<PAGE>   1
                                   FORM 10-QSB

                     U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-QSB

              (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

               (For the quarterly period ended October 31, 1997)

             ( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                                  EXCHANGE ACT
            For the transition period from___________ to ____________
                       Commission file number 93-67656-S

                        LEADING-EDGE EARTH PRODUCTS, INC
           (Name of small business issuer as specified in its charter)

                  Oregon                                    93-1002429
(State of incorporation or organization)              (I.R.S. Employer ID No.)

       319 Nicherson St.  #186, Seattle, WA                  98109
     (Address of principal executive offices)              (Zip Code)

                                  800-788-3599
                            Issuer's telephone number

         --------------------------------------------------------------
      (Former name, former address and former fiscal year, if changed since
                                  last report)

   Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days __X____ _____
                                                                   Yes      No

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                 PROCEEDINGS DURING THE 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 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: 28,272,014 as of January 13, 1998

    Transitional Small Business Disclosure Format (check one):
Yes...........  No......X....
<PAGE>   2
                        LEADING-EDGE EARTH PRODUCTS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

PART I

ITEM 1.   FINANCIAL STATEMENTS

Interim Financial Statements for the periods ending October 31, 1997 and 1996,
are attached hereto.

ITEM 2.   PLAN OF OPERATION

The operations of Leading-Edge Earth Products, Inc. (the "Company"), since
inception have been focused on research and development (R&D). R&D activities
were done by the Company from 1992 to 1996. R&D was done and paid for by Agile
Building Technologies, Inc. ("Agile"), from January 1996 through October 1996.
The Company resumed direct R&D activities in November 1996. Between November
1996 and the present, a viable structural panel product has been developed by
the Company in concert with its affiliates. This product is known as "LEEP
STRUCTURAL CORE." Significant purchase of equipment and manufacturing facilities
by the Company's affiliates, is expected during fiscal 1997/1998, as well as
expansion of personnel.

The strategy of Management during fiscal 1997/1998 is to develop the LEEP
STRUCTURAL CORE product manufacturing capability and marketing through affiliate
companies. Manufacturing and marketing of LEEP STRUCTURAL CORE will be performed
in tandem with the Company's affiliate company, Agile, who is developing the
markets for its insulated wallboard product known as "IN-SULATE", and its
External Insulated Sheathing System product known as "EX-SULATE". All three
product lines are compatible and complementary and use the same basic
polyisocyanurate expanding foam lamination ("Polyiso") technology. The Company
believes that, over time, both Agile and the Company's future affiliates will be
materially more cost effective by locating manufacturing plants in the same
locations to be able to share Polyiso chemical unloading and storage facilities.
Polyiso chemical order volume, shipping costs, intermediate rail tank storage
and in-plant isolated temperature controlled storage, are major cost and
logistic considerations with respect to efficient, economical laminated Polyiso
product manufacturing. Locating Polyiso depots between future Agile
IN-SULATE/EX-SULATE and LEEP STRUCTURAL CORE plants lends these operational
pairings substantial advantage over future would-be competition. No specific
plan has been implemented, as of this report, to undertake to build such a
"side-by-side" operation.

With respect to Agile, considering Agile's bank facilities, equity investments
and long-term notes, more than $3,000,000 has been invested in Agile's products
and operations since Agile's inception in December 1995. This investment has
produced a group of new, well-timed products, including Agile's EX-SULATE and
IN-SULATE. EX-SULATE is an Exterior Insulated Sheathing System Product which
takes the place of multiple-step application external finishing systems such as
"Dryvet" (a 3-to-7-step, labor intensive competitive product). IN-SULATE is an
insulated wall board product for finishing the interior of buildings, while
providing significant thermal and sound insulation at the same time. Agile
purchased an operating production line at the Winter Panel Corporation facility
in Brattleboro, Vermont. Agile privately placed various equities since November
1996, to fund development of its new products, markets, and sales programs, and
to modify the production line in Vermont to manufacture Agile's products. Based
on the outlook for Agile product order demand, Agile ordered, and paid cash in
advance (during November 1997), an additional Laminator which is twice as long
as, and offers approximately twice the production capacity of, the machine in
Brattleboro.


                                       1
<PAGE>   3

The Agile products are fully developed and in pilot production. As such, Agile
is ready to upscale or participate in upscaling production quantities to pace
their current visible market demands. Management and Agile estimate $20,000,000
first-year revenues of Agile products. David Moran, the Company's former
President (see below), had been assisting Agile and the HKC investors (see
Exhibit 10.4, Agreement between Leading Edge Earth Products, Inc., and Harrison
Kramer Corporation, dated August 12, 1997, attached to 10-K Report, filed
November 5, 1997), in Pennsylvania and Vermont to achieve the next level of
planning and product manufacturing efficiency at Agile. As of an October 28,
1997, Agreement between Agile and the new investors, Mr. Moran resigned as
President of the Company and became the CEO of Agile Group Inc. ("AGI"). Mr.
Grant Record, founder and CEO of the Company assumed Mr. Moran's duties until a
new president can be identified. The Company believes that Mr. Moran's talents
can be more fully utilized in the Joint Venture affiliate at this time because
of the higher current demand for production efficiency at Agile. The Company
will not require high-volume production efficiency before summer 1998.

The Company plans to form a new affiliate company in Twin Falls, Idaho. The Twin
Falls area offers substantial transportation, work force, logistic and economic
reasons to encourage an aggressive outlook to manufacturing in the Twin Falls
area. The Company does not believe there is any need to expedite building a
manufacturing plant during the winter months as personnel and facilities are
available to manufacture the LEEP panels in Pennsylvania and ship them to Idaho
for developing the initial western markets between now and spring 1998, when
plant construction can begin in the Twin Falls area. Grant Record, CEO of the
Company, took up residence in Twin Falls in order to administer the planning for
building facilities. Options to purchase or lease turnkey manufacturing
facilities will be made available to Agile for one of the two new buildings now
in planning for the Twin Falls area. Mr. Record, in concert with one of the
Company's joint venture candidates, L/A Investors, Inc., is presently reviewing
various manufacturing plant sites in the region of LEEP's interest. One 80 acre
site has been purchased by L/A Investors with a view to constructing an
environmentally friendly industrial campus wherein LEEP will be the principal
builder. As of this report, two additional locations in the region are being
considered. LEEP and Agile will be treated as "favored" customers, respectively,
for the approximately 15 acres each would require to accommodate the planned
200,000 sq.ft. rail-side manufacturing buildings.

The Company's proposed new affiliate company (NEWCO) and the Company's affiliate
company, Agile, use the same basic technology, chemicals and equipment to
produce their respective products. Pilot Product will be produced at a rate in
Pennsylvania to support construction of two medium-sized commercial buildings
per week or one medium-sized refrigerated warehouse per day, for each group of
five (5) manual containment presses. By mid calendar 1998 Management believes
that the Company's affiliate companies will have production capacity to support
$90,000,000 in annual sales.

NEWCO will produce foam filled metal structural panels using manual presses in
or near Agile's Pennsylvania facility during the winter months of 1998. In the
summer of 1998, NEWCO expects to be positioned to produce the LEEP STRUCTURAL
CORE product on a new 100-foot Laminator System in Idaho that will be capable of
producing upwards of 48,000 square feet of LEEP STRUCTURAL CORE per ten-hour
shift. In the interim it will use Shuttle Containment (manual) Presses which are
currently in the final stage of fabrication in Pennsylvania. 2.3 metric tons
(51,000 pounds) of custom sheet metal has been purchased by the Company and
shipped from Korea to Pennsylvania to support first quarter 1998 manufacturing
of LEEP STRUCTURAL CORE. Negotiations are under way to transfer this steel
inventory to the joint-venture company (NEWCO), to support NEWCO's operations,
as part of the joint-venture negotiation. No broader manufacturing rights than
regional rights within the United States are under consideration for joint
venture at this time.


                                       2
<PAGE>   4

Agile purchased a used 100-foot long Polyiso Laminator during the last quarter
of calendar 1997. Additional Laminators will be ordered as required. Phase One
production capacity in Pennsylvania is expected to allow Agile to produce foam
insulation backed interior and exterior sheeting products sufficient to meet
projected market demand of sales beyond the $30,000,000 level.

LEEP announced on December 11, 1997, that its affiliate, Agile Building
Technology, Inc., completed installation of its proprietary EX-SULATE exterior
panels on three new drug stores for the Rite Aid Corporation. These stores are
part of Rite Aid's major national building program.


LIQUIDITY AND CAPITAL RESOURCES. Due to cash flow constraints at Agile, while a
newly created manufacturing joint venture is being implemented, the Company has
agreed with Agile that payments on moneys owed to LEEP by Agile will be delayed
until cash flow permits. Since there is no date certain for the Company to
receive payments on the receivable from Agile, the Company has provided for a
reserve of $244,375 as shown in the financial statements to cover the license
revenue and accrued interest due from Agile.

Investors have contracted to invest $6,000,000 in Agile--to support
manufacturing upgrades on present equipment and additional manufacturing
capacities to enable Agile to exceed $30,000,000 in sales revenues over the next
24 months. The same investors (HKC; see below) have expressed interest in
negotiating to fund a proposed new affiliate company to build the plant
facilities necessary to begin manufacturing LEEP STRUCTURAL CORE product in
Idaho. This investor interest is presently being compared with other
opportunities for joint venturing in Idaho.

The Company entered into an August 12, 1997 Amended Agreement with Harrison
Kramer Corporation ("HKC"), or assigns, on August 15, 1997. The Agreement
specified that HKC had until November 1997 to consummate a $5,000,000 financing
for the Company. Alternately, a $6,000,000 financing was consummated under a
separate agreement, for Company affiliate, Agile. HKC investors signed a binding
agreement with Agile on October 28, 1997, to form Agile Group, Inc. (AGI) and
Agile Building Structures, Inc. (ABS), and to invest $500,000 per month in ABS
beginning November 31, 1997 and each month thereafter for eleven consecutive
months and to invest up to $400,000 prior to November 31, 1997. Both initial
increments ($400,000 and $500,000) were completed. According to the terms of the
October 28, 1997 Agreement, Agile will hold 49% of ABS, and AGI will hold 51%.
Should AGI default on any monthly payment, Agile has the right to control of
ABS. AGI has the right of first refusal to finance additional joint venture
operations on a 51%/49% basis and to provide all of the funding for such
operations. Should AGI not exercise the right, Agile has the right to otherwise
finance and control such future operations.

The Company obtained a revolving credit facility from Rothchild SA, Nassau,
Bahamas. The credit facility presently provides for monthly draws of $137,500
which can be paid down subsequently in stock with a 1.08 repayment multiple if
repaid in stock at the then current market price for stock. The advances can be
repaid in cash at a 1.03 multiple rate (refer to Note 14 to the Financial
Statements, 10-K Report for the year ending April 30, 1997, filed on November 5,
1997). Difficult administrative challenges are being worked out with regard to
employing this facility. As of this report the Company has successfully
completed the first draw of $137,500 and is in the process of completing the
second draw, having received a partial payment on it. The Company expects to
know within 30 days if the credit facility will remain a viable financing
alternative.

RESULTS OF OPERATIONS. The Company has yet to generate revenues from the sale of
building panels, however, $300,000 has been received in the form of License
revenue and an additional $195,250 is due 


                                       3
<PAGE>   5

the Company from its affiliate, Agile, for fees and services rendered. The
Company financed its cost of operations for the quarter ending July 31, 1997,
from stock sales, stockholder loans, and debt conversions. As of January 1,
1998, the Company had $374,575 in short-term borrowing. For further analysis,
see the Company's Statement of Cash Flows.

PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

Mr. Metz is tardy in responding to discovery requests made by the Company. Court
sanctions have been requested and are pending. Should Mr. Metz not respond, the
Company would close the case in its favor under default provisions. Other than
the foregoing, there have been no changes in the status of legal proceedings
since the 10-K Report for the year ending April 30, 1997, filed on November 5,
1997.

ITEM 2.   CHANGES IN SECURITIES

There have been no changes in instruments defining the rights of holders of any
class of securities.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

None.

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

There have been no submissions of matters for security holder vote since the
10-K Report for the year ending April 30, 1997, filed on November 5, 1997.

ITEM 5.   OTHER INFORMATION

Matters discussed herein, contain forward-looking statements that involve risk
and uncertainties. The Company's results may differ significantly from results
indicated by forward looking statements. Factors that might cause some
differences, include, but are not limited to:

o    Changes in general economic conditions, including but not limited to
     increases in interest rates, and shifts in domestic building construction
     requirements;

o    Changes in government regulations affecting customers, the Company, or
     Agile;.

o    Risks generally involved in the construction business, including weather,
     fixed price contracts and shortages of materials or price competitive
     labor;

o    Competition;

o    The ability of the Company to successfully bring the products from their
     development stage into full and profitable production;

o    The Company and/or Agile and HKC's ability to raise sufficient debt and
     equity capital to perfect Agile's business plans and to enable Agile to
     continue in existence;

o    The occurrences of incidents which could subject the Company to liability
     or fines;


                                       4
<PAGE>   6

o    Agile's ability to obtain the sales orders necessary to support the volume
     of production required to sustain successful operations.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

Unaudited financial reports and notes thereto are attached covering the period
ending October 31, 1997.

No 8-K reports have been filed since the 10-K Report for the year ending April
30, 1997, filed on November 5, 1997.

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.

                                      Leading-Edge Earth Products, Inc.
                                                 (Registrant)



Date: January 13, 1998                By:    Grant C. Record
                                             CEO and Secretary

                                       5

<PAGE>   7
                        LEADING-EDGE EARTH PRODUCTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                          INTERIM FINANCIAL STATEMENTS

                            OCTOBER 31, 1997 AND 1996

                                   (UNAUDITED)
<PAGE>   8
                        LEADING-EDGE EARTH PRODUCTS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS
                           OCTOBER 31, 1997, AND 1996
                                   (UNAUDITED)
1. GENERAL

The interim financial statements have been prepared by the Company without audit
and are subject to normal recurring year-end adjustments. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments, (all of which are of a normal recurring
nature), necessary to present fairly the financial position of the Company as of
October 31, 1997, and the results of operations for the three and six months
ending October 31, 1997 and 1996. It is suggested that these interim statements
be read in conjunction with the financial statements and notes thereto contained
in the Company's audited financial statements for the year ended April 30, 1997.
The results of operations for the three and six months ended October 31, 1997
are not necessarily indicative of the results to be expected for the full year.

2.  INCOME TAXES

Deferred income tax assets and liabilities are computed for differences between
the financial statement and tax basis of assets and liabilities that will result
in taxable or deductible amounts in the future based on enacted tax laws and
rates applicable to the periods in which the differences are expected to affect
taxable income. Losses prior to 1995 will be capitalized. From 1995 on, the year
in which the Company received its first license revenue, most losses should be
carried forward. Valuation allowances are established when necessary to reduce
tax assets to the amount expected to be realized. Income tax expense is the tax
payable or refundable for the period plus or minus the change during the period
in net deferred tax assets and liabilities.



3.  NET LOSS PER COMMON STOCK

Net loss per common share is computed based on the weighted average number of
common shares and common share equivalents outstanding. When dilutive, stock
options are included as common share equivalents using the treasury stock
method.


<PAGE>   9
4.  CONTINUING EXISTENCE

The Company has yet to produce and sell its products. The burden of trade debt
has been reduced with short term borrowing and stockholder loans. Its ability to
continue in existence is dependent upon obtaining sufficient funding to begin
planned manufacturing operations and achieve a positive cash flow either for
itself or its affiliates. Management believes that sufficient funding and
operational success will be achieved to allow the Company to realize planned
business objectives, but at this time it is not assured.

5.  ISSUANCE OF SECURITIES

The Company issued 740,800 shares of stock in exchange for $302,416 in notes
payable and interest owed by the Company.

In September the Board of Directors authorized options to purchase 250,000
shares of restricted Rule 144 stock at $0.375 for three years to be issued to
members of the Board.

6.  RECEIVABLES DUE FROM AFFILIATE

As a result of the agreement completed in March of 1997 with Agile and WLP the
Company does not expect to collect license and consulting revenues and interest
due from Agile until Agile is in production and is in a position to make
payments on its payables to the Company. Consequently the Company has
established a reserve of $244,375 for receivables from Agile.

 7.  INVESTMENTS IN AFFILIATES

The Company has a 35% interest in Agile with the remaining 65% interest held by
other investors. This investment is accounted for using the equity method. Any
asset or equity distributions from Agile will be made in accordance with the
respective ownership interests. Agile is a development stage enterprise
established to manufacture building panels using technology developed jointly
and/or independently by the Company and/or Agile. The Company has recorded no
value related to this investment. Agile has incurred operating losses since its
inception in December 1995.

8.  AGILE  REPORTED NET LOSES

The Company has not recognized its proportionate share of Agile's net losses as
the Company has no obligation to fund any such losses and carries its investment
in Agile at zero.

9.  INVENTORY

The Company purchased and taken possession of polyester coated custom embossed
sheet steel which it is holding for and expects to transfer to a joint venture
affiliate to be formed in 1998. There is no other inventory being reported on
the Company financial statement.
<PAGE>   10
10.  OTHER ASSETS

On August 29, 1996, the Company assumed an agreement entered into by Grant
Record on March 30, 1996. In this agreement, the inventor disclosed certain
proprietary information for the use of Magnesium Oxide Technology (MgO) and the
Company received an exclusive and assign-able right to the licensed technology,
including enhancements made by the licensee. The MgO technology is used to
control odors produced in the manufacturing process of its principal product.
The Company obtained the right to use the technology by paying $25,822 which it
financed with a stockholder loan. The Company shows this purchase as an
intangible asset. Amortization has been taken on this asset from the date
acquired by the Company using the straight-line method over 15 years. The
continued right to use the product depends on the Company's payment of $25,000
per year minimum royalty to the inventor and the inventor accepting the payment.
No commitment has been made by either the Company or the inventor as of the
writing. The Company is examining the cost and other trade-off's of in-house
developed/controlled slurry technology Vs vendor purchased slurries. The
Company's criteria for developing and/or holding slurry technology is that MgO
slurry or equivalent be low cost, fire proof, water proof, easy to apply and
competitively priced with similar commercially available products.

In May, 1997 the Company signed a contingent earnest-money agreement and placed
$15,000 in trust on the purchase of property to be used by a yet to be formed
subsidiary in Twin Falls Idaho.

During the quarter the Company loaned an investment company $86,177 with
interest at 10% per annum which is due to be paid in full in two years which is
shown as "Notes receivable". The note specifies that it is to be fully secured
with stock. The investment company is using the money to fund the start-up of
the Company's new affiliate which is expected to be established in Idaho in
1988. When the new company is funded, the Company expects to recover these
funds.

11.  SUBSEQUENT EVENTS

Management has withdrawn its offer to purchase property in Idaho and has
recovered the $15,000 earnest-money placed in trust.

The Board has authorized 100,000 shares of restricted Rule 144 stock be reserved
for future services by a vendor.

In November of 1997 the Company issued 106,250 shares of restricted Rule 144
stock to vendors for services rendered.

The Company settled a dispute with a vendor by agreeing to pay $20,345 for
services rendered including legal fees. Payments are to be made over two months
in three equal parts.
<PAGE>   11
                        LEADING-EDGE EARTH PRODUCTS, INC.
                        (A Development Stage Enterprise)
                       STATEMENTS OF STOCKHOLDERS' DEFICIT
                       From December 23, 1991 (inception)




<TABLE>
<CAPTION>
                                                                                    Price Per               Common Stock
                                                                      Date            Share          Shares               Amount
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>              <C>            <C>                  <C>
Balances at inception                                               12/31/91                        11,936,830           $   5,000 
Cash contributions and unreimbursed expenditures
  incurred on behalf of the Company                                1/92-4/92                                 -              37,039 
Net loss                                                                                                     -                   - 

                                                                                                    ------------------------------
Balances at April 30, 1992                                                                          11,936,830              42,039 

Cash contributions and unreimbursed expenditures
  incurred on behalf of the Company                                  5/92-4/93                               -              63,871 

Common stock issued for payment of note payable                      4/30/93           0.35            168,725              58,725 
Common stock issued for payment of salary                            4/30/93           0.12             40,000               4,654 
Excess of market price over exercise price on
  options granted during the year                                                                            -             332,710 
Net loss                                                                                                     -                   - 

                                                                                                    ------------------------------
Balances at April 30, 1993                                                                          12,145,555             501,999 

Common stock issued for cash                                         6/22/93           0.54            665,000             360,000 
Common stock issued for payment of services                          6/22/93           0.54             99,000              53,594 
Common stock issued for payment of stockholder                                                                                     
  loan and accrued interest                                          7/27/93           0.61            125,400              76,000 
Exercise of stock options                                            4/30/94           0.07            100,000               6,500 
Excess of market price over exercise price on
  options granted during the year                                                                            -             825,129 
Net loss                                                                                                     -                   - 

                                                                                                    ------------------------------
Balances at April 30, 1994                                                                          13,134,955           1,823,222 

Common stock issued for payment of professional
  fees and royalty obligations                                       5/31/94           0.50          1,054,863             526,500 
Exercise of options for cash                                         6/30/94           0.09            207,400              18,996 
Cash payment of note receivable from stockholder                     7/31/94                                 -                   - 
Exercise of options for cancellation of note payable                 8/4/94            0.12            197,680              23,000 
Grant of stock options in payment of accrued salaries               10/31/94                                 -             120,000 
Exercise of options for notes receivable                           11/94-2/95          0.13          1,859,172             246,099 
Common stock issued for payment of accounts
  payable                                                           12/31/94           0.84             45,796              38,240 
</TABLE>




<TABLE>
<CAPTION>
                                                                                          Deficit                  Total
                                                                                        Accumulated            Stockholders'
                                                                      Notes              during the                Equity
                                                                   Receivable -          Development            (Accumulated
                                                                   Stockholders             Stage                 Deficit)
----------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>                   <C>                   <C>
Balances at inception                                                $     -               $       -            $      5,000
Cash contributions and unreimbursed expenditures
  incurred on behalf of the Company                                        -                       -                  37,039
Net loss                                                                   -                 (34,725)                (34,725)

                                                                  ----------------------------------------------------------
Balances at April 30, 1992                                                 -                 (34,725)                  7,314

Cash contributions and unreimbursed expenditures
  incurred on behalf of the Company                                        -                       -                  63,871

Common stock issued for payment of note payable                                                                       58,725
Common stock issued for payment of salary                                                                              4,654
Excess of market price over exercise price on
  options granted during the year                                                                                    332,710
Net loss                                                                   -                (504,175)               (504,175)

                                                                  ----------------------------------------------------------
Balances at April 30, 1993                                                 -                (538,900)                (36,901)

Common stock issued for cash                                                                                         360,000
Common stock issued for payment of services                                                                           53,594
Common stock issued for payment of stockholder                                                                             -
  loan and accrued interest                                                                                           76,000
Exercise of stock options                                             (6,500)                                              -
Excess of market price over exercise price on
  options granted during the year                                                                                    825,129
Net loss                                                                   -              (1,559,781)             (1,559,781)

                                                                  ----------------------------------------------------------
Balances at April 30, 1994                                            (6,500)             (2,098,681)               (281,959)

Common stock issued for payment of professional
  fees and royalty obligations                                                                                       526,500
Exercise of options for cash                                                                                          18,996
Cash payment of note receivable from stockholder                       6,500                                           6,500
Exercise of options for cancellation of note payable                                                                  23,000
Grant of stock options in payment of accrued salaries                                                                120,000
Exercise of options for notes receivable                            (246,099)                                              -
Common stock issued for payment of accounts
  payable                                                                                                             38,240
</TABLE>

                                     Page 1
<PAGE>   12
                        LEADING-EDGE EARTH PRODUCTS, INC.
                        (A Development Stage Enterprise) 
                      STATEMENTS OF STOCKHOLDERS' DEFICIT
                       From December 23, 1991 (inception)




<TABLE>
<CAPTION>
                                                                                    Price Per               Common Stock
                                                                      Date            Share          Shares               Amount
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>              <C>            <C>                  <C>
Exercise of Class A warrants for cash                               1/31/95            2.00              1,650               3,300
Exercise of Class A warrants for payment of note
  payable                                                           1/31/95            2.00             50,000             100,000
Net loss                                                                                                     -                   -

                                                                                                    ------------------------------
Balances at April 30, 1995                                                                          16,551,516           2,899,357

Common stock issued for payment of accounts                                                                                       
  payable                                                           9/28/95            0.63             20,800              13,000
Common stock issued for cash                                        11/6/95            0.80             12,500              10,000
Common stock issued in exchange for investments in
  affiliates                                                        12/4/95                         11,884,615                    
Common stock issued for payment of accounts
  payable                                                          12/10/95            0.50            150,000              75,000
Exercise of options for cash                                       12/27/95            0.12            202,320              23,541
Common stock issued for payment of accounts
  payable                                                           1/12/96            0.75            100,000              75,000
Offset of notes receivable from stockholders with
  related loans from stockholders                                   2/28/96                                                      -
Common stock issued for payment of accounts
  payable                                                           3/11/96            0.75            100,000              75,000
Common stock issued for payment of note payable
  and accrued interest and royalties                                4/28/96            1.03            250,000             258,011
Excess of market price over exercise price on options
  granted during the year                                           4/30/96                                  -              41,500
Net loss                                                                                                     -                   -

                                                                                                    ------------------------------
Balances at April 30, 1996                                                                          29,271,751           3,470,409
                                                                                                                                  
Common stock issued in payment of accrued salaries                  6/15/96            0.69             21,200              14,624
Common stock issued for payment of services                         7/10/96            1.00             75,000              75,000
Options exercised in exchange for note receivable                   7/30/96            0.53            150,000              80,000
Removal of stop stock transfer for cash                             8/10/96                                  -               3,500
Common stock issued for note receivable                             8/15/96            1.00            275,000             275,000
Common stock issued for payment of note payable
  and accrued interest                                              8/22/96            0.69            100,000              69,000
Exercise of options for cash                                        10/3/96            0.50             50,000              25,000
Common stock issued for payment of services                        12/10/96            1.00             75,000              75,000
Common stock issued for payment of services                         3/10/97            0.70             75,000              52,800
</TABLE>




<TABLE>
<CAPTION>
                                                                                          Deficit                  Total
                                                                                        Accumulated            Stockholders'
                                                                      Notes              during the                Equity
                                                                   Receivable -          Development            (Accumulated
                                                                   Stockholders             Stage                 Deficit)
----------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>                   <C>                   <C>
Exercise of Class A warrants for cash                                                                                3,300
Exercise of Class A warrants for payment of note
  payable                                                                                                          100,000
Net loss                                                                    -              (1,303,988)          (1,303,988)

                                                                 ---------------------------------------------------------
Balances at April 30, 1995                                           (246,099)             (3,402,669)            (749,411)

Common stock issued for payment of accounts                                                                              -
  payable                                                                                                           13,000
Common stock issued for cash                                                                                        10,000
Common stock issued in exchange for investments in
  affiliates                                                                                                             -
Common stock issued for payment of accounts
  payable                                                                                                           75,000
Exercise of options for cash                                                                                        23,541
Common stock issued for payment of accounts
  payable                                                                                                           75,000
Offset of notes receivable from stockholders with
  related loans from stockholders                                     117,315                                      117,315
Common stock issued for payment of accounts
  payable                                                                                                           75,000
Common stock issued for payment of note payable
  and accrued interest and royalties                                                                               258,011
Excess of market price over exercise price on options
  granted during the year                                                                                           41,500
Net loss                                                                    -                (402,536)            (402,536)

                                                                 ---------------------------------------------------------
Balances at April 30, 1996                                           (128,784)             (3,805,205)            (463,580)
                                                                                                                         -
Common stock issued in payment of accrued salaries                                                                  14,624
Common stock issued for payment of services                                                                         75,000
Options exercised in exchange for note receivable                     (80,000)                                           -
Removal of stop stock transfer for cash                                                                              3,500
Common stock issued for note receivable                              (275,000)                                           -
Common stock issued for payment of note payable
  and accrued interest                                                                                              69,000
Exercise of options for cash                                                                                        25,000
Common stock issued for payment of services                                                                         75,000
Common stock issued for payment of services                                                                         52,800
</TABLE>

                                     Page 2
<PAGE>   13
                        LEADING-EDGE EARTH PRODUCTS, INC.
                        (A Development Stage Enterprise) 
                      STATEMENTS OF STOCKHOLDERS' DEFICIT
                       From December 23, 1991 (Inception)


<TABLE>
<CAPTION>
                                                                                    Price Per               Common Stock
                                                                      Date            Share          Shares               Amount
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>              <C>            <C>                  <C>
Common stock returned by subsidiary                                 3/25/97                         (4,216,601)                  -
Net loss                                                                                                     -                   -

                                                                                                    ------------------------------
Balances at April 30, 1997                                                                          25,876,350           4,140,333

Common stock issued for accounts payable                            5/15/97            0.40             62,500              25,000
Common stock issued for accounts payable                            5/30/97            0.43             75,000              32,400
Stock options issued for accounts payable                           6/6/97             0.00                  -               5,000
Common stock exchanged for note payable                             6/6/97             0.43            178,279              76,660
Common stock exchanged for shareholder loan                         6/6/97             0.43             37,272              16,027
Common stock issued for accounts payable                            6/6/97             0.43            110,796              47,642
Common stock issued in exchange for services                                   
   net of 600,000 shares claimed by the Company, (Note 5)           6/6/97             0.52            600,000             312,000
Common stock issued in exchange for services                        6/6/97             0.43            113,690              48,887
Common stock issued for cash                                        6/26/97            0.18            114,133              20,000
Net loss                                                                                                     -                   -

                                                                                                    ------------------------------
Balances at July 31, 1997                                                                           27,168,020           4,723,949

Common stock exchanged for note payable                             8/21/97            0.62            316,800             196,416
Common stock exchanged for note payable                            10/15/97            0.25            424,000             106,000
Net loss                                                                                                                          

                                                                                                    ------------------------------
Balances at October 31, 1997                                                                        27,908,820           5,026,365
                                                                                                    ==============================
</TABLE>






<TABLE>
<CAPTION>
                                                                                          Deficit                  Total
                                                                                        Accumulated            Stockholders'
                                                                      Notes              during the                Equity
                                                                   Receivable -          Development            (Accumulated
                                                                   Stockholders             Stage                 Deficit)
----------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>                   <C>                   <C>
Common stock returned by subsidiary                                                                                    -
Net loss                                                                    -                (838,139)          (838,139)

                                                                   -----------------------------------------------------
Balances at April 30, 1997                                           (483,784)             (4,643,344)          (986,795)

Common stock issued for accounts payable                                                                          25,000
Common stock issued for accounts payable                                                                          32,400
Stock options issued for accounts payable                                                                          5,000
Common stock exchanged for note payable                                                                           76,660
Common stock exchanged for shareholder loan                                                                       16,027
Common stock issued for accounts payable                                                                          47,642
Common stock issued in exchange for services                                                                     
   net of 600,000 claimed by the Company, (Note 5)                                                               312,000      
Common stock issued in exchange for services                                                                      48,887
Common stock issued for cash                                                                                      20,000
Net loss                                                                    -                (210,125)          (210,125)

                                                                   -----------------------------------------------------
Balances at July 31, 1997                                            (483,784)             (4,853,469)          (613,304)

Common stock exchanged for note payable                                                                          196,416
Common stock exchanged for note payable                                                                          106,000
Net loss                                                                                     (269,465)          (269,465)

                                                                   -----------------------------------------------------
Balances at October 31, 1997                                         (483,784)             (5,122,934)          (580,353)
                                                                   =====================================================
</TABLE>

                                     Page 3
<PAGE>   14
                        LEADING-EDGE EARTH PRODUCTS, INC.
                        (A Development Stage Enterprise)

          Condensed Balance Sheets October 31, 1997 and April 30, 1997
                                   "Unaudited"

<TABLE>
<CAPTION>
                                                                           31-Oct-97             30-Apr-97
----------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                   <C>
ASSETS
Current assets:
      Cash                                                               $     4,158           $     5,897
      Receivables from affiliate, net of adjustment of 244,375                 4,070                 4,070
      Inventory                                                               30,724
      Prepaid expenses and deposits                                          197,107                 6,500
                                                                         -----------           -----------
                     Total current assets                                    236,059                16,467

Other assets:
      Intangible assets                                                       40,822                25,822
      Less accumulated amortization                                           (2,008)               (1,148)
                                                                         -----------           -----------
                     Total intangible assets:                                 38,814                24,674
      Notes Receivable                                                        86,177
      Accrued interest                                                         1,435
                                                                         -----------           -----------
                     Total other assets:                                     126,426                24,674

                                                                         -----------           -----------
                     Total assets                                        $   362,485           $    41,141
==========================================================================================================

LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
      Notes payable                                                                            $    74,630
      Accounts payable                                                   $   163,295               197,342
      Accrued contract salary                                                351,343               334,728

      Accrued royalties and interest payable                                 108,625                96,661
      Loans from shareholder                                                 319,575               324,575
                                                                         -----------           -----------
                     Total current liabilities                               942,838             1,027,936

Shareholders' equity (deficit):
      Common stock, no par value                                           5,026,365             4,140,333
      Note receivable from shareholders                                     (483,784)             (483,784)
      Deficit accumulated during development stage                        (5,122,934)           (4,643,344)
                                                                         -----------           -----------
                     Total shareholders' equity                             (580,353)             (986,795)

                                                                         -----------           -----------
                     Total liabilities and shareholders' equity          $   362,485           $    41,141
==========================================================================================================
</TABLE>
<PAGE>   15
                        LEADING-EDGE EARTH PRODUCTS, INC.
                        (A Development Stage Enterprise)

    Statements of Operations three and six months ended October 31, 1997 and
                                October 31, 1996
                                  "Unaudited"
<TABLE>
<CAPTION>
                                                                                                                    Period from
                                                                                                                    Dec. 23, 1991
                                                             Three months ended           Six months ended       (inception)through
                                                           10/31/97       10/31/96      10/31/97      10/31/96         10/31/97
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>           <C>           <C>           <C>           <C>
INCOME:                                                                                                          
      License and consulting revenues                                      $46,000                    $165,125         $497,000
      Interest                                                12,825         6,881        23,153         6,951           58,872
      Other                                                                 15,103         7,000        16,464           22,964
                                                          -----------   -----------   -----------   -----------     ------------
      Total income                                            12,825        67,984        30,153       188,540          578,836
                                                                                                                 
RESEARCH AND DEVELOPMENT EXPENSES:                                                                               
      Salaries                                                                                                          418,874
      Supplies/shipping                                                                                    301           91,130
      Professional fees                                        9,450                      10,668         2,083          197,833
      License fees                                                           8,000                      18,000   
      Travel                                                                                                             11,418
      Rent                                                                                                               37,715
      Legal                                                    1,643         1,358         4,171         5,154           38,028
      Depreciation/amortization                                  430                         860                          8,272
      Utilities                                                                162                         162            6,371
      Write-down of assets                                                  47,534                      47,534          141,453
                                                          -----------   -----------   -----------   -----------     ------------
      Total research and development                          11,523        57,054        15,699        73,234          951,094
                                                                                                                 
GENERAL AND ADMINISTRATIVE EXPENSES:                                                                             
      Contract salaries                                       46,251        31,137        93,979        65,217        1,446,322
      Rent                                                     5,044         3,011         7,081         7,962           86,402
      Depreciation                                                                                                        7,912
                                                                                                                 
      Office supplies                                          4,489         3,498         7,874         5,030           59,378
      Postage and shipping                                     1,023         1,631         3,930         2,981           27,712
      Telephone                                                3,587         2,105         6,447         6,935          116,491
      Travel and entertainment                                12,670         2,726        25,991        10,948          201,851
      Relocation                                                             3,403           897         3,403           19,464
      Payroll and payroll expenses                                                                      14,375           15,503
      Legal and professional                                 117,613        55,294       212,218        77,289        1,170,039
      Stockholder costs                                          827         3,578         2,100         4,436           49,789
      Interest and bank charges                               67,949         9,072        79,438        16,022          219,339
      Promotion & corp. development                                          3,232        32,400       120,434          494,468
      Insurance                                                                                                           7,865
      Other                                                        1         1,174            64         2,241           19,415
                                                          -----------   -----------   -----------   -----------     ------------
      Total general and administrative                       259,454       119,861       472,419       337,273        3,941,950
                                                                                                                 
Adjustment for unpaid revenues                                11,313                      21,625                        244,375
Royalties and royalty buyout expense                               0             0             0             0          553,000
                                                          -----------   -----------   -----------   -----------     ------------
                                                 Net loss  ($269,465)    ($108,931)    ($479,590)    ($221,967)     ($4,867,208)
                                                                                                                 
Loss per common share                                         ($0.01)       ($0.00)       ($0.02)       ($0.01)          ($0.26)
Weighted average shares outstanding                       28,508,820    29,871,755    28,138,420    29,871,755       18,570,094
==================================================================================================================================
</TABLE>
<PAGE>   16
                        LEADING-EDGE EARTH PRODUCTS, INC.
                        (A Development Stage Enterprise)

        Condensed Statements of Cash Flows for three and six months ended
                     October 31, 1997 and October 31, 1996
                                  "Unaudited"

<TABLE>
<CAPTION>
                                                                                                                     Period from
                                                                                                                     Dec. 23, 1991
                                                                 Three months ended          Six months ended     (inception)through
                                                               10/31/97      10/31/96      10/31/97     10/31/96        10/31/97
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>           <C>           <C>          <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                 ($269,465)    ($108,931)    ($479,590)   ($221,967)    ($5,122,934)
Adjustments to reconcile net loss to cash
flows used in operating activities:
     Noncash compensation expenses related to
        nonqualified stock options granted                                                    5,000                    1,204,339
     Depreciation and amortization                                  430                         860                       16,184
     Write-off of long-term assets                                             47,534                     47,534         147,089
     Noncash compensation expenses
         related to stock grants                                                            465,929       90,900       1,307,805
     Accrued royalties and interest payable                       7,210                      11,964                      248,964
     Changes in operating assets and liabilities:
     Receivables                                                              (56,944)                   (78,069)         (4,070)
     Inventory                                                   (6,013)                    (30,724)                     (30,724)
     Prepaid expenses and deposits                               61,893         5,276      (190,607)      38,401        (197,107)
     Accounts payable                                             9,500        51,917       (34,047)     (17,664)        557,321
     Accrued salary obligations                                  29,251        18,917        16,615       33,916         365,967
     Accrued interest payable                                                 (20,129)                   (13,432)        261,696

                                                              ----------    ----------    ----------   ----------    ------------
                   Net cash used                               (167,194)      (62,360)     (234,600)    (120,381)     (1,245,470)

CASH FLOWS FROM INVESTING ACTIVITIES:
     Equipment purchases                                                                                                (159,064)
     Purchase intangibles                                                     (25,822)      (15,000)     (25,822)        (41,822)
     Note receivable in investment company                      (87,612)                    (87,612)                     (87,612)
     Payments on notes receivable from stockholders                   0                                                    6,500
                                                              ----------    ----------    ----------   ----------    ------------
                   Net cash used in investing                   (87,612)      (25,822)     (102,612)     (25,822)       (281,998)

CASH FLOWS FROM FINANCING ACTIVITIES:
     Sale of common stock                                                      72,500       112,687       72,500         482,687
     Exercise of stock options                                                 25,000                     25,000          67,537
     Exercise of Class A warrants                                                                                          3,300
     Contributed capital                                                                                                 100,910
     Notes payable exchanged for stock                          302,416                     302,416                      302,416
     Proceeds from notes payable                                                                                         272,130
     Proceeds from loans from stockholders                       10,000        34,323        10,000      128,620         630,155
     Payments on notes payable                                  (65,000)                    (74,630)                     (88,130)
     Payments on loans from stockholders                                      (43,500)      (15,000)     (83,500)       (239,379)
                                                              ----------    ----------    ----------   ----------    ------------
                   Cash provided by financing                   247,416        88,323       335,473      142,620       1,531,626

                   Net change in cash                            (7,390)          141        (1,739)      (3,583)          4,158

Cash at beginning of period                                      11,548         1,976         5,897        5,700
                                                              ----------    ----------    ----------   ----------    ------------
Cash at end of period                                            $4,158        $2,117        $4,158       $2,117          $4,158
==================================================================================================================================
</TABLE>