           <C>
AT DATE OF INCEPTION                   0     $       0             0     $       0     $       0     $       0

ISSUANCE OF COMMON
   STOCK FOR CASH
   $.01 - JUNE 27, 1988                0             0     1,500,000         1,500        20,500             0

NET INCOME FOR THE
   PERIOD ENDED
   MARCH 31, 1989                      0             0             0             0             0           538
                               ---------     ---------     ---------     ---------     ---------     ---------

BALANCE, MARCH 31, 1989                0             0     1,500,000         1,500        20,500           538

NET (LOSS) FOR THE YEAR
   ENDED MARCH 31, 1990                0             0             0             0             0        (2,128)
                               ---------     ---------     ---------     ---------     ---------     ---------

BALANCE, MARCH 31, 1990                0             0     1,500,000         1,500        20,500        (1,590)

ISSUANCE OF COMMON
   STOCK FOR CASH
   $.10 - MARCH 31, 1991,
   NET OF COSTS OF $24,646             0             0       732,500           733        47,873             0

NET (LOSS) FOR THE YEAR
   ENDED MARCH 31, 1991                0             0             0             0             0        (6,415)
                               ---------     ---------     ---------     ---------     ---------     ---------

BALANCE, MARCH 31, 1991                0             0     2,232,500         2,233        68,373        (8,005)

NET (LOSS) FOR THE YEAR
   ENDED MARCH 31, 1992                0             0             0             0             0        (3,809)
                               ---------     ---------     ---------     ---------     ---------     ---------

BALANCE, MARCH 31, 1992                0             0     2,232,500         2,233        68,373       (11,814)

NET (LOSS) FOR THE YEAR
   ENDED MARCH 31, 1993                0             0             0             0             0        (2,770)
                               ---------     ---------     ---------     ---------     ---------     ---------

BALANCE, MARCH 31, 1993                0             0     2,232,500         2,233        68,373       (14,584)
</TABLE>

       See Accompanying Notes and Independent Accountants' Review Report.


                                       4
<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
            STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)
              FOR THE PERIOD FROM JUNE 27, 1988 (DATE OF INCEPTION)
                              TO DECEMBER 31, 1996
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                     Paid in       Deficit
                                                                                    Capital in   Accumulated
                                   Preferred Stock              Common Stock        Excess of     During the
                            -----------------------     -----------------------     Par Value    Development
                              Shares        Amount        Shares        Amount       of Stock        Stage
                            ---------     ---------     ---------     ---------     ----------   -----------
<S>                                <C>    <C>           <C>           <C>           <C>           <C>
NET (LOSS) FOR THE YEAR
   ENDED MARCH 31, 1994             0     $       0             0     $       0     $       0     $  (1,034)
                            ---------     ---------     ---------     ---------     ---------     ---------

BALANCE, MARCH 31, 1994             0             0     2,232,500         2,233        68,373       (15,618)

NET (LOSS) FOR THE YEAR
   ENDED MARCH 31, 1995             0             0             0             0             0        (1,072)
                            ---------     ---------     ---------     ---------     ---------     ---------

BALANCE, MARCH 31, 1995             0             0     2,232,500         2,233        68,373       (16,690)

NET (LOSS) FOR THE YEAR
   ENDED MARCH 31, 1996             0             0             0             0             0       (25,857)
                            ---------     ---------     ---------     ---------     ---------     ---------

BALANCE, MARCH 31, 1996             0             0     2,232,500         2,233        68,373       (42,547)

NET (LOSS) FOR THE NINE
   MONTHS ENDED
   DECEMBER 31, 1996                0             0             0             0             0          (391)
                            ---------     ---------     ---------     ---------     ---------     ---------

BALANCE,
   DECEMBER 31, 1996                0     $       0     2,232,500     $   2,233     $  68,373     $ (42,938)
                            =========     =========     =========     =========     =========     =========
</TABLE>

       See Accompanying Notes and Independent Accountants' Review Report.


                                       5
<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF CASH FLOWS
                   FOR THE NINE MONTHS ENDED DECEMBER 31, 1996
                      AND FOR THE PERIOD FROM JUNE 27, 1988
                    (DATE OF INCEPTION) TO DECEMBER 31, 1996
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                          Nine           June 27, 1988
                                                         Months            (Date of
                                                          Ended          Inception) to
                                                    December 31, 1996  December 31, 1996
                                                    -----------------  -----------------
<S>                                                      <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
       Net (loss)                                        $   (391)         $(42,938)
       Adjustments to reconcile net (loss) to
          net cash (used) by operating activities:
             Allowance for doubtful accounts                    0            23,750
             Amortization                                       0                69
       Changes in operating assets and liabilities
          Deferred income tax                                   0               (69)
          Accounts payable                                      0             2,024
                                                         --------          --------

             NET CASH (USED) BY
                OPERATING ACTIVITIES                         (391)          (17,164)
                                                         --------          --------

CASH FLOWS FROM INVESTING ACTIVITIES
       Loan to merger candidate                                 0           (50,000)
                                                         --------          --------

             NET CASH (USED) BY
                INVESTING ACTIVITIES                            0           (50,000)
                                                         --------          --------

CASH FLOWS FROM FINANCING ACTIVITIES
       Proceeds from issuance of common stock                   0            95,250
       Offering costs incurred                                  0           (24,644)
       Acquisition of organization costs                        0              (500)
                                                         --------          --------

             NET CASH PROVIDED BY
                FINANCING ACTIVITIES                            0            70,106
                                                         --------          --------

NET INCREASE (DECREASE) IN CASH
   AND CASH EQUIVALENTS                                      (391)            2,942

CASH AND CASH EQUIVALENTS AT
   BEGINNING OF PERIOD                                      3,333                 0
                                                         --------          --------

CASH AND CASH EQUIVALENTS AT
   END OF PERIOD                                         $  2,942          $  2,942
                                                         ========          ========
</TABLE>

       See Accompanying Notes and Independent Accountants' Review Report.


                                       6
<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                      STATEMENTS OF CASH FLOWS (CONTINUED)
                   FOR THE NINE MONTHS ENDED DECEMBER 31, 1996
                      AND FOR THE PERIOD FROM JUNE 27, 1988
                    (DATE OF INCEPTION) TO DECEMBER 31, 1996
                                   (UNAUDITED)

                                                   Nine          June 27, 1988
                                                  Months            (Date of
                                                  Ended          Inception) to
                                           December 31, 1996   December 31, 1996
                                           -----------------   -----------------

SUPPLEMENTAL DISCLOSURE OF CASH
   FLOW INFORMATION

       Interest paid                           $       0          $       0
                                               =========          =========

       Taxes paid                              $       0          $     132
                                               =========          =========

       See Accompanying Notes and Independent Accountants' Review Report.


                                       7
<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1996
                                   (UNAUDITED)

NOTE 1      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            Organization and Nature of Business

            The company was incorporated under the laws of the state of Colorado
            on June 27, 1988 for the purpose of acquiring subsidiary companies.

            Cash and Cash Equivalents

            For the purposes of the statement of cash flows, the company
            considers all highly liquid debt instruments purchased with an
            original maturity of three months or less to be cash equivalents.

            Accounting Estimates

            Management uses estimates and assumptions in preparing financial
            statements in accordance with generally accepted accounting
            principles. Those estimates and assumptions affect the reported
            amounts of assets and liabilities, the disclosure of contingent
            assets and liabilities, and the reported revenues and expenses.
            Actual results could vary from the estimates that were used.

            Income Taxes

            Provisions for income taxes are based on taxes payable or refundable
            for the current year and deferred taxes on temporary differences
            between the amount of taxable income and pretax financial income and
            between the tax bases of assets and liabilities and their reported
            amounts in the financial statements. Deferred tax assets and
            liabilities are included in the financial statements at currently
            enacted income tax rates applicable to the period in which the
            deferred tax assets and liabilities are expected to be realized or
            settled as prescribed in FASB Statement No. 109, Accounting for
            Income Taxes. As changes in tax laws or rates are enacted, deferred
            tax assets and liabilities are adjusted through the provision for
            income taxes.

            Net (Loss) Per Share

            The company adopted Statement of Financial Accounting Standards No.
            128 that requires the reporting of both basic and diluted earnings
            per share. Basic earnings per share is computed by dividing net
            income available to common shareowners by the weighted average
            number of common shares outstanding for the period. Diluted earnings
            per share reflects the potential dilution that could occur if
            securities or other contracts to issue common stock were exercised
            or converted into common stock. In accordance with FASB 128, any
            anti-dilutive effects on net loss per share are excluded.

       See Accompanying Notes and Independent Accountants' Review Report.


                                       8
<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1996
                                   (UNAUDITED)

NOTE 1      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Disclosure About Fair Value of Financial Instruments

            The company has financial instruments, none of which are held for
            trading purposes. The company estimates that the fair value of all
            financial instruments at December 31, 1996 as defined in FASB 107,
            does not differ materially from the aggregate carrying values of its
            financial instruments recorded in the accompanying balance sheet.
            The estimated fair value amounts have been determined by the company
            using available market information and appropriate valuation
            methodologies. Considerable judgement is required in interpreting
            market data to develop the estimates of fair value, and accordingly,
            the estimates are not necessarily indicative of the amounts that the
            company could realize in a current market exchange.

NOTE 2      DEVELOPMENT STAGE OPERATIONS

            As of December 31, 1996, the company was in the development stage of
            operations. According to the Financial Accounting Standards Board of
            the Financial Accounting Foundation, a development stage company is
            defined as a company that devotes most of its activities to
            establishing a new business activity. In addition, planned principle
            activities have not commenced, or have commenced and have not yet
            produced significant revenue.

            FAS-7 requires that all development costs be expensed during the
            development period. The company expensed $444 of development costs
            for the nine months ended December 31, 1996 and $57,460 for the
            period from June 27, 1988 (date of development stage) to December
            31, 1996.

NOTE 3      INCOME TAXES

<TABLE>
            <S>                                                                  <C>
            (Loss) before income taxes                                           $    (391)
                                                                                 ---------

            The provision for income taxes is estimated as follows:
                   Currently payable                                             $       0
                                                                                 ---------
                   Deferred                                                      $       0
                                                                                 ---------

            A reconciliation of the provision for income taxes compared with
              the amounts at the U.S. Federal Statutory rates is as follows:
                   Tax at U.S. Federal Statutory income tax rates                $       0
                                                                                 ---------
</TABLE>

       See Accompanying Notes and Independent Accountants' Review Report.


                                       9
<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1996
                                   (UNAUDITED)

NOTE 3      INCOME TAXES (CONTINUED)

<TABLE>
            <S>                                                                   <C>
            Deferred income tax assets and liabilities reflect the impact of
              temporary differences between amounts of assets and liabilities
              for financial reporting purposes and the basis of such assets
              and liabilities as measured by tax laws
                 The net deferred tax assets is:                                  $        0
                                                                                  ----------
                 The net deferred tax liability is:                               $        0
                                                                                  ----------
</TABLE>

            Temporary differences and carryforwards that gave rise to
              deferred tax assets and liabilities included the following:

<TABLE>
<CAPTION>
                                                                                  Deferred Tax
                                                                           ------------------------
                                                                             Assets     Liabilities
                                                                           ---------    -----------
            <S>                                                            <C>          <C>
                Net operating loss                                         $   6,441    $         0

                Valuation allowance                                            6,441              0
                                                                           ---------    -----------

                Total deferred taxes                                       $       0    $         0
                                                                           =========    ===========

            A reconciliation of the valuation allowance is as follows:

                Balance, April 1, 1996                                                  $     6,382

                Addition for the nine months ended December 31, 1996                             59
                                                                                        -----------

                Balance, December 31, 1996                                              $     6,441
                                                                                        ===========
</TABLE>

NOTE 4      TAX CARRYFORWARD

            The company has the following tax carryforwards at December 31, 1996

                    Year Ended                 Amount           Expiration Date
                    ----------                 ------           ---------------

                  March 31, 1990            $     1,590          March 31, 2005
                  March 31, 1991                  6,415          March 31, 2006
                  March 31, 1992                  3,809          March 31, 2007
                  March 31, 1993                  2,770          March 31, 2008
                  March 31, 1994                  1,034          March 31, 2009
                  March 31, 1995                  1,072          March 31, 2010
                  March 31, 1996                 25,857          March 31, 2011
                                            -----------

                                            $    42,547
                                            ===========

       See Accompanying Notes and Independent Accountants' Review Report.


                                       10
<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1996
                                   (UNAUDITED)

NOTE 4      TAX CARRYFORWARD (CONTINUED)

            Future changes in ownership may limit the ability of the company to
            utilize its net operating loss carryforwards prior to their
            expiration.

NOTE 5      STOCK WARRANTS

            The company has outstanding A warrants and B warrants in the amounts
            of 10,465,000 and 3,732,500, respectively. The A warrants entitle
            holders to purchase one share of the company's $.001 par value
            common stock for $.25 per share and expire on December 31, 1999. The
            B warrants entitle holders to purchase one share of the company's
            $.001 par value common stock for $.40 per share and expire on
            December 31, 2000.

NOTE 6      PREFERRED STOCK

            No rights or preferences have been assigned to the preferred stock.

NOTE 7      UNAUDITED FINANCIAL INFORMATION

            The accompanying financial information as of December 31, 1996 is
            unaudited. In managements opinion, such information includes all
            normal recurring entries necessary to make the financial information
            not misleading.

NOTE 8      PROPOSED MERGER AND PROMISSORY NOTE RECEIVABLE

            On August 17, 1995, the company executed a letter of intent to
            acquire a privately held operating company in a reverse acquisition.
            The proposed merger was conditional upon the following events: (1)
            the operating company would plan, finance, construct, and operate a
            200 bed hospital in Bahrain, (2) the hospital is to be used as a
            teaching hospital in conjunction with the Arabian Gulf University
            (AGU) Medical School, (3) the land for the project is to be donated
            by AGU, (4) the operating company would have the cooperation of the
            Bahrain government and required licensing authorities, and (5) the
            operating company would have authorization of the local military
            hospital to open and operate the facility, and the funds and
            purchasing ability to acquire the personnel, equipment and supplies
            for that purpose. In connection with the proposed merger, the
            company advanced $50,000 to a merger candidate. The advance was
            evidenced by a promissory note due August 17, 1996, at 8 percent
            interest. As of August 17, 1996, the merger candidate had failed to
            repay the advance. The company planned to acquire 100 percent of the
            stock of the operating company by issuing approximately 20,092,000
            shares of its $.001 par value common stock to shareholders of the
            operating company. Upon completion of the transaction, approximately
            90 percent of the shares of the company's common stock would be held
            by shareholders of the operating company. To ensure that shares held
            by the shareholders of the operating company are not diluted by the
            exercise of warrants, the company planned to issue nine

       See Accompanying Notes and Independent Accountants' Review Report.


                                       11
<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1996
                                   (UNAUDITED)

NOTE 8      PROPOSED MERGER AND PROMISSORY NOTE RECEIVABLE (CONTINUED)

            shares of common stock to the shareholders of the operating company
            for each share of common stock obtained through the exercise of
            warrants.

            Due to the delinquency of its note receivable from merger candidate,
            the company recorded an allowance for doubtful accounts for $26,250
            which equals fifty percent of the face value of the note plus
            accrued interest.

            If the company is successful in its effort to acquire the privately
            held company, the majority of the control of the company will rest
            with the former shareholders of the acquired company. Therefore,
            significant changes may be made to the present slate of officers and
            directors of the company.

       See Accompanying Notes and Independent Accountants' Review Report.


                                       12