SECURITIES AND EXCHANGE COMMISSION
                                              WASHINGTON, D.C. 20549

                                                    FORM 10-KSB

[x]     Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchang
 Act of 1934 [Fee Required]

For the fiscal year ended March 31, 1995

[ ]     Transition Report Pursuant to Section 13 or 15(d) of the Securities
 Exchange Act of 1934 [No Fee Required]

For the transition period from                          to

Commission file number 0-23498

                                                ACHIOTE CORPORATION
                          (Exact name of small business issuer in its charter)

                         DELAWARE                                  33-0601487
(State or other jurisdiction of incorporation or organization)  (I.R.S. Employer
                                                            Identification No.)

                 1500 Quail Street, Suite 550
                 Newport Beach, California                              92660
           (Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code:               (714) 660-1500
                                                             -------------------

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

Securities registered pursuant to Section 12(g) of the Act: 
 Common Stock, par value $.001
                                                             
           Indicate  by check  mark  whether  the  registrant  (1) has filed all
reports  required to be filed by Section 13 or 15(d) of the Securities  Exchange
Act of 1934 during the preceding 12 months (or for such shorter  period that the
registrant  was required to file such  reports) and (2) has been subject to such
filing requirements for the past 90 days.
                                                      YES   X        NO

           Check if there is no disclosure  of delinquent  filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained,  to the best of  registrant's  knowledge,  in definitive  proxy or
information  statements  incorporated by reference in part III of this Form 10-K
or any amendment to this Form 10-K. [ X ]

           State issuer's revenues for its most recent fiscal year: None

           The aggregate market value of the voting stock held by non-affiliates
of the  registrant  as of March 31, 1995 was not  determinable  since the Common
Stock was not traded.

           The number of shares  outstanding  of the issuer's  classes of Common
Stock as of March 31, 1995:

Common Stock, $.001 Par Value - 424,600 shares




                                    DOCUMENTS INCORPORATED BY REFERENCE:  NONE


<PAGE>



                                                      PART I

Item 1.   DESCRIPTION OF BUSINESS

Background

 Achiote Corporation, a Delaware corporation (the "Company") was incorporated on
May 4, 1992.  The Company has no  operating  history  other than  organizational
matters,  and was formed  specifically  to be a "clean public shell" and for the
purpose of either merging with or acquiring an operating  company with operating
history and assets.  The  Securities  and  Exchange  Commission  has defined and
designated  these  types  of  companies  as  "blind  pools"  and  "blank  check"
companies.

 The primary  activity of the Company will involve seeking merger or acquisition
candidates  with  whom it can  either  merge or  acquire.  The  Company  has not
selected  any  company  for  acquisition  or merger and does not intend to limit
potential acquisition  candidates to any particular field or industry,  but does
retain the right to limit acquisition or merger candidates, if it so chooses, to
a particular field or industry.  The Company's plans are in the conceptual stage
only.

 The executive  offices of the Company are located at 1500 Quail  Street,  Suite
550, Newport Beach, California 92660. Its telephone number is (714) 660-1500.

Plan of Operation - General

 The Company was  organized  for the purpose of creating a corporate  vehicle to
seek,  investigate and, if such investigation  warrants,  acquire an interest in
one or more  business  opportunities  presented to it by persons or firms who or
which desire to seek the perceived advantages of a publicly held corporation. At
this  time,the  Company  has no  plan,  proposal,  agreement,  understanding  or
arrangement to acquire or merge with any specific  business or company,  and the
Company has not  identified any specific  business or company for  investigation
and  evaluation.  No member of Management or promotor of the Company has had any
material  discussions  with any other company with respect to any acquisition of
that  company.  Although the  Company's  Common  Stock is  currently  not freely
tradeable,  it will  eventually  become  so  under  exemptions  such as Rule 144
promulgated  under the Securities Act of 1933. See  "Description of Securities."
The Company will not restrict its search to any specific  business,  industry or
geographical  location, and the Company may participate in a business venture of
virtually any kind or nature. The discussion of the proposed business under this
caption and throughout this Registration  Statement is purposefully  general and
is not meant to be restrictive of the Company's virtually  unlimited  discretion
to search for and enter into potential business opportunities.

 The  Company  intends  to obtain  funds in one or more  private  placements  to
finance the operation of any acquired business. Persons purchasing securities in
these placements and other  shareholders will likely not have the opportunity to
participate in the decision relating to any acquisition.  The Company's proposed
business is sometimes  referred to as a "blind pool" because any investors  will
entrust their investment  monies to the Company's  management before they have a
chance  to  analyze  any   ultimate  use  to  which  their  money  may  be  put.
Consequently,  the  Company's  potential  success  is heavily  dependent  on the
Company's  management,   which  will  have  virtually  unlimited  discretion  in
searching for and entering into a business opportunity. None of the officers and
directors of the Company has had any experience in the proposed  business of the
Company.  There can be no  assurance  that the Company will be able to raise any
funds in private placements.  In any private placement,  management may purchase
shares  on the same  terms as  offered  in the  private  placement.  (See  "Risk
Factors" and "Management").

 Management  anticipates that it will only participate in one potential business
venture. This lack of diversification should be considered a substantial risk in
investing  in the  Company  because  it will not  permit  the  Company to offset
potential  losses  from one  venture  against  gains  from  another  (see  "Risk
Factors").

 The Company  may seek a business  opportunity  with a firm which only  recently
commenced  operations,  or a developing  company in need of additional funds for
expansion into new products or markets, or seeking to

                                                         2

<PAGE>



develop a new  product  or  service,  or an  established  business  which may be
experiencing  financial  or  operating  difficulties  and  is in  the  need  for
additional capital which is perceived to be easier to raise by a public company.
In some instances,  a business opportunity may involve the acquisition or merger
with a corporation  which does not need  substantial  additional  cash but which
desires to establish a public trading  market for its common stock.  The Company
may purchase assets and establish wholly owned  subsidiaries in various business
or purchase existing businesses as subsidiaries.

 The Company  anticipates that the selection of a business  opportunity in which
to participate will be complex and extremely risky.  Because of general economic
conditions,  rapid  technological  advances being made in some  industries,  and
shortages  of available  capital,  management  believes  that there are numerous
firms  seeking the benefits of a publicly  traded  corporation.  Such  perceived
benefits of a publicly traded corporation may include  facilitating or improving
the  terms  on  which  additional  equity  financing  may be  sought,  providing
liquidity  for the  principals  of a  business,  creating a means for  providing
incentive  stock  options  or  similar  benefits  to  key  employees,  providing
liquidity (subject to restrictions of applicable statutes) for all shareholders,
and other factors.  Potentially  available  business  opportunities may occur in
many different  industries and at various  stages of  development,  all of which
will make the task of  comparative  investigation  and analysis of such business
opportunities extremely difficult and complex.

 As is  customary  in the  industry,  the  Company  may pay a  finder's  fee for
locating an acquisition  prospect.  If any such fee is paid, it will be approved
by the Company's  Board of Directors and will be in accordance with the industry
standards.  Such  fees  are  customarily  between  1% and 5% of the  size of the
transaction,  based upon a sliding scale of the amount  involved.  Such fees are
typically in the range of 5% on a $1,000,000 transaction ratably down to 1% in a
$4,000,000 transaction. Management has adopted a policy that such a finder's fee
or real estate  brokerage fee could,  in certain  circumstances,  be paid to any
employee,  officer,  director or 5% shareholder  of the Company,  if such person
plays a material role in bringing a transaction to the Company.

 As part of any transaction, the acquired company may require that Management or
other  stockholders  of the Company sell all or a portion of their shares to the
acquired  company,  or  to  the  principals  of  the  acquired  company.  It  is
anticipated  that the sales  price of such shares will be lower than the current
market price or  anticipated  market price of the Company's  Common  Stock.  The
Company's  funds are not expected to be used for purposes of any stock  purchase
from insiders.  The Company shareholders will not be provided the opportunity to
approve or consent to such  sale.  The  opportunity  to sell all or a portion of
their  shares in  connection  with an  acquisition  may  influence  management's
decision to enter into a specific transaction. However, management believes that
since the  anticipated  sales  price will be less than  market  value,  that the
potential  of a stock  sale by  management  will be a  material  factor on their
decision to enter a specific transaction.

 The above  description of potential sales of management stock is not based upon
any corporate bylaw, shareholder or board resolution,  or contract or agreement.
No other  payments of cash or property are expected to be received by Management
in connection with any acquisition.

 The Company has not formulated  any policy  regarding the use of consultants or
outside advisors,  but does not anticipate that it will use the services of such
persons.

 The Company has, and will continue to have,  insufficient capital with which to
provide the owners of business  opportunities with any significant cash or other
assets.  However,  management believes the Company will offer owners of business
opportunities the opportunity to acquire a controlling  ownership  interest in a
public company at substantially less cost than is required to conduct an initial
public offering.  The owners of the business  opportunities will, however, incur
significant post-merger or acquisition registration costs in the event they wish
to register a portion of their shares for subsequent sale. The Company will also
incur  significant legal and accounting costs in connection with the acquisition
of a  business  opportunity  including  the  costs of  preparing  post-effective
amendments,   Forms  8-K,   agreements   and  related   reports  and   documents
nevertheless,  the  officers and  directors  of the Company  have not  conducted
market  research and are not aware of  statistical  data which would support the
perceived  benefits of a merger or acquisition  transaction  for the owners of a
business opportunity.


                                                         3

<PAGE>



 The  Company  does not  intend to make any loans to any  prospective  merger or
acquisition candidates or to unaffiliated third parties.

Sources of Opportunities

 The Company  anticipates that business  opportunities for possible  acquisition
will be referred by various  sources,  including  its  officers  and  directors,
professional advisers, securities broker-dealers,  venture capitalists,  members
of the financial community, and others who may present unsolicited proposals.

 The Company will seek a potential business  opportunity from all known sources,
but will rely principally on personal  contacts of its officers and directors as
well as indirect  associations  between them and other business and professional
people.   It  is  not  presently   anticipated  that  the  Company  will  engage
professional firms specializing in business acquisitions or reorganizations.

 The  officers  and  directors  of the Company are  currently  employed in other
positions  and will  devote only a portion of their time (not more than one hour
per  week)  to the  business  affairs  of the  Company,  until  such  time as an
acquisition  has been  determined  to be highly  favorable,  at which  time they
expect to spend full time in  investigating  and closing any  acquisition  for a
period of two weeks.  In addition,  in the face of  competing  demands for their
time, the officers and directors may grant priority to their full-time positions
rather than to the Company.

Evaluation of Opportunities

 The analysis of new business  opportunities  will be undertaken by or under the
supervision  of the  officers and  directors of the Company (see  "Management").
Management   intends  to  concentrate  on   identifying   prospective   business
opportunities which may be brought to its attention through present associations
with management.  In analyzing  prospective business  opportunities,  management
will consider such matters as the available technical,  financial and managerial
resources;  working  capital  and  other  financial  requirements;   history  of
operation,  if any; prospects for the future;  present and expected competition;
the quality and experience of management services which may be available and the
depth of that  management;  the potential for further  research,  development or
exploration;  specific  risk factors not now  foreseeable  but which then may be
anticipated to impact the proposed activities of the Company;  the potential for
growth or expansion;  the potential for profit; the perceived public recognition
or acceptance of products,  services or trades; name  identification;  and other
relevant  factors.  Officers and directors of each Company will meet  personally
with   management  and  key  personnel  of  the  firm  sponsoring  the  business
opportunity as part of their investigation.  To the extent possible, the Company
intends to utilize  written reports and personal  investigation  to evaluate the
above factors.  The Company will not acquire or merge with any company for which
audited financial statements cannot be obtained.

 It may be anticipated  that any  opportunity in which the Company  participates
will present certain risks. Many of these risks cannot be adequately  identified
prior to selection of the specific opportunity,  and the Company's  shareholders
must,  therefore,  depend on the ability of  management to identify and evaluate
such risk. In the case of some of the opportunities available to the Company, it
may be  anticipated  that the  promoters  thereof  have been unable to develop a
going concern or that such business is in its  development  stage in that it has
not generated  significant revenues from its principal business activities prior
to the  Company's  participation.  There is a risk,  even  after  the  Company's
participation  in the  activity  and the related  expenditure  of the  Company's
funds,  that the  combined  enterprises  will  still be unable to become a going
concern or advance beyond the development  stage.  Many of the opportunities may
involve new and untested products, processes, or market strategies which may not
succeed.  Such  risks  will  be  assumed  by the  Company  and,  therefore,  its
shareholders.

 The Company will not restrict its search for any specific kind of business, but
may acquire a venture which is in its preliminary or development stage, which is
already in operation,  or in essentially  any stage of its corporate life. It is
currently  impossible to predict the status of any business in which the Company
may become  engaged,  in that such  business may need  additional  capital,  may
merely desire to have its shares  publicly  traded,  or may seek other perceived
advantages which the Company may offer.


                                                         4

<PAGE>



Acquisition of Opportunities

 In implementing a structure for a particular business acquisition,  the Company
may become a party to a merger,  consolidation,  reorganization,  joint venture,
franchise or licensing agreement with another corporation or entity. It may also
purchase  stock or assets of an  existing  business.  On the  consummation  of a
transaction,  it is possible that the present management and shareholders of the
Company will not be in control of the Company. In addition, a majority or all of
the  Company's  officers  and  directors  may,  as  part  of  the  terms  of the
acquisition  transaction,  resign and be replaced by new officers and  directors
without a vote of the Company's shareholders.

 It is anticipated that any securities issued in any such  reorganization  would
be issued in reliance on exemptions from registration  under applicable  Federal
and state  securities  laws.  In some  circumstances,  however,  as a negotiated
element of this  transaction,  the Company may agree to register such securities
either at the time the transaction is consummated,  under certain conditions, or
at specified time thereafter.  The issuance of substantial additional securities
and their  potential  sale into any  trading  market  which may  develop  in the
Company's  Common Stock may have a depressive  effect on such market.  While the
actual  terms of a  transaction  to which the Company  may be a party  cannot be
predicted,  it may be expected that the parties to the business transaction will
find it desirable to avoid the creation of a taxable event and thereby structure
the  acquisition  in  a so  called  "tax  free"  reorganization  under  Sections
368(a)(1) or 351 of the Internal  Revenue Code of 1986, as amended (the "Code").
In order to obtain tax free  treatment  under the Code,  it may be necessary for
the owners of the  acquired  business to own 80% or more of the voting  stock of
the surviving entity. In such event, the shareholders of the Company,  including
investors  in this  offering,  would  retain  less  than 20% of the  issued  and
outstanding  shares of the surviving  entity,  which could result in significant
dilution in the equity of such shareholders.

 As part of the Company's  investigation,  officers and directors of the Company
will meet personally  with  management and key personnel,  may visit and inspect
material  facilities,  obtain  independent  analysis or  verification of certain
information provided,  check reference of management and key personnel, and take
other reasonable  investigative measures, to the extent of the Company's limited
financial resources and management expertise.

 The manner in which each Company  participates in an opportunity will depend on
the nature of the  opportunity,  the respective needs and desires of the Company
and  other  parties,  the  management  of  the  opportunity,  and  the  relative
negotiating strength of the Company and such other management.

 With respect to any mergers or acquisitions,  negotiations  with target company
management  will be expected  to focus on the  percentage  of the Company  which
target company shareholders would acquire in exchange for their shareholdings in
the target company.  Depending upon,  among other things,  the target  company's
assets and liabilities, the Company's shareholders will in all likelihood hold a
lesser  percentage  ownership  interest in the Company  following  any merger or
acquisition. The percentage ownership may be subject to significant reduction in
the event the Company  acquires a target company with  substantial  assets.  Any
merger  or  acquisition  effected  by the  Company  can be  expected  to  have a
significant  dilative  effect on the  percentage of shares held by the Company's
then shareholders, including purchasers in this offering. (See "Risk Factors).

 The Company will not have sufficient funds (unless it is able to raise funds in
a private  placement) to undertake any  significant  development,  marketing and
manufacturing of any products which may be acquired. Accordingly,  following the
acquisition  of any such  product,  the  Company  will,  in all  likelihood,  be
required to either seek debt or equity  financing  or obtain  funding from third
parties, in exchange for which the Company would probably be required to give up
a  substantial  portion of its  interest in any  acquired  product.  There is no
assurance that the Company will be able either to obtain additional financing or
interest  third  parties  in  providing  funding  for the  further  development,
marketing and manufacturing of any products acquired.

 It is anticipated that the investigation of specific business opportunities and
the  negotiation,  drafting  and  execution of relevant  agreements,  disclosure
documents and other  instruments  will require  substantial  management time and
attention and  substantial  costs for  accountants,  attorneys and others.  If a
decision is made not to participate in a specific business opportunity the costs
therefore  incurred  in the  related  investigation  would  not be  recoverable.
Furthermore, even if an agreement is reached for the participation in a specific
business opportunity, the failure to

                                                         5

<PAGE>



consummate that transaction may result in the loss of the Company of the related
 costs incurred.

 Management  believes  that the Company  may be able to benefit  from the use of
"leverage"  in  the  acquisition  of  a  business   opportunity.   Leveraging  a
transaction involves the acquisition of a business through incurring significant
indebtedness  for a large  percentage of the purchase  price for that  business.
Through a leveraged  transaction,  the Company  would be required to use less of
its available funds for acquiring the business opportunity and, therefore, could
commit those funds to the operations of the business opportunity, to acquisition
of other business  opportunities or to other activities.  The borrowing involved
in a  leveraged  transaction  will  ordinarily  be  secured by the assets of the
business opportunity to be acquired. If the business opportunity acquired is not
able to generate  sufficient  revenues to make  payments on the debt incurred by
the Company to acquire that  business  opportunity,  the lender would be able to
exercise  the  remedies  provided  by  law  or  by  contract.  These  leveraging
techniques,  while  reducing the amount of funds that the Company must commit to
acquiring a business opportunity,  may correspondingly increase the risk of loss
to the Company. No assurance can be given as to the terms or the availability of
financing for any  acquisition  by the Company.  No assurance can be given as to
the terms or the  availability  of financing for any acquisition by the Company.
During  periods  when  interest  rates are  relatively  high,  the  benefits  of
leveraging  are not as great as during  periods of lower  interest rates because
the investment in the business  opportunity  held on a leveraged basis will only
be profitable if it generates  sufficient revenues to cover the related debt and
other costs of the  financing.  Lenders  from which the Company may obtain funds
for  purposes  of a  leveraged  buy-out  may impose  restrictions  on the future
borrowing,  distribution,  and  operating  policies  of the  Company.  It is not
possible at this time to predict the  restrictions,  if any,  which  lenders may
impose or the impact thereof on the Company.

Competition

 The  Company  is an  insignificant  participant  among  firms  which  engage in
business  combinations  with, or financing of,  development  stage  enterprises.
There are many  established  management and financial  consulting  companies and
venture capital firms which have  significantly  greater financial and personnel
resources,  technical  expertise and experience than the Company. In view of the
Company's limited financial resources and management  availability,  the Company
will  continue  to  be a  significant  competitive  disadvantage  vis-a-vis  the
Company's competitors.

Regulation and Taxation

 The Investment Company Act of 1940 defines an "investment company" as an issuer
which is or holds  itself out as being  engaged  primarily  in the  business  of
investing,  reinvesting  or trading of  securities.  While the Company  does not
intend to  engage in such  activities,  the  Company  could  become  subject  to
regulation  under the  Investment  Company  Act of 1940 in the event the Company
obtains or  continues  to hold a minority  interest  in a number of  development
stage   enterprises.   The  Company  could  be  expected  to  incur  significant
registration  and compliance  costs if required to register under the Investment
Company  Act of 1940.  Accordingly,  management  will  continue  to  review  the
Company's  activities  from  time  to  time  with a  view  toward  reducing  the
likelihood the Company could be classified as an "investment company."

 The Company  intend to structure a merger or  acquisition  in such manner as to
minimize  Federal  and state tax  consequences  to the Company and to any target
company.

Employees

 The  Company's  only  employees  at the  present  time  are  its  officers  and
directors,  who will devote as much time as the Board of Directors  determine is
necessary to carry out the affairs of the Company. (See "Management").

Risk Factors

 Potential  investors  should consider the following  special risk factors which
pertain to the Company.


                                                         6

<PAGE>



 New  Company:  No  Revenues  from  Operation;  Risk of Loss.  The  Company  was
incorporated  on May 4,  1992  and  faces  all of the  risks  inherent  in a new
business, coupled with the risks involved with a blind pool/blank check company.
Since the  Company is a start-up  venture,  it is without any record of earnings
and sales. There is no information at this time upon which to base an assumption
that its plans will  either  materialize  or prove  successful.  There can be no
assurance  that any of the  Company's  business  activities  will  result in any
operating revenues or profits.  Investors should be aware that they may lose all
or substantially all of their investment.

 Reliance  Upon  Officers;  No  Experience.  The Company is  dependent  upon the
personal  efforts and abilities of its officers and  directors,  who devote only
minimal  time to the affairs of the Company.  The officers and  directors of the
Company  have  certain  business  experience  but  have  limited  experience  in
acquisition or merger activities.  The officers and directors have not agreed to
expend any  specific  amount of time on behalf of the  Company,  but will devote
such time as necessary to identify and consummate a merger or acquisition.  (See
"Management").

 Dilution  on Change in Control.  The Company may acquire or merge with  another
company  through  the  issuance of its Common  Stock or shares of its  preferred
stock which will dilute the existing  shareholders'  percentage  interest in the
Company,  and may, in come instances,  result in the further dilution of the per
share book value of the Company's  Common Stock.  An acquisition may involve the
appointment  of  additional  members  to the  Company's  Board of  Directors  or
resignation  of some or all of the  current  directors,  which  may  result in a
change  of  Management.  Should  any such  acquisition  or  merger  take  place,
investors  in this  offering  will not have the benefit of knowing the  business
backgrounds  of any future  members of the  Company's  Board of  Directors.  The
Company  does not intend to provide  the  Company's  security  holders  with any
disclosure  documents,  including  audited financial  statements,  concerning an
acquisition or merger  candidate and its business prior to the  consummation  of
any merger or acquisition transaction.

 Financing  Required.  The  Company's  ability to operate as a going  concern is
contingent upon its receipt of additional  financing through private  placements
or by loans or capital contributions from officers and directors.  The Company's
business may require  additional funds in the future.  There can be no assurance
that if additional funds are required they will be available,  or, if available,
that they can be obtained on terms satisfactory to Management.  In the event the
Company  elects  to  issue  preferred  stock  to raise  additional  capital  for
acquisition  or merger  purposes,  any  rights or  privileges  attached  to such
preferred stock may either (i) dilute the percentage of ownership of the already
issued  common  shares or (ii)  dilute  the value of such  shares.  No rights or
privileges  have been  assigned to the  preferred  stock and any such rights and
privileges  will be at the total  discretion  of the Board of  Directors  of the
Company.

 Lack of Market for the Common Stock.  At the present  time,  there is no public
market for the  Company's  Common  Stock,  and there can be no assurance  that a
market  will in fact  develop.  Even if a  market  does  develop,  it may not be
sustained.  At present  there are no market makers for the shares of the Company
and the Common Stock of the Company does not trade on any market.

 Leveraged  Transactions.  There  is a  possibility  that any  acquisition  of a
business  opportunity  by the Company may be  leveraged,  i.e.,  the Company may
finance the  acquisition of the business  opportunity by borrowing on the assets
of the business opportunity to be acquired, on the projected future revenues, or
the profitability of the business opportunity. This could increase the Company's
exposure to larger losses. A business  opportunity  acquired through a leveraged
transaction  is  profitable  only if it generates  enough  revenues to cover the
related  debt and  expenses.  Failure to make  payments on the debt  incurred to
purchase the business  opportunity  could result in the loss of a portion or all
of the assets  acquired.  There is no assurance  that any  business  opportunity
acquired through a leveraged  transaction will generate  sufficient  revenues to
cover the related debt and expenses.

 No Arrangements.  None of the Company's officers,  directors,  promoters, their
affiliates or associates have had any material  contact or discussions  with and
there are no present plans,  proposals,  arrangements or  undertakings  with any
representatives  of  the  owners  of  any  business  or  company  regarding  the
possibility of an acquisition or merger transaction contemplated herein.


                                                         7

<PAGE>



 Time to be Devoted by Management. The officers and directors of the Company are
currently  employed in other  positions  and will devote only a portion of their
time (not more than one hour per week) to the  business  affairs of the Company,
until such time as an acquisition has been determined to be highly favorable, at
which  time they  expect to spend full time in  investigating  and  closing  any
acquisition  for a period of two weeks.  In  addition,  in the face of competing
demands for their time,  the officers and directors may grant  priority to their
full-time positions rather than to the Company.

 Type of Business Acquired. The type of business to be acquired may be one which
desires to avoid effecting its own public offering and the accompanying expense,
delays,  and federal and state  requirements which purport to protect investors.
In particular,  business acquired may be one which, due to merit requirements of
state  securities  authorities,  would  not be  permitted  to make a  securities
offering in many states.  Because of the Company's  limited capital,  it is more
likely than not that any  acquisition by the Company that would take place would
involve other parties whose primary  interest is the  acquisition  of a publicly
traded company.

 Blue Sky Compliance.  The trading of securities of blank check companies may be
restricted by the "Blue Sky" laws of the several  states.  With the exception of
solicited  "unsolicited"  transactions,  Management  is aware that  unrestricted
trading of blank check stocks is prohibited in the states of California,  Idaho,
Indiana,  Minnesota,  Michigan,  and Texas,  and may be prohibited in many other
states  absent the  availability  of exemptions  which are in the  discretion of
state securities administrators. The effect of these state laws will be to limit
the trading market, if any, for the shares of the Company and make the resale of
shares acquired by investors more difficult.

 Loss of  Control  by Present  Management  and  Shareholders.  The  Company  may
consider a merger in which the Company issues a substantial amount of its Common
Stock  as   consideration   for  any   acquisition  (70  -  80%  if  a  tax-free
reorganization  is  desired).  The  result  of such a  merger  would be that the
acquired  Company's  shareholders and management would control the Company,  and
the  Company's  management  could be replaced by persons  whose  background  and
competence are unknown at this time.  Such a merger could leave the investors in
this offering with stock worth  substantially  less than the price paid for such
stock in this  offering,  and a greatly  reduced  percentage of ownership of the
Company. The Company acquired may be a privately held company.  Management could
sell its control block of stock to the acquired  company's  shareholders.  There
are no agreements or understandings for any officer or director to resign at the
request of another  person and none of the officers or  directors  are acting on
behalf of or will act at the direction of any other person.  See "Acquisition of
Opportunities."

 Lack of Dividends.  The Company has no paid dividends and does not  contemplate
paying  dividends in the  foreseeable  future.  There is no assurance  that if a
merger or acquisition occurs, the surviving company will pay any dividends.

 Substantial  Management  Conflicts.  Certain  conflicts  of interest  may exist
between the Company and its management, and conflicts may develop in the future.
The officers and directors of the Company hold similar  positions  with Hermaton
Company,  a company engaged in the same business as the Company.  In the event a
business  opportunity  is  presented  to the  management,  they will present the
opportunity to the Company before the Hermaton  Company,  until such time as the
Company has entered into an  acquisition or a merger  transaction.  The officers
and  directors  intend  to  become  involved  with  several  other  blank  check
companies, and a similar conflict policy will be adopted.

 Possible Rule 144 Sales. All of the 400,000 shares of the Company's outstanding
Common Stock are "restricted securities" and may be sold only in compliance with
Rule 144 adopted under the Securities Act of 1933 or other applicable exemptions
from  registration.  Rule 144 provides that a person affiliated with the Company
and holding restricted  securities for a period of two years may thereafter sell
in brokerage transactions, an amount not exceeding in any three month period the
greater of either (i) 1% of the Company's  outstanding Common Stock, or (ii) the
average weekly trading volume during a period of four calendar weeks immediately
preceding any sale. Persons who are not affiliated with the Company and who have
held their restricted securities for at least three years are not subject to the
volume  limitation.  Possible or actual sales of the  Company's  Common Stock by
present  shareholders under Rule 144, which could occur as early as May 4, 1994,
may have a depressive effect on the price

                                                         8

<PAGE>



of the Company's Common Stock in any market which may develop.

 Inability to Conduct  Extensive  Analysis.  Because of its limited  funds,  the
Company will unable to conduct extensive  analysis of any prospective  merger or
acquisition.  As a result,  any decisions made by management may be made without
the benefit of exhaustive  studies and analysis  which might be available if the
Company had more money for  analysis.  If the funds  allotted by the Company are
depleted  before an  acquisition  or merger is completed,  the Company will have
exhausted its capital and may not be able to continue operations.

 Risks of Low Priced Stocks. Trading, if any, in the Common Stock will likely be
conducted in the over-the-counter  market in the so-called "pink sheets," or the
NASD's "Electronic Bulletin Board." Consequently, a shareholder may find it more
difficult to dispose of, or to obtain  accurate  quotations  as to the price of,
the Company's securities.

 In the absence of a security  being  quoted on NASDAQ,  or the  Company  having
$2,000,000  in net  tangible  assets,  trading in the Common Stock is covered by
Rule 15c2-6 promulgated under the Securities Exchange Act of 1934 for non-NASDAQ
and  non-exchange  listed  securities.   Under  such  rule,  broker/dealers  who
recommend  such  securities  to persons  other than  established  customers  and
accredited investors (generally institutions with assets in excess of $5,000,000
or  individuals  with a net worth in excess of  $1,000,000  or an annual  income
exceeding  $200,000 or $300,000  jointly with their  spouse) must make a special
written suitability  determination for the purchaser and receive the purchaser's
written  agreement to a transaction  prior to sale.  Securities  are also exempt
from this rule if the market price is at least $5.00 per share, or for warrants,
if the warrants have an exercise price of at least $5.00 per share.

 The  Securities  Enforcement  and  Penny  Stock  Reform  Act of  1990  requires
additional  disclosure  related to the market for penny stocks and for trades in
any  stock  defined  as a penny  stock.  The  Commission  has  recently  adopted
regulations  under  such Act  which  define a penny  stock to be any  NASDAQ  or
non-NASDAQ  equity  security  that has a market price or exercise  price of less
than  $5.00 per share and allow for the  enforcement  against  violators  of the
proposed  rules.  In addition,  unless  exempt,  the rules require the delivery,
prior to any  transaction  involving a penny  stock,  of a  disclosure  schedule
prepared by the Commission  explaining  important  concepts  involving the penny
stock  market,  the  nature  of such  market,  terms  used in such  market,  the
broker/dealer's  duties  to the  customer,  a  toll-free  telephone  number  for
inquiries about the  broker/dealer's  disciplinary  history,  and the customer's
rights and remedies in case of fraud or abuse in the sale.  Disclosure also must
be made about  commissions  payable to both the broker/dealer and the registered
representative,  current quotations for the securities, and if the broker/dealer
is the sole  market-maker,  the  broker/dealer  must  disclose this fact and its
control over the market.  Finally,  monthly  statements  must be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stocks.

 While many NASDAQ stocks are covered by the proposed definition of penny stock,
transactions  in NASDAQ  stock  are  exempt  from all but the sole  market-maker
provision for (i) issuers who have $2,000,000 in tangible assets  ($5,000,000 if
the  issuer  has  not  been in  continuous  operation  for  three  years),  (ii)
transactions in which the customer is an institutional  accredited  investor and
(iii) transactions that are not recommended by the  broker/dealer.  In addition,
transactions in a NASDAQ security directly with the NASDAQ market-maker for such
securities,  are  subject  only to the  sole  market-maker  disclosure,  and the
disclosure  with regard to commissions to be paid to the  broker/dealer  and the
registered representatives.

 Finally, all NASDAQ securities are exempt if NASDAQ raised its requirements for
continued  listing so that any issuer with less than  $2,000,000 in net tangible
assets or stockholder's equity would be subject to delisting. These criteria are
more stringent than the proposed increased in NASDAQ's maintenance requirements.

 The Company's securities are subject to the above rules on penny stocks and the
market  liquidity for the  Company's  securities  could be severely  affected by
limiting the ability of broker/dealers to sell the Company's securities.


                                                         9

<PAGE>



 Preferred  Shares.  The Board of Directors has total discretion in the issuance
and the  determination  of the rights and  privileges of any shares of Preferred
Stock or  Common  Stock  which may be issued in the  future,  which  rights  and
privileges may be detrimental to the holders of the Common Stock of the Company.
The Company is authorized to issue 1,000,000  shares of its Preferred Stock, par
value $.001 and a total of 20,000,000  shares of Common Stock. (See "Description
of Securities").

Item 2.   DESCRIPTION OF PROPERTY

 The Company rents an executive  suite on an as needed  basis.  The Company pays
its own  charges  for long  distance  telephone  calls and  other  miscellaneous
secretarial, photocopying and similar expenses.

Item 3.   LEGAL PROCEEDINGS

 Not Applicable.

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

 No matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of the fiscal year ended March 31, 1995.

                                                        10

<PAGE>



                                                      PART II


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

         The Company's Common Stock has not traded.  As of March 31, 1995, there
were approximately 115 stockholders of record.

Item 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

Selected Financial Information

             The following sets forth selected financial information as of March
31, 1993 and 1994, and is qualified in its entirety by the financial  statements
appearing  elsewhere in this Prospectus.  The Company's fiscal year end is March
31st.
<TABLE>
<CAPTION>

                                                Balance Sheet Data
                                                                        March 31,               March 31,
                                                                           1995                    1994

<S>                                                                    <C>                     <C>
Cash         ....................................................      $                       $
Organizational Costs.............................................            177                     177
Total Assets.                                                                177                     177
Total Liabilities................................................             60                      60
Stockholders' Equity.............................................            117                     117
</TABLE>

        The  Company  has  been  recently  formed  and  has not  engaged  in any
operations other than organizational matters.

Item 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

            The consolidated  financial statements of the Company required to be
            included in Item 7 are set forth in the Financial Statements Index.

Item 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
            FINANCIAL DISCLOSURE

            Not Applicable.

                                                        11

<PAGE>



                                                     PART III

Item 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
            COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

Directors and Executive Officers

            The members of the Board of Directors of the Company serve until the
next  annual  meeting  of  stockholders,  or until  their  successors  have been
elected.  The  officers  serve  at the  pleasure  of  the  Board  of  Directors.
Information  as to the  directors  and  executive  officers of the Company is as
follows.  Each of the officers and directors holds similar positions in a number
of other "blind pool-blank check" companies. See "Conflicts of Interest."

            Eric W. Anderson has been a director,  chairman and chief  financial
officer  since  inception  of  the  Company.   He  founded  Bentley  Richards  &
Associates,  Inc. in July 1991.  Bentley,  Richards  provides  financial  public
relations services to public and private  companies.  He is also chief executive
officer and director of Faraday  Financial,  Inc., which provides  financial and
consulting  services.  From  January  1987  to  June  1991  Mr.  Anderson  was a
registered representative at various NASD broker-dealers, including Cruttenden &
Company  (October  1990 to June 1991),  Grant  Bettingen,  Inc.  (May to October
1990),  Ross  Anderson  Capital  Management  (July  1989  to  May  1990),  Sacks
Investments  (August 1987 to May 1990) and Private Ledger,  Inc. (January August
1987. Mr. Anderson was also a principal of Ross Anderson Capital Management. Mr.
Anderson received an MBA from Sonoma State University in 1987.

            Jehu Hand has been  President and Secretary of the Company since its
inception.  Mr. Hand has been engaged in corporate and  securities  law practice
and has been a partner of the law firm of Hand & Hand since 1992.  From  January
1992 to December 1992 he was the Vice President-Corporate  Counsel and Secretary
of Laser Medical  Technology,  Inc.,  which  designs,  manufactures  and markets
dental lasers and endodontics equipment. He was a director of Laser Medical from
February 1992 to February  1993.  From January to October,  1992 Mr. Hand was Of
Counsel to the Law Firm of Lewis,  D'Amato,  Brisbois & Bisgaard.  From  January
1991 to January 1992 he was a  shareholder  of  McKittrick,  Jackson,  DeMarco &
Peckenpaugh,  a law corporation.  From January to December 1990 he was a partner
of Day,  Campbell & Hand, and was an associate of its  predecessor law firm from
July 1986 to December  1989.  From 1984 to June 1986 Mr.  Hand was an  associate
attorney with Schwartz,  Kelm, Warren & Rubenstein in Columbus,  Ohio. Jehu Hand
received a J.D. from New York University School of Law and a B.A.
from Brigham Young University.

Conflicts of Interest

            Certain  conflicts of interest now exist and will  continue to exist
between the Company and its officers and directors due to the fact that each has
other business interests to which he devotes his primary attention. Each officer
and director may continue to do so notwithstanding the fact that management time
should be devoted to the business of the Company.

            Certain  conflicts of interest may exist between the Company and its
management,  and conflicts may develop in the future. The officers and directors
of the Company hold  similar  positions  with Basic  Science  Associates,  Inc.,
Hermaton  Company;  Achiote  Corporation;  Rook Haven,  Ltd.;  Helsinki  Capital
Partners,  Inc.;  Keratoplanetes  Corporation;   Quasar  Projects  Company,  and
Vendalux Corporation, all companies engaged in the same business as the Company.
In the event a business  opportunity is presented to the  management,  they will
present the  opportunity to the Company and to these  companies in the foregoing
order  of  priority,  until  such  time  as each  company  has  entered  into an
acquisition  or a merger  transaction.  The  officers and  directors  may become
involved with several other blank check companies, and a similar conflict policy
will be adopted.



                                                        12

<PAGE>



            The  Company has not  established  policies  or  procedures  for the
resolution of current or potential  conflicts of interests  between the Company,
its officers and  directors or  affiliated  entities.  There can be no assurance
that  management will resolve all conflicts of interest in favor of the Company,
and failure by  management  to conduct the  Company's  business in the Company's
best  interest  may result in  liability  to the  management.  The  officers and
directors are accountable to the Company as  fiduciaries,  which means that they
are required to exercise  good faith and  integrity  in handling  the  Company's
affairs. Shareholders who believe that the Company has been harmed by failure of
an officer or director to  appropriately  resolve any conflict of interest  may,
subject to applicable rules of civil procedure,  be able to bring a class action
or derivative suit to enforce their rights and the Company's rights.

            The Company has no arrangement,  understanding or intention to enter
into any  transaction for  participating  in any business  opportunity  with any
officer,  director,  or  principal  shareholder  or with  any  firm or  business
organization with which such persons are affiliated,  whether by reason of stock
ownership, position as an officer or director, or otherwise.

            The  Company,   by   resolution   of  its  Board  of  Directors  and
stockholders,  adopted a 1992 Stock Option Plan (the "Plan") on May 4, 1992. The
Plan  enables the Company to offer an  incentive  based  compensation  system to
employees,  officers and directors and to employees of companies who do business
with the Company.

            In the discretion of a committee comprised of non-employee directors
(the "Committee"), directors, officers, and key employees of the Company and its
subsidiaries  or  employees of  companies  with which the Company does  business
become  participants  in the Plan  upon  receiving  grants  in the form of stock
options or restricted  stock.  A total of 2,000,000  shares are  authorized  for
issuance  under the Plan,  of which  40,000  shares are issuable  under  options
granted to officers and  directors at $.50 per share,  exercisable  until May 4,
1997. The Company does not intend to grant additional options until such time as
a merger or  acquisition  has been  consummated.  The Company may  increase  the
number of  shares  authorized  for  issuance  under  the Plan or may make  other
material  modifications to the Plan without  shareholder  approval.  However, no
amendment may change the existing rights of any option holder.

            Any shares  which are  subject to an award but are not used  because
the terms and  conditions of the award are not met, or any shares which are used
by participants to pay all or part of the purchase price of any option may again
be used for awards under the Plan. However, shares with respect to which a stock
appreciation right has been exercised may not again be made subject to an award.

            Stock  options  may be granted  as  non-qualified  stock  options or
incentive  stock  options,  but incentive  stock options may not be granted at a
price  less  than 100% of the fair  market  value of the stock as of the date of
grant (110% as to any 10% shareholder at the time of grant); non-qualified stock
options may not be granted at a price less than 85% of fair market  value of the
stock as of the date of grant.  Restricted  stock may not be  granted  under the
Plan in connection with incentive stock options.

            Stock options may be exercised  during a period of time fixed by the
Committee except that no stock option may be exercised more than ten years after
the date of grant or three years after death or disability,  whichever is later.
In the discretion of the Committee, payment of the purchase price for the shares
of stock  acquired  through the  exercise of a stock option may be made in cash,
shares of the Company's Common Stock or by delivery or recourse promissory notes
or a combination  of notes,  cash and shares of the Company's  common stock or a
combination  thereof.  Incentive  stock options may only be issued to directors,
officers and employees of the Company.

            Stock options may be granted under the Plan may include the right to
acquire an Accelerated Ownership Non-Qualified Stock Option ("AO"). If an option
grant  contains  the AO  feature  and if a  participant  pays all or part of the
purchase  price of the option with shares of the Company's  common  stock,  then
upon exercise of the option the participant is granted an AO to purchase, at the
fair market value as of the date of the AO grant, the number of shares of common
stock the  Company  equal to the sum of the number of whole  shares  used by the
participant in payment of the purchase price and the number of whole shares,  if
any,  withheld  by the Company as payment for  withholding  taxes.  An AO may be
exercised  between the date of grant and the date of  expiration,  which will be
the

                                                        13

<PAGE>



same as the date of expiration of the option to which the AO is related.

            Stock appreciation  rights and/or restricted stock may be granted in
conjunction  with, or may be unrelated to stock  options.  A stock  appreciation
right entitles a participant to receive a payment,  in cash or common stock or a
combination  thereof,  in an amount equal to the excess of the fair market value
of the stock at the time of exercise  over the fair market  value as of the date
of grant.  Stock  appreciation  rights may be exercised  during a period of time
fixed by the  Committee not to exceed ten years after the date of grant or three
years after death or disability,  whichever is later.  Restricted stock requires
the  recipient  to  continue  in service as an  officer,  director,  employee or
consultant  for a fixed period of time for  ownership of the shares to vest.  If
restricted  shares or stock  appreciation  rights  are  issued  in  tandem  with
options,  the  restricted  stock or stock  appreciation  right is canceled  upon
exercise of the option and the option will  likewise  terminate  upon vesting of
the restricted shares.

Item 10. EXECUTIVE COMPENSATION

            No  compensation  is paid or  anticipated  to be paid by the Company
until an acquisition is made.

            On acquisition  of a business  opportunity,  current  management may
resign and be  replaced  by persons  associated  with the  business  opportunity
acquired,  particularly if the Company participates in a business opportunity by
effecting a reorganization,  merger or  consolidation.  If any member of current
management  remains after  effecting a business  opportunity  acquisition,  that
member's time  commitment will likely be adjusted based on the nature and method
of the  acquisition  and  location of the business  which  cannot be  predicted.
Compensation of management will be determined by the new board of directors, and
shareholders  of the Company will not have the opportunity to vote on or approve
such compensation.

            Directors  currently  receive no  compensation  for their  duties as
directors.

Item 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

           The following table sets forth information relating to the beneficial
ownership of Company  common stock by those  persons  beneficially  holding more
than 5% of the Company capital stock,  by the Company's  directors and executive
officers,  and by all of the Company's  directors  and  executive  officers as a
group.
<TABLE>
<CAPTION>

                                                                                   Percentage
               Name of                           Number of                       of Outstanding
             Stockholder                       Shares Owned                       Common Stock

<S>                                                 <C>                               <C>  
            Eric Anderson (1)(2)                    200,000                           45.0%

            Jehu Hand (1)(2)                        110,000                           24.7%

            Elizabeth Rodelli                        90,000                           21.2%
            2249 Via Salvador
            San Clemente, CA 92672

            All officers and
            directors as a group
            (2 persons) (1)                         310,000                           66.7%
</TABLE>

         (1)      Includes 20,000 shares issuable upon exercise of stock options
 held by each of Messrs. Hand and
                  Anderson.
         (2)      The address of such person is care of the Company.



                                                        14

<PAGE>



Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In connection  with organizing the Company,  persons  consisting of its
officers,  directors, and other individuals paid an aggregate of $500 in cash to
purchase a total of 400,000  shares of Common Stock at an average sales price of
$.00125 per share.  In April 1993  Messrs.  Hand and Anderson  also  contributed
$500.00 to the Company as a contribution to capital.  Under Rule 405 promulgated
under the Securities Act of 1933, Messrs.  Hand and Anderson may be deemed to be
promoters of the Company.  No other persons are known to Management  which would
be deemed to be promoters.

         An officer of the Corporation has advanced  certain  expenses on behalf
of the Company. As of March 31, 1995 such expenses totalled $428.


                                                        15

<PAGE>



                                                      PART IV


Item 13.    EXHIBITS AND REPORTS ON FORM 8-K

            (a) Exhibits.  The following exhibits of the Company are included 
herein.

                                                          
    Exhibit No.            Document Description            .

        3.                 Certificate of Incorporation and Bylaws

                           3.1.     Articles of Incorporation(1)
                           3.2      Bylaws(1)

         10.               Material Contracts

                           10.1.    1992 Stock Option Plan(1)
                           10.2     Stock Option Agreement with Jehu Hand(1)
                           10.3     Stock Option Agreement with Eric Anderson(1)


(1)      Incorporated by reference to such exhibit as filed with the Company's
 registration statement on Form 10-SB,
         File No. 0-23498

        (b)                Reports on Form 8-K.

                           Not Applicable.


                                                        16

<PAGE>





















To The Shareholders and
Board of Directors of
ACHIOTE CORPORATION

                                           INDEPENDENT AUDITOR'S REPORT

I have audited the  statement of financial  position of Achiote  Corporation  (a
development  stage  company)  as of March  31,  1993 and 1994,  and the  related
statements of operations,  changes in stockholders' equity (deficiency) and cash
flows for the period from  inception (May 4, 1992) to March 31, 1993 and for the
year ended March 31, 1994. These financial  statements are the responsibility of
the Company's  management.  My  responsibility is to express an opinion on these
financial statements based on my audit.

I conducted my audit in accordance with generally  accepted auditing  standards.
Those standards  require that I plan and perform the audit to obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects,  the financial position of Achiote Corporation (a development
stage company) as of March 31, 1993 and 1994, and the results of its operations,
changes in  stockholders'  equity and cash flows for the period  from  inception
(May 4, 1992) to March 31,  1993 and for the year ended March 31,  1994,  all in
conformity with generally accepted accounting principles.





Carolyn J. Bunker, CPA
Los Angeles, California

July 7, 1994

                                                        17

<PAGE>


<TABLE>
<CAPTION>

ACHIOTE CORPORATION
(A Development Stage Company)                                                      Statements of Financial Position


                                                      ASSETS

                                                                                    March 31,        March 31,
                                                                                      1995             1994

<S>                                                                                       <C>               <C>
CURRENT ASSETS - CASH                                                                    -0-               -0-
     OTHER ASSETS
            Organization costs, net of accumulated
            amortization of $166 and $109 (Note 1)                                       120               177

     TOTAL ASSETS                                                                   $    120         $     177



                                       LIABILITIES AND STOCKHOLDERS' EQUITY



CURRENT LIABILITIES - Accounts payable                                              $    428         $      60

STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value; 1,000,000 shares
  authorized; no shares issued and outstanding

Common Stock, $.001 par value; 20,000,000 shares
  authorized; 424,600 shares issued and outstanding                                      425               425

Additional paid-in Capital                                                               821               821

Accumulated deficit during the development stage                                     (1,554)           (1,129)


     TOTAL STOCKHOLDERS' EQUITY                                                        (308)               117


TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                                          $    120         $     177




</TABLE>







                     The  accompanying   notes  are  an  integral  part  of  the
financial statements.

                                                        18

<PAGE>

<TABLE>
<CAPTION>


ACHIOTE CORPORATION
(A Development Stage Company)                                                              Statements of Operations




                                                                                                   CUMULATIVE
                                                   FOR THE                 FOR THE               FROM INCEPTION
                                                 FISCAL YEAR             FISCAL YEAR             (May 4, 1992)
                                                    ENDED                   ENDED                      TO
                                               March 31, 1995          March 31, 1994            March 31, 1995


<S>                                             <C>                     <C>                      <C>         
REVENUES                                        $       -0-              $       -0-              $       -0-

OPERATING EXPENSES

    General and Administrative                          368                      800                    1,388
    Amortization                                         57                       57                      166
TOTAL OPERATING EXPENSES                                425                      857                    1,554


NET (LOSS)                                      $     (425)              $     (857)              $   (1,554)

NET (LOSS) PER SHARE                            $     (Nil)              $     (Nil)              $     (Nil)


WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING                              418,450                  400,000                  414,453



</TABLE>




















                     The  accompanying   notes  are  an  integral  part  of  the
financial statements.

                                                        19

<PAGE>


<TABLE>
<CAPTION>

ACHIOTE CORPORATION                                                                        Statement of Changes in Stockholders'
(A Development Stage Company)                                                              Equity From Inception (May 4, 1992)
                                                                                                          Through March 31, 1995



                                                                                                    Accumulated
                                                                                                      Deficit
                                                        Common Stock              Additional        During the
                                                                                    Paid-In         Development
                                                  Shares            Amount          Capital            Stage           Total

Issuance of common stock
<S>                                                <C>           <C>                      <C>       <C>             <C>          
    for cash                                       400,000       $        400             100       $               $       500

Net (loss)                                                                                                (272)           (272)

Balances at
    March 31, 1993                                 400,000                400             100             (272)             228

Net (loss)                                                                                                (857)           (857)

Contribution to capital                                                                   500                               500

Sale of shares in private placement
 on September 30, 1993                              24,600                 25             221                               246

Balances at
    March 31, 1994                                 424,600                425             821           (1,129)             117

Net (loss)                                                                                                (425)           (425)

Balances at
    March 31, 1995                                 424,600       $        425    $        821       $   (1,554)           (308)



</TABLE>















                           The accompanying  notes are an integral part of these
financial statements.

                                                               20

<PAGE>

<TABLE>
<CAPTION>


ACHIOTE CORPORATION
(A Development Stage Company)                                                                           Statements of Cash Flows




                                                                                                                CUMULATIVE
                                                            FOR THE                     FOR THE               FROM INCEPTION
                                                           FISCAL YEAR                FISCAL YEAR               May 4, 1992
                                                              ENDED                      ENDED                      TO
                                                         March 31, 1995             March 31, 1994            March 31, 1994

CASH FLOWS FROM OPERATING ACTIVITIES

<S>                                                        <C>                       <C>                        <C>      
    Net (Loss)                                             $    (425)                $    (857)                 $ (1,677)

    Add item not requiring the use of cash                         57                        57                       229

    Increase (decrease) in accounts payable                     (368)                     (160)

    Net cash flows from operating activities                                              (960)                     (960)

CASH FLOWS FROM INVESTING ACTIVITIES
    Organization Costs                                                                                              (286)

CASH FLOWS FROM FINANCING ACTIVITIES
Contribution to Capital                                                                     500                       500
Sale of common stock                                                                        246                       746
Net Cash flows from financing activities                                                    746                     1,246


NET INCREASE (DECREASE) IN CASH                                                           (214)

CASH BALANCE AT BEGINNING OF PERIOD                                                         214

CASH BALANCE AT END OF PERIOD                              $                         $                          $





</TABLE>











                            The  accompanying  notes are an integral part of the
financial statements.

                                                               21

<PAGE>



ACHIOTE CORPORATION
(A Development Stage Company)                    Notes to Financial Statements


NOTE 1      ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

            The Company was incorporated under the laws of the State of Delaware
            on  May  4,  1992,   for  the  purpose  of  seeking   out   business
            opportunities,   including  acquisitions.  The  Company  is  in  the
            development stage and will be very dependent on the skills, talents,
            and abilities of management to  successfully  implement its business
            plan.  Due to the Company's  lack of capital,  it is likely that the
            Company will not be able to compete with larger and more experienced
            entities  for  business  opportunities  which are lower risk and are
            more attractive for such entities.  Business  opportunities in which
            the  Company  may  participate  will  likely  be  highly  risky  and
            speculative.  Since  inception,  the Company's  activities have been
            limited  to  organizational   matters.   Organizational   costs  are
            amortized on a straight-line basis over five years.

NOTE 2      RELATED PARTY TRANSACTIONS

            The Company currently has informal arrangements with an affiliate of
            an officer and director for use of office space and professional and
            clerical services.  The Company currently receives the use of office
            space free of charge, and the officers and directors currently serve
            without compensation.

NOTE 3      STOCK OPTION PLAN

            On May 4, 1992,  the Company  adopted a stock  option plan whereby a
            total of 2,000,000  shares of common stock are reserved for issuance
            under  the  plan.  Any  officer,  employee,   director,  advisor  or
            consultant  of the  Company is  eligible  to  participate.  The plan
            provides for  administration by an option  committee,  which will be
            composed of two or more  members of the board of  directors  who are
            disinterested   directors.   Stock   options   may  be   granted  as
            non-qualified or incentive options.  Incentive stock options may not
            be granted at a price less than 100% of the fair market value of the
            stock as of the date of grant (110% as to any 10% shareholder at the
            time of the grant);  non-qualified  stock options may not be granted
            at a price less than 85% of the fair market value of the stock as of
            the date of grant.

NOTE 4      INCOME TAXES

            The fiscal  year end of the  Company is March 31st and an income tax
return has not been filed.

NOTE 5      STOCKHOLDERS' EQUITY

            The Company issued 400,000 shares on incorporation for consideration
            of $500. The directors and officers  contributed an additional  $500
            to capital in the fiscal year ended March 31, 1994. On September 30,
            1993 the Company closed a private placement of 24,600 shares at $.01
            per share for net proceeds of $246.

                                                               22

<PAGE>


                                                           SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) 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 February 7, 1996.


                                                         ACHIOTE CORPORATION


                                                          By:/s/ Jehu Hand
                                                                   Jehu Hand
                                                                  President

      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities on February 7, 1996.


By:    /s/ Jehu Hand                          Chairman, Chief Financial Officer
       Jehu Hand                 and Director, President, Secretary and Director



                                                               23

<PAGE>