SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549



                                   FORM 10-QSB



                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                          OF THE SECURITIES ACT OF 1934


                       For the Quarter Ended May 31, 1997


                         Commission File Number 0-22382




                           SECTOR COMMUNICATIONS, INC.
                 (Name of small business issuer in its charter)




                Nevada                                  56-1051491
    (State or other jurisdiction of                   (IRS Employer
    Incorporation or organization)                 Identification No.)


               7601 Lewinsville Road, Suite 250, McLean, VA 22102
                     Address of principal executive offices

                                 (703) 761-1500
                            Issuer's Telephone Number




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 [ ]

As of May 31, 1997 there were 44,898,066 shares of the Registrant's Common Stock
outstanding.




<PAGE>

                           SECTOR COMMUNICATIONS, INC.

                              REPORT ON FORM 10-QSB

                                TABLE OF CONTENTS


                                                                           Page

PART I ---- FINANCIAL INFORMATION

     Item 1.      Financial Statements

         Consolidated balance sheet -
              May 31, 1997 (unaudited) and February 28, 1997................3

         Consolidated statement of operations -
              three month periods (unaudited) ended
              May 31, 1997 and 1996.........................................4

         Consolidated statement of cash flows -
              three month periods (unaudited) ended
              May 31, 1997 and 1996.........................................5

         Notes to consolidated financial statements (unaudited).............6

     Item 2. Management's Plan of Operations...............................10


PART II ---- OTHER INFORMATION

     Item 6.  Exhibits and Reports on Form 8-K.............................14




<PAGE>

                           SECTOR COMMUNICATIONS, INC.
                           CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
                                                                  May 31,           February 28,
                                                                  1997                   1997
<S>                                                           <C>                   <C>          
ASSETS (Unaudited)
CURRENT ASSETS
    Cash and Cash Equivalents                                 $    157,016          $      80,096
    Accounts Receivable, net of provision for
     doubtful accounts of $79,498 and $50,678                      601,828                618,845
    Marketable Securities                                               -                  21,762
    Related Party Receivables                                           -                  32,198
    Receivable on Sale of Securities                               429,000              1,000,000
    Notes Receivables129,707                                       143,110
    Prepaid Expenses and Deposits                                  114,809                117,426
                                                               -----------            -----------
       Total Current Assets                                      1,432,360              2,013,437
                                                               -----------            -----------
PROPERTY AND EQUIPMENT                                           2,202,521              2,170,846
    Accumulated Depreciation                                    (1,165,063)            (1,060,696)
                                                               -----------            -----------
    Net Book Value                                               1,037,458              1,110,150
                                                               -----------            -----------
OTHER ASSETS
    Intangible Assets, net                                       5,276,391              5,350,447
    Capitalized Mining Claim Costs                               1,036,523              1,036,523
    Deposits                                                        41,953                 41,953
                                                               -----------            -----------
       Total Other Assets                                        6,354,867              6,428,923
                                                               -----------            -----------
       TOTAL OTHER ASSETS                                      $ 8,824,685            $ 6,428,923
                                                               ===========            ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
    Accounts Payable and Accrued Expenses                      $ 1,279,480            $ 1,218,867
    Short-Term Borrowing                                                 -                 12,028
    Deferred Revenue                                               424,602                449,254
    Due to Related Parties                                         480,792                474,021
                                                                ----------            -----------
       Total Current Liabilities                                 2,184,874              2,154,170
Rent Deposit                                                        12,248                 12,248
                                                               -----------           ------------
    TOTAL LIABILITIES                                            2,197,122              2,166,418
                                                               -----------            -----------
Commitments and Contingencies                                            -                      -

STOCKHOLDERS' EQUITY
    Preferred Stock, $.001 par value; 5,000,000 shares
     authorized, no shares issued and outstanding                        -
    Common Stock, $.001 par value; 50,000,000 shares
     authorized, 44,898,066 shares issued and outstanding           44,898                 44,898
    Additional Paid-in Capital                                  13,116,354             13,116,354
    Retained Deficit                                            (6,405,861)            (5,658,196)
    Cumulative Foreign Currency Translation Adjustment            (127,828)              (116,964)
                                                              ------------           ------------
       Total Stockholders' Equity                                6,627,563              7,386,092
                                                               -----------            -----------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                 $ 8,824,685            $ 9,552,510
                                                               ===========            ===========
</TABLE>

The  Accompanying  Notes are an Integral  Part of These  Consolidated  Financial
Statements.




<PAGE>



                           SECTOR COMMUNICATIONS, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (UNAUDITED)
                           FOR THE THREE MONTHS ENDED

<TABLE>
<CAPTION>
                                                             May 31,            May 31,
                                                              1997               1996
<S>                                                        <C>                <C>         
 REVENUE
    Telecommunication Revenue                              $    250,684       $    477,655
    Software Sales & Maintenance                                372,711                  -
                                                           ------------        -----------
                                                                623,395            477,655
COST OF SALES                                                   371,388            386,280
                                                           ------------        ------------
GROSS PROFIT                                                    252,007             91,375
                                                           ------------       ------------
OPERATING EXPENSES
    Gold Exploration Costs                                       29,864                  -
    Software Development Costs                                  237,919                  -
    Sales, General & Administrative                             766,786              71,441
                                                           ------------       -------------
       Total Operating Expenses                               1,034,569              71,441
                                                           ------------       -------------

(Loss) Income From Operations                                  (782,562)             19,934
                                                           ------------       -------------

OTHER INCOME (EXPENSE)
    Interest Expense                                               (612)            (83,340)
    Other Income (Expense)                                       25,235               1,464
    Foreign Exchange Gain (Loss)                                 10,274              38,308
                                                           ------------       -------------
       Total Other Income (Expense)                              34,897             (43,568)
                                                           ------------       -------------
Loss Before Provision for Income Taxes                         (747,665)            (23,634)

Provision for Income Taxes                                            -                   -
                                                           ------------       ------------


Net Loss                                                  $    (747,665)      $     (23,634)
                                                           ============       =============

Loss per share                                            $      (0.017)      $      (0.003)
                                                          =============      ==============

Weighted Average of Number of Shares Outstanding             44,898,066           9,192,439
</TABLE>

The  Accompanying  Notes are an Integral  Part of These  Consolidated  Financial
Statements.

<PAGE>

                           SECTOR COMMUNICATIONS, INC.
                       CONSOLIDATED STATEMENT OF CASH FLOW
                                   (UNAUDITED)
                           FOR THE THREE MONTHS ENDED

<TABLE>
<CAPTION>

                                                                 May 31,                May 31,
                                                                    1997                   1996
                                                           -------------           ------------
<S>                                                        <C>                    <C>           
CASH FLOWS FROM OPERATING ACTIVITIES
    Net Loss                                               $    (747,665)         $     (23,634)
    Adjustments to Reconcile Net Loss to
     Net Cash Provided by Operating Activities:
       Depreciation and Amortization                             204,760                 93,469
       Change in Assets and Liabilities, Net
        of Effect of Acquisition:
           (Increase) Decrease in Assets
              Accounts Receivable                                 17,017               (195,830)
              Repayment of Related Party Receivable               32,198
              Prepaid Expenses and Deposits                        4,617                (22,337)
              Receivable on Sale of Securities                   571,000
           (Decrease) Increase in Liabilities
              Accounts Payable                                    60,613                (51,845)
              Related Party Payable                                6,771                      -
              Deferred Revenue                                   (24,652)                     -
              Accrued Interest on Loan Payable                         -                 83,340
                                                           -------------           ------------
Net Cash Provided (Used) by Operating Activities                 124,659               (116,837)
                                                           -------------           ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of Fixed Assets                                     (31,675)                 (923)
    Decrease in Marketable Securities                             21,762                     -
    Loans Receivable                                              13,403                     -
                                                           -------------          ------------
Net Cash Provided (Used) by Investing Activities                   3,490                  (923)
                                                           -------------          -------------
CASH FLOWS FROM FINANCING ACTIVITIES                                   -                     -
                                                           -------------          ------------
Effect of Exchange Rate Changes on Cash                          (51,229)              185,215
                                                           -------------          -------------
Net Increase (Decrease) in Cash                                   76,920                 67,455
Cash - March 1,                                                   80,096                 22,429
                                                           -------------          -------------
Cash - May 31,                                             $     157,016          $      89,884
                                                           =============          =============
SUPPLEMENTAL CASH FLOWS INFORMATION:
    Cash Paid For:
       Interest                                            $          -           $          -
                                                           =============          ============
       Taxes                                               $          -           $          -
                                                           =============          ============
</TABLE>



The  Accompanying  Notes are an Integral  Part of These  Consolidated  Financial
Statements.





<PAGE>



                           SECTOR COMMUNICATIONS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)
                                  May 31, 1997

NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

           a) Basis of Presentation
              The  accompanying  financial  statements  have  been  prepared  in
              accordance  with  generally  accepted  accounting  principles  for
              interim  financial  information and with the  instructions to Form
              10-Q. Accordingly,  they do not include all of the information and
              footnotes required by generally accepted accounting principles for
              complete financial statements.  In the opinion of management,  all
              adjustments  (consisting  only of  normal  recurring  adjustments)
              considered  necessary for a fair  presentation have been included.
              Certain  reclassifications  have been made to the prior  period to
              conform to the current period's presentation.

              For further  information  refer to the  financial  statements  and
              footnotes  included  in the  Registrant's  Annual  Report  on form
              10-KSB for the period ended February 28, 1997.

              The  results  of  operations   for  any  interim  period  are  not
              necessarily  indicative of the results to be expected for the full
              fiscal year ending February 28, 1998.

              On June 18, 1996, Sector Communications, Inc. ("Sector"), formerly
              Aurtex, Inc., acquired all the outstanding capital stock of Global
              Communications  Group, Inc.  ("Global").  For accounting purposes,
              this acquisition has been treated as a recapitalization  of Sector
              with Global as the acquirer in a reverse acquisition.

              The unaudited condensed  consolidated  balance sheet as of May 31,
              1997 and the condensed  consolidated  statements of operations and
              cash flows for the three  months ended are those of Sector and its
              subsidiaries   (collectively   the  "Company").   All  significant
              intercompany accounts and transactions have been eliminated.

              The  financial  statements  presented  for  periods  prior  to the
              acquisition of Global  present the financial  position and results
              of operations  solely of Global,  and do not include the financial
              position  or  results  of  operations  of  Sector  or  any  of its
              subsidiaries.  As such, the unaudited statements of operations and
              cash flows for the three  months  ended May 31,  1996  reflect the
              results of operations of only Global.

              The accompanying  consolidated  financial statements as of May 31,
              1997 and for the three  months then ended  include the accounts of
              Sector and its subsidiaries. Such subsidiaries are as follows:

                     Global Communications, Inc.,          100% owned
                     Sector Communications AG              100% owned
                     HIS Technologies AG                    60% owned
                     Mountain Software AG                  100% owned



<PAGE>



                           SECTOR COMMUNICATIONS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)
                                  May 31, 1997


NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

           b) Loss Per Share
              Loss per share is based on the weighted  average  number of shares
              of common stock outstanding during the period.

           c) Foreign Currency Translation
              In  accordance  with the  provisions  of Statement  of  Accounting
              Standard No. 52, "Foreign Currency  Translations"  ("SFAS No. 52")
              the assets and liabilities of the Company's  subsidiaries  located
              outside the United States are generally translated at the rates of
              exchange  in effect at the balance  sheet  date.  Gains and losses
              resulting  from  foreign  currency   transactions  are  recognized
              currently  in  income  and those  resulting  from  translation  of
              financial statements,  with the exception of entities operating in
              highly  inflationary  economies,  as Global does in Bulgaria,  are
              accumulated in a separate  component of stockholders'  equity.  In
              highly inflationary  economies,  SFAS No. 52 requires that the use
              of historical  exchange rates to translate  nonmonetary  items and
              current exchange rates to translate  monetary items. The effect of
              exchange rate changes is reflected in net loss.

NOTE 2 -   PROPERTY AND EQUIPMENT

              Property and equipment consists of the following:

                                                  May 31,           February 28,
                                                   1997               1997
                                                ------------        ----------
                     Fiber Network             $    157,837       $   157,837
                     Equipment                    1,907,393         1,875,718
                     Furniture and Fixtures          47,223            47,223
                     Vehicles and Other              90,068            90,068
                                               ------------        ----------
                                                  2,202,521         2,170,846
                     Less:  Accumulated
                      Depreciation               (1,165,063)       (1,060,696)
                                                -----------       -----------
                                                $ 1,034,458       $ 1,110,150
                                                ===========       ===========

              Depreciation  expense for the three  months  ended in May 31, 1997
              and 1996 was $106,287 and $86,113, respectively.

NOTE 3 -   RELATED PARTY TRANSACTIONS

              During the three month period ended November 30, 1996, the Company
              accrued $80,000 for consulting fees incurred for services provided
              by MCG Management  Consulting Group, S.A. ("MCG").  This agreement
              was canceled on November 26, 1996. One of the principles of MCG is
              also a  director  of  Sector AG and the  Chairman  of the Board of
              Directors of Histech.  This liability remains unpaid as of May 31,
              1997.
<PAGE>

NOTE 4 -   NOTES RECEIVABLE

              Notes  receivable  at February  28,  1997 are as follows:  Both of
these notes are currently due and in default.
<TABLE>
<S>                                                                                                          <C>
              Promissory note receivable from Atcall,  Inc., bearing interest at
              8% per annum. This note is personally  guaranteed by the president
              of Atcall.  Repayment  of this note was demanded on the note's due
              date, October 23, 1996. On January 20, 1997, the Company agreed to
              restructure payment of this amount to be payable $25,000 per month
              with a final balloon payment of $25,000, plus all accrued
              interest.                                                                                      $  248,707

              Reserve for potential uncollectability                                                           (119,000)

              Unsecured   promissory   note   receivable  from  Combined  Metals
              Reduction  Company,  bearing  interest  at 10%.  The  Company  has
              previously established a reserve for the full amount of
              this note.                                                                                        136,575

              Reserve for potential uncollectability                                                           (136,575)
                                                                                                             ----------

              Total                                                                                          $  129,707

              Atcall, Inc. has made only one of its scheduled payments under the
              restructured  payment plan. The Company has  established a reserve
              for the potential uncollectibility of the note.

NOTE 5 -   INTANGIBLE ASSETS

                  Intangible assets at May 31, 1997 are as follows:

                     Intangible assets related to the acquisition
                     of Histech                                                                             $ 4,286,922

                     Intangible assets related to the acquisition
                     of Mountain                                                                                595,959

                     Intellectual property and distribution rights
                     acquired by Histech prior to its acquisition
                     by the Company, net of foreign currency
                     exchange fluctuations.                                                                     791,446
                                                                                                              5,674,327
                     Amortization of intangible assets and
                     intellectual property and distribution
                     rights                                                                                    (397,936)
                                                                                                            ------------

                     Total                                                                                  $ 5,276,391
                                                                                                            ===========
</TABLE>
<PAGE>

                  The intangible  asset recorded for  intellectual  property and
                  distribution  rights  was  acquired  by  Histech  based  on an
                  agreement,  as amended, dated May 1, 1996, between Histech and
                  HIS Software AG.

                  The  excess  purchase  price  over the  fair  value of the net
                  assets acquired of Histech and Mountain will be amortized on a
                  straight-line  basis over twenty  years.  Costs related to the
                  acquisition  of the  intellectual  property  and  distribution
                  rights  purchase by Histech are  amortized  over the estimated
                  useful life of five years.

NOTE 6 -   WARRANTS

                  At May 31, 1997, the Company has reserved  3,895,680 shares of
                  common stock for issuance  upon the exercise of the  currently
                  outstanding warrants. The exercise prices and expiration dates
                  of the warrants are as follows:

                            Number      Exercise      Date            Date of
                          of Shares      Price     Exercisable      Expiration
                          ---------      -----     -----------      ----------
                          2,083,746      $0.79       2/28/97         12/31/97
                             11,934       0.79       2/28/97          8/31/97
                            100,000       2.25       2/28/97          6/30/00
                            100,000       3.00       7/20/97          6/30/00
                            100,000       4.00       7/20/98          6/30/00
                            250,000       0.79       2/28/97          7/18/99
                          1,250,000       0.79       2/28/97          7/18/99
                          ---------
                          3,895,680

NOTE 7 -   STOCK OPTION PLANS

               At May 31,  1997,  the Company has  options  outstanding  for the
               purchase  of  1,210,000  shares  under the 1994  Stock  Plan,  at
               exercise prices ranging from $.375 to $1.0625 per share.  510,000
               options are exercisable as of May 31, 1997.  There were no option
               transactions during the period March 1 through May 31, 1997.







<PAGE>



Item 6.       Management's  Discussion  and Analysis of Financial  Condition and
              Results of Operations

RESULTS OF OPERATIONS

The following is  management's  discussion  and analysis of certain  significant
factors  which have  affected the  Company's  financial  position and  operating
results  during the three months ended May 31, 1997 compared to the three months
ended May 31, 1996.

Telecommunication Revenue
The  Company  earns all of its  telecommunications  revenue  from (i)  providing
direct-dial  services for international long distance calls to twelve hotels and
resorts  in the  cities  of  Sofia  and  Plovdiv  in  Bulgaria;  (ii)  from  the
integration,  installation  and  maintenance  of  customer-owned  digital  phone
systems; and (iii) from usage-based  percentages of Company-owned  digital phone
systems through shared revenue agreements with some of its customers.

The Company's telecommunications revenue decreased by $226,971 from $477,655 for
the three  months  ended May 31, 1996 to $250,684 for the three months ended May
31, 1997.  This decrease in revenue is due primarily to the Bulgarian  Telephone
Company  ("BTC"),  without prior notice or cause,  unilaterally  terminating the
Company's  Joint  Activity  Agreement  on July 8,  1996.  On that  date  the BTC
disconnected  Global's  digital link to  international  carrier  services,  thus
suspending  the  majority  of  the  services  provided  by  the  Company  to its
customers.  The  digital  link was  reestablished  through a new Joint  Activity
Agreement with the BTC dated February 14, 1997.  Revenues from carrier  services
have not recovered to their  pre-disconnect  levels but are expected to do so as
the Bulgarian economy recovers from its recent crises and our services are fully
re-connected to all our former customers.

Software Sales and Maintenance
Effective  August 31, 1996,  the Company began  recording the software sales and
maintenance revenue of its 60% owned subsidiary,  Histech. No revenue related to
Histech's  operations was recorded prior to that time,  since the acquisition of
Histech was accounted for as a purchase, effective August 31, 1996.

During the three  months ended May 31, 1997,  the Company  recorded  $372,711 in
software  sales and  maintenance,  net of payments to third party  distributors,
generated exclusively by its 60% owned subsidiary, Histech as follows:

Software Sales                                                       $  255,020
Software Maintenance and Consulting                                      62,223
                                                                     ----------
Subtotal                                                                317,243
Deferred Software Maintenance Recognized in
 Current Period                                                          55,468
Total Recognized Revenue                                             $  372,711
                                                                     ==========
<PAGE>

Histech  utilizes  the  service of  software  distributors  for the sales of its
products in  geographic  regions  which it has no sales force.  During the three
months ended May 31, 1997,  approximately  40% of sales were  generated  through
distributors.

Histech plans to release  several new software  products in the third quarter of
1997 for use on Digital Open VMS,  Microsoft  Windows NT and various versions of
Unix-based corporate networks. These products will facilitate the administration
of user  accounts and security  across all three  networks  concurrently  from a
single Windows NT workstation.

Cost of Sales
The majority of the Company's  costs of sales for the three months ended May 31,
1997 relate to costs associated with telecommunication revenues as shown below.

                                             Three Months Ended
                                    May 31,                   May 31,
                                    1997                       1996
                                 ----------                   --------
Global Communications            $  225,369                 $  386,280
Histech                             146,019                          -
                                 ----------                   --------
  Total                          $  371,388                 $  386,280
                                 ==========                 ==========

Global's costs of sales decreased by $160,911 from $386,280 for the three months
ended May 31, 1996 to $225,369 for the three  months  ended May 31,  1997.  This
decrease is due primarily to the Company  reestablishing its carrier services in
the three month period ended May 31, 1997,  which had been  terminated  in July,
1996 and reconnected in February of 1997.

It should be noted that,  as shown below,  costs of sales,  as a  percentage  of
telecommunication  revenues,  has increased for the three month period ended May
31, 1997 compared to the three month period ended May 31, 1996.

                                                         Three Months Ended
                                                    May 31,             May 31,
                                                     1997                1996
                                                  ---------             -----
Cost of Sales, as a Percent of Revenue               90%                  81%

This  increase is due in part to  increased  costs  incurred  in  reestablishing
Global's digital link at the BTC.

Costs of sales  related to  software  products  and  maintenance  are  comprised
primarily of  commissions  and  distribution  payments.  These costs were 39% of
software sales and maintenance revenue for the three month period May 31, 1997.
<PAGE>

Software Development Costs

Software  development  costs  consist  primarily of  salaries,  employee-related
benefits,   consulting  fees  and  other  costs  directly  attributable  to  the
development  of Histech's  new  distributed  systems  management  products.  The
Company  believes that a significant  level of development is required to remain
competitive and expects that such costs will continue to increase in the future,
although  such costs may decline as a percentage  of total revenue to the extent
that revenue increases.

Sales, General and Administrative Expense

Consists primarily of personnel costs, including salaries,  benefits and bonuses
and  related  costs for  management,  finance  and  accounting,  legal and other
professional services.  General and administrative  expenses are detailed in the
following table by individual company below.

                                                       Three Months Ended
                                                 May 31,               May 31,
                                                 1997                    1996
                                              ---------               -------
General and Administrative
  Global Communications                         $ 121,507              $ 71,441
  Histech                                         295,591                    -
  Sector Communications                           349,688                    -
                                                ---------
         Total                                  $ 766,786              $ 71,441
                                                =========              ========


Higher  expenses for  salaries,  related  costs and  professional  services were
primarily  responsible for the increase in the sales, general and administrative
costs for Global for the period  ended May 31, 1997  compared to the same period
in 1996.

Sales, general and administrative costs of Histech consist primarily of salaries
and related costs, fees,  marketing expenses,  depreciation and the amortization
of intangible  assets.  Management of Histech  believes that as new products are
introduced  into the market in the future,  significant  marketing costs will be
incurred to successfully promote these products.

Interest Expense

Interest expense declined  dramatically for the three month period ended May 31,
1997 as compared to the three month  period ended May 31,  1996.  This  decrease
results from the  extinguishing of the Company's  long-term debt on February 28,
1997.
<PAGE>

Gold Exploration Costs and Activities

In order  to  accurately  determine  the best  course  to take for the  ultimate
divestiture of its gold assets, the Company incurred  exploration costs, as more
fully  described  below of $29,864  during the three month  period ended May 31,
1997.  No  comparable  costs for such  activities  are shown in the statement of
operations  for the three months ended May 31,  1996.  During 1996,  the Company
did, however, conduct gold exploration activities,  but due to the nature of the
acquisition  of  Global  as  a  reverse  acquisition,   the  historic  financial
statements  are those  only of Global and not of Sector,  formerly  Aurtex.  The
reader is referred to the  Company's  February  29, 1996 and  February  28, 1997
10-KSB for details concerning  exploration costs incurred during its years ended
February  29, 1996 and February 28,  1997.  The Company  incurred  approximately
$18,000 in  exploration  costs in the three months ended May 31, 1996 which were
incurred prior to the reverse  acquisition of Global,  and as such are not shown
in the statement of operations as expense.

In connection with the change in the Company's  strategic  direction the Company
has decided to curtail any significant future gold exploration  activities.  The
Company is  currently  evaluating  options to  determine  the  possibilities  of
divestiture and or  discontinuance  of its mineral  properties  described below.
Management  believes it has sufficient  information from the exploration efforts
conducted recently to properly evaluate various  possibilities of divestiture of
the mineral  properties,  the Company does not expect to incur significant costs
in  the  future  related  to its  gold  exploration  properties  or  other  gold
exploration related activities.

Vienna Project

On April 15,  1997,  the  Vienna  Property  Exploration  License  and  Option to
Purchase Agreement expired.  The Company has written off previously  capitalized
costs of $100,000 related to this property.

Ketchum Project

A minor drilling  program,  consisting of one exploration drill hole of 403 feet
was conducted  under the direction of Agricola  Metals  Company,  a principal of
which is a  shareholder  of the Company,  to explore that part of the Wood River
formation  immediately  under the challis volcanics in the Rooks Creek East area
of the Company's  unpatented claim block.  According to Agricola Metals Company,
the drill core showed mineralization of the Wood River in this sector.  However,
faulting prevented the drilling from reaching the critical zone. Further surface
investigation,  and a modest  drilling  program,  will be  needed  to  determine
whether a deposit exists in this location.

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

During the three month  period  ended May 31,  1997,  the Company  financed  its
operations  primarily  through funds it received  pursuant to a debt  retirement
agreement entered into on February 28, 1997.

The Company is currently  experiencing  negative cash flow from  operations  but
management  believes  that  with the  reinstatement  of  Global's  services  and
increased sales of Histech, that operating cash flow will improve significantly.
Even with these projected  improvements in operations and cash flows from Global
and Histech, and the curtailment of gold exploration activities,  the funding of
future operations may require further infusion of capital.  Based on its current
and  projected  operating  levels,  the  Company  believes  that  it  will  have
sufficient  liquid  assets to maintain  operations  for at least the next twelve
months.

If  additional  funds are raised by the Company  through the  issuance of equity
securities, securities convertible into or exercisable for equity securities, or
an equity  securities  exchange,  the  percentage  ownership of the then current
stockholders  of the Company  will be reduced.  The Company may issue  preferred
stock with rights,  preferences  or privileges  senior to those of the Company's
common stock.

FORWARD LOOKING STATEMENTS

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations   contains   forward-looking   statements   which  involve  risk  and
uncertainties.  Such  forward-looking  statements  reflect the Company's current
views with respect to future events and reflect the Company's current views with
respect to future events and financial performance,  including statements in the
following  section  concerning  the timing and amount of revenues,  the level of
expenses  incurred  and the  sufficiency  of cash and  other  resources  to fund
operations.  Actual results could differ  materially from those projected in the
forward-looking  statements  as a result  of the  Company's  ability  to  obtain
adequate  additional  financing  as needed,  the  uncertainties  of new  product
development   and   introduction,    sales,   growth,   competitive   pressures,
uncertainties  connected  to the Bulgaria  economy,  and other risks listed from
time to time in the Company's  SEC Report  included,  but limited,  to report on
Form 10-KSB, for year-ended 2/28/97 (FORWARD LOOKING STATEMENT SECTIONS).




<PAGE>



                          PART II----OTHER INFORMATION

Item 6.       Exhibits and Reports on Form 8-K

(a)      Exhibits: NONE

(b)      Reports on Form 8-K: NONE

<PAGE>

                                   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.


July 21, 1997
                                                /s/ Theodore Georgelas
                                                --------------------------------
                                                Theodore Georgelas  
                                                President and Chief
                                                Executive Officer