================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

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

  For the fiscal year ended April 30, 1997         Commission File No. 000-23250

                              MARKET AMERICA, INC.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

            North Carolina                                     56-1784094
    -------------------------------                       ----------------------
    (State or Other Jurisdiction of                         (I.R.S. Employer
    Incorporation or Organization)                        Identification No.)

      7605-A Business Park Drive
            Greensboro, NC                                        27409
    -------------------------------                             ---------
    (Address of Principal Executive                            (Zip Code)
               offices)


                                 (910) 605-0040
              ----------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)

         Securities Registered under Section 12(b) of the Exchange Act:
                                      None
                                (Title of Class)

         Securities Registered under Section 12(g) of the Exchange Act:
                    Common Stock, par value $.00001 per share
                                (Title of Class)

Check if the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months
(or for such shorter period as 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 disclosure of delinquent filers in response to Item 405 of Regulation
S-K is not contained herein and no such disclosure will be contained, to the
best of the 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. |_|

The aggregate market value of shares of Common Stock of the registrant held by
non-affiliates (based on the August 5, 1997 closing sale price of $6.375) was
$34,982,258 million. The Common Stock is traded over-the-counter and quoted
through the OTC Bulletin Board. As of August 5, 1997, 19,950,000 shares of the
Common Stock were outstanding.

                      Documents Incorporated by Reference:

Certain information from the Notice and Information Statement for the
registrant's annual meeting of stockholders, scheduled to be held September 30,
1997, is incorporated by reference to Part III, Items 10, 11, 12 and 13 of this
report.

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<PAGE>



                                    1. PART I

ITEM 1.             DESCRIPTION OF BUSINESS

General

        Market America, Inc. ("Market America" or the "Company") is a product
brokerage company that markets a wide range of consumer-oriented products and
services through a network of independent distributors. The Company was founded
in 1992 by James H. Ridinger, and has experienced substantial growth in revenue
and net income in recent years.

        The Company's product lines include health and nutrition products,
personal care products, cosmetics, fragrances, telecommunications services, and
home cleaning products. The Company's distributors are compensated through a
proprietary network marketing plan. As of April 30, 1997, the Company had 73,000
distributors in all 50 U.S. states, Canada, Puerto Rico and the Bahamas.

        The results of the Company's performance during fiscal 1997 are
discussed in greater detail in "Management's Discussion and Analysis of
Financial Condition and Results of Operations," contained in Item 7 of this
Report. That section should be read in its entirety in conjunction with the
discussion of the Company's business in this Item 1.

        The Company's principal executive offices and national distribution
center are located at 7605-A Business Park Drive, Greensboro, North Carolina
27409. Its telephone number at that address is (910) 605-0040.

Products and Services

        The Company maintains the following product lines, which the Company
calls "stores" in connection with its network marketing plan: health and
nutrition products, custom-blended cosmetics, custom-fit blue jeans, jewelry,
photo services, personal and skin care products, fragrances, security products,
cleaning and other home care supplies, water filtrators, personalized training
and self help programs, telecommunications services, personal financial
management tools and automotive supplies.

        The Company obtains its products from third-party sources. It does not
engage in any manufacturing activities. All of the Company's products are
marketed as proprietary product lines with proprietary trade names or under
trade names of the supplier or manufacturer under exclusive contracts or with
exclusive rights residing in the Company. This strategy helps provide the
Company with flexibility to enter new markets, offer recently popular products
and avoid the capital requirements and liability exposure frequently involved in
developing and manufacturing products.

        In the fiscal year ended April 30, 1997, the Company's sales of products
exceeding 10% of sales revenue included 27% from the Company's primary
antioxidant product and 18% from the Company's primary weight management
product. No other product represented more than 10% of sales revenues.

        The Company continually searches for new products and services. It seeks
out emerging trends in consumer-oriented products and services and innovative
product breakthroughs. The management team, in response to suggestions from the
field distributors, analyze sales trends, 

                                      -2-

<PAGE>


meets with manufacturers' research and development departments, and attempts to
maintain optimum levels of inventory from a mix and volume perspective.

Marketing

        The Company markets its products and services directly to consumers
through a network of independent distributors under a proprietary network
marketing plan.

        The Company's marketing plan departs from concepts and structures found
in traditional multi-level marketing and direct sales programs. It has been
designed to address many of the problems traditionally associated with such
programs. Distributors are not required to purchase any inventory and have small
monthly sales quotas. Most of the Company's distributors sell its products on a
part-time basis for supplemental income. The Company also has developed
sophisticated software that tracks each distributor's sales volumes and
commission payouts.

        The Company refers to its concept of bringing established companies and
product lines under its marketing umbrella as the "mall without walls." Each
product line is promoted to distributors as a "store." Each store is
individually packaged as a self-sufficient business with its own identity,
trademarks, training material and marketing support. A Market America
distributor can specialize exclusively in one store or can choose to sell a
number of product lines. The concept is similar to being a manufacturer's
representative for one or more product lines, with the products of different
manufacturers coming under the same marketing plan. This enables a distributor's
volume from various product lines to be combined to maximize commission
earnings. It also permits the Company and its distributors to change their
marketing directions when confronted with new product trends, price compression,
regulatory actions and other factors that affect their marketing.

        Market America supports its independent distributors in a variety of
ways. The Company provides product and marketing support, sales conventions and
a variety of training materials and programs. From July 1996 to July 1997, the
Company held the following regional conventions:

                       Region 1 -     April 1997 in Boston, MA
                       Region 2 -     May 1997 in York, PA
                       Region 3 -     October 1996 in Atlanta, GA
                       Region 4 -     September 1996 in Chicago, IL.
                       Region 5 -     November 1996 in Dallas, TX
                       Region 6 -     April 1997 in Minneapolis, MN
                       Region 7 -     April 1997 in Portland, OR
                       Region 8 -     March 1997 in San Diego, CA

The Company has sponsored a leadership school in Fort Lauderdale, Florida,
during the past year.

        The Company's current marketing efforts focus on high interest areas of
the United States and Canada. The Company also is focusing on mass customization
(share of customer) "one-to-one marketing," a marketing strategy introduced at
its July 1996 convention. The Company initiated its "Preferred Customer" program
during the 1997 fiscal year as an extension of its "one-

                                      -3-

<PAGE>


to-one marketing" strategy. The Company is now seeking to build relationships
with manufacturers capable of responding to the individual needs of its
"Preferred Customers."

        The fifth annual Market America, Inc. convention was held in July 1997
at the Koury Convention Center, Greensboro, North Carolina, with over 15,000
people in attendance. It is expected that this huge response will translate, as
it did last year, into major increases in sales and number of distributors in
the ensuing months.

Government Regulation

        The Company is subject to extensive laws and regulations, including
those governing the content, packaging, labeling, distribution, sale and storage
of certain of its products and those governing product claims and advertising.

        In addition, the Company's network marketing system is or may be subject
to or affected by extensive government regulation, including, without
limitation, state regulation of marketing practices and federal and state
regulation of the offer and sale of business franchises, business opportunities,
and securities. The Company believes that it is in compliance with these
requirements and maintains communications regularly with regulatory authorities
in a number of jurisdictions. Additionally, an adverse determination by any one
state could influence the decisions of regulatory authorities in other
jurisdictions. Any or all of these factors could adversely affect the way the
Company does business and could affect the Company's ability to attract
potential distributors. Although the regulations governing network marketing are
complex and vary from state to state, the Company believes that it is in
compliance with the regulations and interpretations of the various regulatory
authorities.

        Thermogenic weight management products have contributed significantly to
the Company's revenues. One of the ingredients in these products is a Chinese
herb, Ma Huang, which contains naturally occurring ephedrine in small
quantities. Ephedrine products have been the subject of adverse publicity
relating to alleged harmful effects, including the deaths of several
individuals. On April 10, 1996, the U.S. Food and Drug Administration issued a
statement warning consumers not to purchase or ingest dietary supplements
containing natural sources of ephedrine that are claimed to produce certain
effects (none of which are claimed by the Company's products), and the FDA
stated that it intended to issue a proposed regulation regarding
ephedrine-containing products by December 31, 1996. On June 4, 1997, the FDA
announced proposed rulemaking to control ephedrine products. There can be no
assurance that the FDA will not succeed in to imposing additional regulations,
possibly prohibiting, limiting potencies or placing other restrictions, on the
sale of such products. The herbal industry opposes such action and is pursuing
legal, political and scientific solutions.

Competition

        The Company is subject to significant competition for the recruitment of
distributors from other network marketing organizations, including those that
market health and nutrition products and cosmetics, as well as other types of
products. Some of the Company's competitors are substantially larger and have
available considerably greater financial resources than the Company. The
Company's ability to remain competitive depends, in significant part, on the
Company's success in recruiting and retaining distributors through an attractive
compensation plan and other incentives. The Company believes that its marketing
plan provides its distributors with significant earning potential and other
features superior to those found in the marketing 

                                      -4-

<PAGE>


plans of other network marketing companies. There can be no assurance however,
that the Company's programs for recruitment and retention of distributors will
be successful.

        In addition, marketing health and nutrition products, cosmetics and
certain other of the Company's products are highly competitive businesses. These
market segments include numerous manufacturers, distributors, marketers,
retailers and physicians that actively compete for the business of consumers.
The markets are highly sensitive to the introduction of new products that may
rapidly capture a significant share of the market.

Trademark, Trade Secret and Software Protection

        The Company has trademarked the terms "Market America's mall without
walls" and "unfranchise," which are used to describe its retail concept and
independent distributor system, respectively.

        The Company regards its marketing plan as proprietary and has
implemented protective measures of both a legal and a practical nature to ensure
that it retains that status. The Company derives such protection by contract
with distributors and by keeping its software program confidential. Like other
companies in the direct sales/network marketing industry, the Company does not
have patent protection for its marketing plan. It therefore relies upon the
copyright laws to protect against unauthorized copying of its software, and upon
copyright and trade secret laws for the protection of the literature that
explains the marketing plan. The Company also enters into confidentiality
agreements with its distributors. Despite this protection, competitors could
copy certain aspects of the Company's marketing plan or software or obtain
information that the Company regards as a trade secret. There can be no
assurance that the steps taken by the Company to protect its proprietary rights
will be adequate to deter misappropriation. Further, there can be no assurance
that any registered trademarks can be successfully defended. In any event, the
Company believes that factors such as innovation, expertise and market
responsiveness are more important than the legal protections described above.

History

        The Company is a North Carolina corporation. It was founded as a
Delaware corporation in 1992. The Company merged with a public company in 1993.
The merged company then changed its name to Market America, Inc. and moved its
jurisdiction of incorporation to North Carolina, also in 1993.

Employees

        As of April 30, 1997 the Company had 180 full-time employees and no
part-time employees. These numbers do not include the Company's distributors,
who are independent contractors. The Company is not a party to any collective
bargaining agreements, and considers its employee relations to be satisfactory.

Where to Get More Information

        As a public company, the Company files periodic reports and other
information with the U.S. Securities and Exchange Commission. Copies of such
information may be obtained upon payment of prescribed fees from the SEC's
Public Reference Section at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. Such information also may be accessed electronically at the SEC's
World Wide Web site at http://www.sec.gov. Certain periodic reports and other
information recently filed by the Company with the SEC may be accessed
electronically at the Company's World Wide Web site at 
http://www.marketamericausa.com.

Forward-Looking Information

        Certain discussions in this report contain forward-looking statements
within the meaning of the federal securities laws. Although the Company believes
that the expectations reflected in these forward-looking statements are based
upon reasonable assumptions, there can be no assurance that these expectations
will be realized. Factors that could cause actual results to differ materially
from current expectations include decreases in sales volume or number of
distributors, materially unfavorable regulatory action, loss of key personnel
and changes in economic conditions.


ITEM 2.       PROPERTIES

        The Company leases 40,000 square feet of commercial space in an office
park in Greensboro, North Carolina, which houses its executive offices and
national distribution center. The lease expires on October 31, 1997. The Company
currently is negotiating an extension of the lease.

                                      -5-

<PAGE>


ITEM 3.       LEGAL PROCEEDINGS

        In Wilson et al. v. Health Power Products, Inc. et al., No. 95-552,942
(140th District Court, Lubbock County, Texas), one of the plaintiffs alleges
that he suffered seizures from ingestion of a single dosage of ThermaChrome
5000, an energy and weight maintenance product distributed by the Company, which
is a defendant in the proceeding. The Company's insurer has undertaken the
defense of this proceeding, and the Company and the insurer are vigorously
opposing the claim of the plaintiffs for damages. Although it is not possible to
predict the outcome of this litigation, management is of the opinion that it
will not have a material impact on the Company.

        In Entin v. Health Power Products, Inc. et al., No. 17289/95 (Suffolk
County, N.Y. Supreme Court), in which the Company is a defendant, the plaintiff
alleges that she contracted Graves' disease from the ingestion of the Company's
product, ThermaChrome 5000. The Company has been informed that Graves' disease
is a genetically inherited disorder. Defense of this claim is being pursued
vigorously by the Company's insurer. Although it is not possible to predict the
outcome of this litigation, management is of the opinion that it will not have a
material impact on the Company.

        The Company has reached a settlement in a lawsuit instituted in 1993,
Larry A. Masi v. Market America, Inc. et al., Civil Case No. 95-CV-6374 (JEI)
(D. N.J.), in which the bankruptcy trustee for Larry A. Masi alleged that he was
entitled to Common Stock of the Company and damages. Under the settlement, the
Company agreed to make payments to the bankruptcy trustee in the amount of
$400,000, $25,000 of which already has been paid by the Company. The remaining
$375,000 was scheduled to be paid in installments over 30 months, without
interest, following court approval of the settlement. The U.S. Bankruptcy Court
for the District of New Jersey approved the settlement upon recommendation of
the bankruptcy trustee. The only objection to the settlement was entered by Mr.
Masi. None of Mr. Masi's creditors objected to the settlement. The U.S. District
Court for New Jersey approved the settlement on Mr. Masi's appeal of the
bankruptcy judge's order approving the settlement. Mr. Masi appealed the
District Court's order pro se to the U.S. Court of Appeals, after the withdrawal
of his lawyers from the case. The case is now pending before the Third Circuit.

        The Company is subject to other litigation from time to time arising
from its operations, including litigation involving distributor terminations.
Management believes that any such pending litigation will not have a material
effect on the Company's financial position or results of operations.

        The Company and several of its officers and employees have been affected
by an investigation being conducted by the staff of the U.S. Securities and
Exchange Commission since the Fall of 1994. The inquiry began as an
investigation into the activities of persons operating out of Spokane,
Washington who were responsible for attempting to take numerous companies,
including the Company, public through a process involving a "reverse merger"
with a public company shell in the early to mid-1990's. At the present time, the
Company is unable to predict the outcome of the investigation or whether it
might result in legal proceedings involving the Company or any of its officers
or employees.

                                      -6-

<PAGE>


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

        No matters were submitted to a vote of the Company's security holders
during the fourth quarter of the fiscal year covered by this report.

                                     PART II

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

        Market Information. The Company's Common Stock is traded
over-the-counter. Quotations are published through the OTC Bulletin Board. The
following table gives the range of quoted high and low bid prices for the
Company's Common Stock for each quarter within fiscal years 1996 and 1997 and as
of a recent date. These quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.

        Quarter                                      Low Bid        High Bid
        -------                                      -------        --------

        May 1, 1995 to July 31, 1995                 $1.69          $2.00

        August 1, 1995 to October 31, 1995           $1.75          $5.12

        November 1, 1995 to January 31, 1996         $4.62          $11.24

        February 1, 1996 to April 30, 1996           $9.75          $12.00

        May 1, 1996 to July 31, 1996                 $8.50          $12.00

        August 1, 1996 to October 31, 1996           $6.00          $10.25

        November 1, 1996 to January 31, 1997         $5.12          $8.25

        February 1, 1997 to April 30, 1997           $4.00          $7.12

        The closing sale price of the Company's Common Stock on August 5, 1997
was $6.38.

        Holders. As of August 5, 1997, there were 383 holders of record of the
Company's Common Stock.

        Cash Dividends. The Company has never paid cash dividends on its Common
Stock, and currently has no plans to pay cash dividends. The Company intends to
retain earnings to finance expansion and development of its business.

        ITEM 6      SELECTED FINANCIAL DATA

        The financial statements of the Company for the year ended April 30,
1997 were audited by Dixon, Odom and Co., L.L.P., independent certified public
accountants. The financial statements of the Company for the four years ended
April 30, 1996, 1995, 1994 and 1993 were audited by Terrence J. Dunne,
independent certified accountant. The following data should be read in
conjunction with the Company's audited financial statements and the notes
thereto.

                                      -7-

<PAGE>

<TABLE>
<CAPTION>

                     Year Ended       Year Ended       Year Ended       Year Ended      Year Ended
                      4-30-97          4-30-96          4-30-95          4-30-94         4-30-93
                      -------          -------          -------          -------         -------
<S>                <C>              <C>              <C>              <C>             <C>
Operating
Revenues           $  66,281,671    $  42,479,911    $  19,592,056    $  9,391,946    $  1,321,874

Net Income
(Loss)             $   8,471,221    $   5,153,227    $     794,767    $    212,210    $    (30,455)

Net Income
(Loss) Per
Share              $        0.43    $        0.26    $        0.04    $       0.01    $       (NIL)

Total Assets       $  21,691,428    $  12,238,284    $   3,619,045    $  1,274,761    $    325,782

Working
Capital            $  14,172,686    $   5,751,385    $   1,123,745    $    (27,686)   $   (191,833)

</TABLE>


ITEM 7.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS

        Following is a schedule of selected financial statistics and ratios for
the Company on a comparative basis for the three most recent fiscal years:

<TABLE>
<CAPTION>


                  Fiscal           Current       Percentage      Current         Percentage
                 Year End          Assets          Change      Liabilities         Change
                 --------          ------          ------      -----------         ------

   <S>           <C>            <C>               <C>          <C>                <C>
                 4-30-95        $   3,285,778     228.34%      $  2,162,033       110.23%
                 4-30-96        $  11,495,565     249.86%      $  5,744,180       165.68%
                 4-30-97        $  20,941,437      81.13%      $  6,768,751        17.84%

   Fiscal        Working     Percentage    Current     Percentage      Operating      Percentage
  Year End       Capital      Change        Ratio        Change         Income          Change
  --------      ---------   ----------    ---------    ----------      --------       --------

   4-30-95     $  1,123,745  4,158.89%      151.98%     4,158.89%      $  1,345,915     321.27%
   4-30-96     $  5,751,385    411.80%      200.12%        31.67%      $  8,220,599     510.78%
   4-30-97     $ 14,172,686    143.63%      309.38%        54.60%      $ 13,276,603      61.50%

</TABLE>


        The primary current assets of the Company as of April 30, 1997 are cash
and short-item investments of $19,618,812, and inventory in the amount of
$1,244,586. Inventory turnover is high due to the type of products that the
Company sells and the increasing demand for these products.

        In regard to liquidity, as of April 30, 1997, current assets exceeded
current liabilities by $14,172,686, for a current ratio of 3.09 to 1. This
compares with an excess of current assets over current liabilities of $5,751,385
as of April 30, 1996, for a current ratio of 2 to 1.

        Income from operations increased by 61.5% from $8,220,599 for the year
ended April 30, 1996 to $13,276,603 for the year ended April 30, 1997. This
increase was primarily due to a 56% increase in revenues from $42,479,911 to
$66,281,671.

                                      -8-

<PAGE>


        Sales continued to increase for the fifth consecutive year. The primary
reason for the continued increase in sales has been the increase in the number
of independent distributors throughout the United States and Canada. The primary
operating expense for the fiscal year ended April 30, 1997 was $29,645,933 in
commissions to independent contract or salespeople through whom all sales were
generated. Net income as a percentage of sales was 12.79% compared to 12.14% for
the prior fiscal year. The Company anticipates continued strong growth in sales,
and is also continuing to implement operating efficiencies in order to improve
net income. The Company has experienced considerable growth in distributorships
during the past two years. This growth can be attributed to concentrated efforts
to expand the Company's national meeting and seminar program to its present
level, as discussed under Item 1, "Description of Business--Marketing."

        Focus on "one to one marketing" with continued improvement of the
Company's stores has caused new activity in the Company's inventory mix.

ITEM 7A.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
              MARKET RISK.

        Not applicable.

ITEM 8.        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



                                                                              
                              MARKET AMERICA, INC.                            
                                                                              
                                                                              
                              FINANCIAL STATEMENTS                            
                                                                              
                                                                              
                             April 30, 1997 and 1996                          
                                                                              
                                                                              
                                                                              
                                                                              
<PAGE>                                                                        
                                                                              


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MARKET AMERICA, INC.                                                            
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TABLE OF CONTENTS


                                                                Page No.
                                                                --------

INDEPENDENT AUDITOR'S REPORT.................................       1

FINANCIAL STATEMENTS

  Balance Sheets.............................................       2

  Statements of Income.......................................       3

  Statements of Changes in Stockholders' Equity..............       4

  Statements of Cash Flows...................................       5

  Notes of Financial Statements..............................       7



<PAGE>

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MARKET AMERICA, INC.                                                            
================================================================================
                                                                                
                                                                                
                                                                                
                          INDEPENDENT AUDITORS' REPORT                          
                                                                                
                                                                                
                                                                                
To the Board of Directors                                                       
Market America, Inc.                                                            
Greensboro, North Carolina                                                      
                                                                                
                                                                                
We have audited the accompanying balance sheet of Market America, Inc. as of    
April 30, 1997 and the related statements of income, changes in stockholders'   
equity and cash flows for the year then ended. These financial statements are   
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit. The financial      
statements of Market America, Inc. as of April 30, 1996 and for the years ended 
April 30, 1996 and 1995, were audited by another auditor whose report dated July
5, 1996 expressed an unqualified opinion on those statements.                   
                                                                                
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable 
assurance about whether the financial statements are free of material           
misstatement. An audit includes examining, on a test basis, evidence supporting 
the amounts and disclosures in the financial statements. An audit also includes 
assessing the accounting principles used and significant estimates made by      
management, as well as evaluating the overall financial statement presentation. 
We believe that our audit provides a reasonable basis for our opinion.          
                                                                                
In our opinion, the 1997 financial statements referred to above present fairly, 
in all material respects, the financial position of Market America, Inc. as of  
April 30, 1997, and the results of its operations and its cash flows for the    
year then ended in conformity with generally accepted accounting principles.    
                                                                                
                                                                                
/s/ Dixon, Odom & Co., L.L.P                                                    
                                                                                
                                                                                
Greensboro, North Carolina                                                      
August 1, 1997                                                                  
                                                                                
                                                                                
                                     Page 1                                     
<PAGE>                                                                          
                                                                                
                                                                                
                                                                                
                                                                                
MARKET AMERICA, INC.                                                            
                                                                                
BALANCE SHEETS                                                                  
                                                                                
April 30, 1997 and 1996                                                         
================================================================================
                                                                                
<TABLE>                                                                         
<CAPTION>                                                                       
                                                                                
                                                                                
                                                                                      1997              1996                      
                                                                               --------------     -------------                   
<S>                                                                             <C>               <C>                             
ASSETS                                                                                                                            
CURRENT ASSETS                                                                                                                    
   Cash and cash equivalents (Note 1)                                           $   2,323,943     $  10,386,088                   
   Short-term investment (Note 2)                                                  17,294,869                 -                   
   Notes receivable, employees (Note 3)                                                58,095            61,696                   
   Inventories (Note 1)                                                             1,244,586         1,020,117                   
   Other current assets                                                                19,944            27,664                   
                                                                                -------------     -------------                   
                                                                                                                                  
                                                        TOTAL CURRENT ASSETS       20,941,437        11,495,565                   
                                                                                -------------     -------------                   
                                                                                                                                  
PROPERTY AND EQUIPMENT (Notes 1 & 4)                                                                                              
   Furniture and equipment                                                            839,057           588,455                   
   Software                                                                           128,840           128,840                   
   Leasehold improvements                                                               2,570             2,570                   
                                                                                -------------     -------------                   
                                                                                      970,467           719,865                   
   Less accumulated depreciation                                                      294,553           176,966                   
                                                                                -------------     -------------                   
                                                                                      675,914           542,899                   
                                                                                -------------     -------------                   
                                                                                                                                  
OTHER ASSETS                                                                                                                      
   Restricted cash (Note 4)                                                            74,077            69,820                   
   Long-term investments (Note 6)                                                           -           130,000                   
                                                                                -------------     -------------                   
                                                                                                                                  
                                                                                       74,077           199,820                   
                                                                                -------------     -------------                   
                                                                                                                                  
                                                                                $  21,691,428     $  12,238,284                   
                                                                                =============     =============                   
                                                                                                                                  
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                              
                                                                                                                                  
CURRENT LIABILITIES                                                                                                               
   Current portion of long-term debt (Note 4)                                   $     250,254     $     243,891                   
   Note payable - related party (Note 6)                                                    -           292,714                   
   Accounts payable                                                                 1,550,609         1,024,429                   
   Sales and payroll taxes payable                                                    283,268           233,515                   
   Commissions payable                                                              1,516,365         1,842,806                   
   Accrued compensation                                                               276,212           376,746                   
   Income taxes payable                                                             1,866,021         1,372,978                   
   Unearned revenue (Note 5)                                                        1,026,022           357,101                   
                                                                                -------------     -------------                   
                                                                                                                                  
                                                   TOTAL CURRENT LIABILITIES        6,768,751         5,744,180                   
                                                                                --------------    --------------                  
                                                                                                                                  
LONG-TERM DEBT (Note 4)                                                               281,707           324,355                   
                                                                                -------------     -------------                   
                                                                                                                                  
STOCKHOLDERS' EQUITY                                                                                                              
   Common stock, $.00001 par value; 800,000.000 shares                                                                            
     authorized; 19,950,000 issued and outstanding                                        199               199                   
   Additional paid-in capital                                                          39,801            39,801                   
   Retained earnings                                                               14,600,970         6,129,749                   
                                                                                -------------     -------------                   
                                                                                   14,640,970         6,169,749                   
                                                                                                                                  
                                                                                $  21,691,428     $  12,238,284                   
                                                                                =============     =============                   
                                                                                
</TABLE>                                                                        
                                                                                
                                                                                
--------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.  Page 2
                                                                                
                                                                                
<PAGE>                                                                          
                                                                                
                                                                                
                                                                                
                                                                                
MARKET AMERICA, INC.                                                            
                                                                                
STATEMENTS OF INCOME                                                            
                                                                                
Years Ended April 30, 1997, 1996 and 1995                                       
================================================================================
                                                                                
<TABLE>                                                                         
<CAPTION>                                                                       
                                                                                
                                                                                
                                                                    1997              1996             1995    
                                                                -------------    -------------     ------------
                                                                                                               
<S>                                                             <C>              <C>               <C>         
Sales                                                           $  66,281,671    $  42,479,911     $ 19,592,056
Cost of Sales                                                      12,249,121        9,173,672        4,343,000
                                                                -------------    -------------     ------------
                                                                                                               
                                                GROSS PROFIT       54,032,550       33,306,239       15,249,056
Operating Expenses                                                                                             
   Commissions                                                     29,645,933       18,643,914       10,336,579
   Salaries                                                         3,724,976        1,799,270          878,702
   Freight                                                          2,837,867        1,653,617          674,433
   Consulting                                                         377,234          885,345          593,158
   Rents                                                              389,862          239,387          111,084
   Depreciation and amortization                                      122,839           75,315           45,532
   Other operating expenses                                         3,657,236        1,788,792        1,263,653
                                                                -------------    -------------     ------------
                                                                   40,755,947       25,085,640       13,903,141
                                                                -------------    -------------     ------------
                                                                                                               
                                      INCOME FROM OPERATIONS       13,276,603        8,220,599        1,345,915
                                                                                                               
Other Income (Expense)                                                                                         
   Interest income                                                    595,651          232,855           49,917
   Interest expense                                                   (40,707)         (33,515)         (40,895)
   Loss on disposals of assets                                         (6,808)          (4,507)         (30,826)
   Miscellaneous income                                               451,051           89,678            4,455 
                                                                -------------    -------------     ------------ 
                                                                      999,187          284,511          (17,349)
                                                                -------------    -------------     ------------ 
                                                                                                                
                                         INCOME BEFORE TAXES       14,275,790        8,505,110        1,328,566 
                                                                                                                
Income Taxes (Note 8)                                               5,804,569        3,351,883          533,799 
                                                                -------------    -------------     ------------ 
                                                                                                                
                                                  NET INCOME    $   8,471,221    $   5,153,227     $    794,767 
                                                                =============    =============     ============ 
                                                                                                                
Net Income Per Share                                            $         .43    $         .26     $        .04
                                                                =============    =============     ============
                                                                               
</TABLE>                                                                       
                                                                               
--------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.  Page 3
                                                                                
<PAGE>                                                                          
                                                                                
                                                                                
                                                                                
                                                                                
MARKET AMERICA, INC.                                                            
                                                                                
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY                                   
                                                                                
Years Ended April 30, 1997, 1996 and 1995                                       
================================================================================
                                                                                
<TABLE>                                                                         
<CAPTION>                                                                       
                                                                                
                                                                                
                                                      Common Stock               Additional                                        
                                                 --------------------------        Paid-In         Retained                        
                                                 Shares           Amount           Capital         Earnings          Total         
                                                 ------           ------           -------         --------          -----         
                                                                                                                                   
<S>                                              <C>           <C>              <C>             <C>              <C>               
BALANCE, April 30, 1994                          19,950,000    $        199     $     39,801    $     181,755    $    221,755      
                                                                                                                                   
   Net income                                             -               -                -          794,767         794,767      
                                              -------------    ------------     ------------    -------------    ------------      
                                                                                                                                   
BALANCE, April 30, 1995                          19,950,000             199           39,801          976,522       1,016,522      
                                                                                                                                   
   Net income                                             -               -                -        5,153,227       5,153,227      
                                              -------------    ------------     ------------    -------------    ------------      
                                                                                                                                   
BALANCE, April 30, 1996                          19,950,000             199           39,801        6,129,749       6,169,749      
                                                                                                                                   
   Net income                                             -               -                -        8,471,221       8,471,221      
                                              -------------    ------------     ------------    -------------    ------------      
                                                                                                                                   
BALANCE, April 30, 1997                          19,950,000    $        199     $     39,801    $  14,600,970    $ 14,640,970      
                                              =============    ============     ============    =============    ============      
                                                                                
</TABLE>                                                                        
                                                                                
--------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.  Page 4
                                                                                
                                                                                
<PAGE>                                                                          
                                                                                
                                                                                
MARKET AMERICA, INC.                                                            
                                                                                
STATEMENTS OF CASH FLOWS                                                        
                                                                                
Years Ended April 30, 1997, 1996 and 1995                                       
================================================================================
                                                                                
<TABLE>                                                                         
<CAPTION>                                                                       
                                                                                
                                                                                
                                                                                
                                                                    1997              1996             1995       
                                                                -------------    -------------     ------------   
<S>                                                             <C>              <C>               <C>            
CASH FLOWS FROM OPERATING ACTIVITIES                                                                              
                                                                                                                  
   Net income                                                   $   8,471,221    $   5,153,227     $    794,767   
   Adjustments to reconcile net income to net cash                                                                
    provided by operating activities:                                                                             
     Depreciation and amortization                                    122,839           75,315           45,532   
     Loss on disposal of assets                                         6,808            4,507           30,826   
     (Increase) in inventories                                       (224,469)        (569,935)        (264,788)  
     (Increase) decrease in other current assets                        7,720          (21,427)           1,835   
     Increase in accounts payable                                     526,180          310,617          320,763   
     Increase in taxes payable                                        542,796        1,105,530          354,662   
     Increase (decrease) in commissions payable                      (326,441)       1,340,007          249,200   
     Increase (decrease) in accrued compensation                     (100,534)         246,652          130,094   
     Increase in unearned revenue                                     668,921           44,901          312,200   
     Increase in note payable (settlement)                                  -          400,000          147,000   
     Increase (decrease) in interest payable                                -           (7,109)           7,109   
                                                                -------------    -------------     ------------   
                                                                                                                  
                                        NET CASH PROVIDED BY                                                      
                                        OPERATING ACTIVITIES        9,695,041        8,082,285        2,129,200   
                                                                -------------    -------------     ------------   
                                                                                                                  
CASH FLOWS FROM INVESTING ACTIVITIES                                                                              
   Purchase of property and equipment                                (258,067)        (170,433)        (139,949)  
   Purchase of long-term  investments                                       -         (130,000)           4,579   
   Purchase of short-term investments                             (17,294,869)               -                -   
   Proceeds from sale of long-term investments                        125,405                -                -   
   (Increase) decrease in notes receivable, employees                   3,601          (61,696)               -   
   Increase in restricted cash                                         (4,257)         (69,820)               -   
                                                                -------------    -------------     ------------   
                                                                                                                  
                                          NET CASH USED FOR                                                       
                                        INVESTING ACTIVITIES      (17,428,187)        (431,949)        (135,370)  
                                                                -------------    -------------     ------------   
                                                                                                                  
CASH FLOWS FROM FINANCING ACTIVITIES                                                                              
   Net proceeds from (payments on) notes payable                                                                  
    and long-term debt                                               (328,999)         (94,288)          28,270   
                                                                -------------    -------------     ------------   
                                                                                                                  
                                        NET CASH PROVIDED BY                                                      
                             (USED FOR) FINANCING ACTIVITIES         (328,999)         (94,288)          28,270   
                                                                -------------    -------------     ------------   
                                                                                                                  
                             NET INCREASE (DECREASE) IN CASH                                                      
                                        AND CASH EQUIVALENTS       (8,062,145)       7,556,048        2,022,100   
                                                                                                                  
CASH AND CASH EQUIVALENTS                                                                                         
 AT BEGINNING OF YEAR                                              10,386,088        2,830,040          807,940   
                                                                -------------    -------------     ------------   
                                                                                                                  
                                   CASH AND CASH EQUIVALENTS                                                      
                                             AND END OF YEAR    $   2,323,943    $  10,386,088     $  2,830,040   
                                                                =============    =============     ============   
                                                                                
</TABLE>                                                                        
                                                                                
--------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.  Page 5
                                                                                
                                                                                
<PAGE>                                                                          
                                                                                
                                                                                
                                                                                
                                                                                
MARKET AMERICA, INC.                                                            
                                                                                
STATEMENTS OF CASH FLOWS                                                        
Years Ended April 30, 1997, 1996 and 1995                                       
================================================================================
                                                                                
<TABLE>                                                                         
<CAPTION>                                                                       
                                                                                
                                                                                
                                                                                
                                                                    1997              1996             1995                        
                                                                -------------    -------------     ------------                    
<S>                                                             <C>              <C>               <C>                             
SUPPLEMENTAL DISCLOSURE OF CASH FLOW                                                                                               
 INFORMATION                                                                                                                       
   Cash paid during the year for:                                                                                                  
                                                                                                                                   
                                                                                                                                   
     Interest                                                   $      28,467    $      33,376     $     33,786                    
                                                                =============    =============     ============                    
                                                                                                                                   
     Income taxes                                               $   5,311,526    $   3,351,883     $    123,229                    
                                                                =============    =============     ============                    
                                                                                
</TABLE>                                                                        
                                                                                
--------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.  Page 6
                                                                                
                                                                                
                                                                                
<PAGE>                                                                          
                                                                                
                                                                                
                                                                                
MARKET AMERICA, INC.                                                            
                                                                                
NOTES TO FINANCIAL STATEMENTS                                                   
                                                                                
April 30, 1997, 1996 and 1995                                                   
================================================================================
                                                                                
                                                                                
NOTE 1 o ORGANIZATION AND SIGNIFICANT POLICIES                                  
                                                                                
Market America, Inc. is based in Greensboro, North Carolina. It was incorporated
on April 27, 1992. The Company distributes a variety of consumer home-use       
products to the public through a network marketing concept which utilizes       
part-time independent contractors to sell these products. The Company supplies  
marketing information to these individuals in order to assist them in their     
sales efforts. The Company sells its products throughout the United States,     
Canada, Puerto Rico and the Bahamas.                                            
                                                                                
Cash  and cash equivalents                                                      
                                                                                
The Company considers all highly liquid investments with a maturity of three    
months or less when purchased to be cash equivalents. The Company maintains its 
cash in bank deposit accounts which, at times, may exceed federally insured     
limits. The Company has not experienced any losses in such accounts and believes
it is not exposed to any significant credit risk on cash and cash equivalents.  
                                                                                
Short-term investments                                                          
                                                                                
The Company classifies short-term investments in debt securities as             
held-to-maturity securities and, accordingly, carries them at amortized cost in 
accordance with the provisions of Statement of Financial Accounting Standards   
No. 115, "Accounting for Certain Investments in Debt and Equity Securities."    
                                                                                
Inventories                                                                     
                                                                                
Inventories are stated at the lower of cost (first-in, first-out method) or     
market.                                                                         
                                                                                
Property and equipment                                                          
                                                                                
Property and equipment are recorded at cost and depreciated on a straight line  
basis over the estimated useful lives of the assets. Maintenance, repairs, and  
minor renewals are charged to operations as incurred. Additions, improvements,  
and major renewals are capitalized. The cost of assets retired or sold, together
with the related accumulated depreciation, is removed from the accounts and any 
gain or loss on disposition is credited or charged to operations.               
                                                                                
Revenue recognition                                                             
                                                                                
The Company recognizes sales revenue at the time products are shipped.          
                                                                                
                                                                                
--------------------------------------------------------------------------------
                                                                          Page 7
                                                                                
<PAGE>                                                                          
                                                                                
                                                                                
                                                                                
                                                                                
MARKET AMERICA, INC.                                                            
                                                                                
NOTES TO FINANCIAL STATEMENTS                                                   
                                                                                
April 30, 1997,1996 and 1995                                                    
================================================================================
                                                                                
                                                                                
NOTE 1 o ORGANIZATION AND SIGNIFICANT POLICIES (Continued)                      
                                                                                
Income Taxes                                                                    
                                                                                
Income taxes are provided for the tax effects of transactions reported in the   
financial statements and consist of taxes currently due plus deferred taxes     
related to temporary differences between the reported amounts of assets and     
liabilities and their tax bases. Deferred tax assets and liabilities represent  
the future tax return consequences of those differences, which will either be   
taxable or deductible when the assets and liabilities are recovered or settled. 
Deferred tax assets and liabilities are adjusted for the effects of changes in  
tax laws and rates on the date of enactment.                                    
                                                                                
Net income per share                                                            
                                                                                
Net income per share is determined based on 19,950,000 common shares, the       
weighted average number of common shares outstanding during each of the years   
ended April 30, 1997, 1996 and 1995.                                            
                                                                                
Use of estimates                                                                
                                                                                
The preparation of financial statements in conformity with generally accepted   
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of     
contingent assets and liabilities at the date of the financial statements and   
the reported amounts of revenues and expenses during the reporting period.      
Actual results could differ from those estimates.                               
                                                                                
Reclassifications                                                               
                                                                                
Certain reclassifications have been made to prior-year amounts to conform with  
the current-year financial statement presentation.                              
                                                                                
New accounting standards                                                        
                                                                                
In February 1997, the Financial Accounting Standards Board issued Statement of  
Financial Accounting Standards No. 128, "Earnings Per Share." This Statement    
specifies the computation, presentation and disclosure requirements for earnings
per share, and its implementation is not expected to have a significant impact  
on the Company's net income per share. The Company will adopt this new standard 
during the third quarter of its year ending April 30, 1998.                     
                                                                                
In June 1997, the Financial Accounting Standards Board issued Statement of      
Financial Accounting Standards No. 130, "Reporting Comprehensive Income." This  
Statement establishes standards of reporting and display of comprehensive income
and its components in a full set of general-purpose financial statements. This  
Statement will be effective for the Company's fiscal year ending April 30, 1999,
and the Company does not intend to early adopt. Adoption of this Statement is   
not expected to have a significant effect on the Company's financial statements.
                                                                                
--------------------------------------------------------------------------------
                                                                          Page 8
                                                                                
<PAGE>                                                                          
                                                                                
                                                                                
MARKET AMERICA, INC.                                                            
                                                                                
NOTES TO FINANCIAL STATEMENTS                                                   
                                                                                
April 30, 1997, 1996 and 1995                                                   
================================================================================
                                                                                
                                                                                
NOTE 2 o SHORT-TERM INVESTMENT                                                  
                                                                                
Short-term investment at April 30 consisted of the following:                   
                                                                                
<TABLE>                                                                         
<CAPTION>                                                                       
                                                                                
                                                                                
                                                                                      1997            1996                         
                                                                                  --------------  --------------                   
                                                                                                                                   
<S>                                                                               <C>             <C>                              
   Master note, maturing September 30, 1997, earning                                                                               
    interest of 4.5% at April 30, 1997.                                           $ 17,294,869    $     -                          
                                                                                  =============== ===============                  
                                                                                
</TABLE>                                                                        
                                                                                
NOTE 3 o NOTES RECEIVABLE, EMPLOYEES                                            
                                                                                
The Company has several employee loans evidenced by promissory notes. All of the
notes bear interest at the rate of 6% per annum. The largest of the notes, in   
the amount of $38,751 at April 30, 1997, is secured by 50,000 shares of Market  
America, Inc. common stock. All of the remaining notes are unsecured.           
                                                                                
                                                                                
NOTE 4 o LONG-TERM DEBT                                                         
                                                                                
                                                                                
<TABLE>                                                                         
<CAPTION>                                                                       
                                                                                      1997            1996                         
                                                                                  ------------    -------------                    
<S>                                                                               <C>             <C>                              
   Notes payable collateralized by equipment, due in monthly installments                                                          
    aggregating $2,440 at April 30, 1997, including interest ranging from 6% to                                                    
    8%. One of these notes is also collateralized by a certificate of deposit                                                      
    that is reported as restricted cash on the accompanying                                                                        
    balance sheets.                                                               $     91,541    $     96,369                     
                                                                                                                                   
   Obligation due in monthly installments of $3,000 including                                                                      
    interest discounted at 9% with remaining balance due                                                                           
    December 31, 1999.                                                                  65,420          96,877                     
                                                                                                                                   
   Obligation arising in settlement of litigation as approved by                                                                   
    the U.S. Bankruptcy Court for the District of New Jersey. (a)                      375,000         375,000                     
                                                                                  ------------    ------------                     
                                                                                       531,961         568,246                     
   Less current portion due within one year                                            250,254         243,891                     
                                                                                  ------------    ------------                     
                                                                                                                                   
                                                                                  $    281,707    $    324,355                     
                                                                                  ============    ============                     
</TABLE>                                                                        
                                                                                
--------------------------------------------------------------------------------
                                                                          Page 9
                                                                                
<PAGE>                                                                          
                                                                                
                                                                                
MARKET AMERICA, INC.                                                            
                                                                                
NOTES TO FINANCIAL STATEMENTS                                                   
                                                                                
April 30, 1997, 1996 and 1995                                                   
================================================================================
                                                                                
                                                                                
NOTE 4 o LONG-TERM DEBT (Continued)                                             
                                                                                
Future maturities of long-term debt at April 30, 1997 are estimated to be due as
follows:                                                                        
                                                                                
     Year Ending April 30,                                                      
             1998                                           $    250,254        
             1999                                                172,209        
             2000                                                 77,542        
             2001                                                 27,886        
             2002                                                  4,070        
                                                            ------------        
                                                                                
                                                            $    531,961        
                                                            ============        
                                                                                
(a) The plaintiff (Masi) has appealed the U.S. Bankruptcy Court's approval of   
    the settlement to the U.S. Third Circuit Court of Appeals, and the Company  
    will continue to vigorously oppose the plaintiff's attempts to overturn the 
    approval of this settlement. The Company has deferred payments under the    
    approved settlement until all appeals are resolved. The ultimate resolution 
    of this matter is not presently determinable.                               
                                                                                
NOTE 5 o UNEARNED REVENUE                                                       
                                                                                
The Company sponsors two conventions per year for its distributors. The unearned
revenue represents cash collected from advance ticket sales.                    
                                                                                
                                                                                
NOTE 6 o RELATED PARTY TRANSACTIONS                                             
                                                                                
Note payable to related party at April 30, 1996, represented loans received by  
the Company from Mr. James H. Ridinger, an officer and stockholder, which were  
due on demand and included interest of 8% per annum. Interest expense related to
this debt amounted to $13,325, $28,823, and $21,411 during the years ended April
30, 1997, 1996, and 1995, respectively.                                         
                                                                                
On April 15, 1996, the Company purchased the former home of Mr. And Mrs.        
Ridinger to provide lodging and meeting facilities for corporate guests. The    
home was purchased for $130,000 and thereafter sold to an unrelated third party 
on May 29, 1996.                                                                
                                                                                
                                                                                
                                                                                
--------------------------------------------------------------------------------
                                                                         Page 10
                                                                                
                                                                                
                                                                                
<PAGE>                                                                          
                                                                                
                                                                                
                                                                                
MARKET AMERICA, INC.                                                            
                                                                                
NOTES TO FINANCIAL STATEMENTS                                                   
                                                                                
April 30, 1997, 1996 and 1995                                                   
================================================================================
                                                                                
                                                                                
NOTE 7 o OPERATING LEASE COMMITMENTS                                            
                                                                                
The Company occupies leased premises in Greensboro, North Carolina. The lease   
commenced on April 1, 1995, and will terminate on October 31, 1997. The Company 
is negotiating an extension of this lease. The Company also leases automobiles  
under long-term operating leases.                                               
                                                                                
Future minimum rental payments required under operating leases that have an     
initial or remaining non-cancelable lease term in excess of one year as of April
30, 1997 are as follows:                                                        
                                                                                
                     1998                                    $    158,280       
                     1999                                          69,570       
                     2000                                           9,672       
                                                             ------------       
                                                                                
      Total future minimum lease payments                    $    237,522       
                                                             ============       
                                                                                
NOTE 8 o INCOME TAXES                                                           
                                                                                
Income tax expense is comprised of the following:                               
                                                                                
<TABLE>                                                                         
<CAPTION>                                                                       
                                                                                
                                                                                
                                                                 1997            1996            1995                              
                                                             ------------    ------------    ------------                          
<S>                                                          <C>             <C>             <C>                                   
  Current tax provision                                                                                                            
            Federal                                          $  4,671,743    $  2,687,762    $    426,201                          
            State                                               1,132,826         664,121         107,598                          
                                                             ------------    ------------    ------------                          
                                                                5,804,569       3,351,883         533,799                          
  Deferred tax provision                                                -               -               -                          
                                                             ------------    ------------    ------------                          
                                                                                                                                   
  Total income tax provision                                 $  5,804,569    $  3,351,883    $    533,799                          
                                                             ============    ============    ============                          
                                                                                
</TABLE>                                                                        
                                                                                
A reconciliation of the statutory U.S. federal income tax rate and the effective
income tax rate is as follows:                                                  
                                                                                
<TABLE>                                                                         
<CAPTION>                                                                       
                                                                                
                                                                                
                                                                   1997             1996            1995                           
                                                              -------------      ------------   ------------                       
                                                                                                                                   
<S>                                                                <C>              <C>             <C>                            
            Statutory U.S. federal rate                            35.0%            34.0%           34.0%                          
                                                                                                                                   
            State income tax, net of federal benefit                5.1              5.1             5.2                           
                                                                                                                                   
            Other, net                                               .6               .3             1.0                           
                                                                ----------      -----------      -----------                       
                                                                                                                                   
                                                                   40.7%            39.4%           40.2%                          
                                                                ==========      ===========      ===========                       
                                                                                
                                                                                
                                                                                
</TABLE>                                                                        
                                                                                
--------------------------------------------------------------------------------
                                                                                
                                                                         Page 11
                                                                                
<PAGE>                                                                          
                                                                                
                                                                                
                                                                                
                                                                                
MARKET AMERICA, INC.                                                            
                                                                                
NOTES TO FINANCIAL STATEMENTS                                                   
                                                                                
April 30, 1997, 1996 and 1995                                                   
================================================================================
                                                                                
                                                                                
NOTE 9 o LITIGATION                                                             
                                                                                
As of April 30, 1997, the Company was a defendant in two lawsuits (exclusive of 
the matter discussed in Note 4 to the financial statements). These lawsuits     
involve product liability claims and have been referred to the Company's        
liability insurer for defense. The Company vigorously opposes these claims, and 
it is, at this time, impractical to estimate any possible adverse monetary      
effects on the Company.                                                         
                                                                                
In addition to the lawsuits mentioned previously, the Company is involved in    
other lawsuits arising in the ordinary course of business. In the opinion of the
Company's legal counsel and management, any liability resulting from such       
litigation will not be material in relation to the Company's financial position.
                                                                                
                                                                                
NOTE 10 o FAIR VALUE OF FINANCIAL INSTRUMENTS                                   
                                                                                
The carrying amounts reflected in the balance sheets for cash and cash          
equivalents, short-term investments, notes receivable and note payable          
approximate their respective fair values. The carrying value of long-term debt  
exceeds its estimated fair value by approximately $36,000 at April 30, 1997 and 
1996. Fair values are based primarily on current interest rates available for   
those or similar instruments.



<PAGE>


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

        Not applicable.

                                    PART III

ITEM 10.       DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        Information relating to Item 10 is incorporated herein by reference to
the Company's Notice and Information Statement to be filed on or about August
28, 1997.

ITEM 11.       EXECUTIVE COMPENSATION

        Information relating to Item 11 is incorporated herein by reference to
the Company's Notice and Information Statement to be filed on or about August
28, 1997.

ITEM 12.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
               MANAGEMENT

        Information relating to Item 12 is incorporated herein by reference to
the Company's Notice and Information Statement to be filed on or about August
28, 1997.

ITEM 13.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        Information relating to Item 13 is incorporated herein by reference to
the Company's Notice and Information Statement to be filed on or about August
28, 1997.

                                     PART IV

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

(a)(1)    Financial Statements

          The following financial statements are included in this report.

               Balance Sheets as of April 30, 1997 and 1996

               Statements of Income for the Years Ended April 30, 1997, 1996 
               and 1995

               Statements  of  Changes  in  Stockholders'  Equity  for the Years
               Ended  April 30, 1997, 1996 and 1995

               Statements of Cash Flows for the Years ended April 30, 1997, 1996
               and 1995

               Notes to Financial Statements


                                      -10-

<PAGE>


(a)(2)    Financial Statement Schedules

          Not applicable.

(a)(3)    Exhibits

          The exhibits to this report are identified in the Exhibit Index, which
          appears immediately after the signature page and is incorporated in
          this Item 14 by this reference.

(b)       Reports on Form 8-K

          No reports on Form 8-K were filed by the Company during the last
          quarter of the fiscal year covered by this report.


                                      -11-


<PAGE>



                                   SIGNATURES
                                   ----------

        Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Greensboro, State of North Carolina, on August 13, 1997.


                                             MARKET AMERICA, INC.

                                             By:  /s/ James H. Ridinger
                                                  ----------------------------
                                                  James H. Ridinger
                                                  President and Chief Executive
                                                    Officer

        Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.


/s/ James H. Ridinger                                       August 13, 1997
--------------------------------------
James H. Ridinger
President, Chief Executive Officer and Director
(Principal Executive, Financial and Accounting Officer)



/s/ Loren A. Ridinger                                       August 13, 1997
--------------------------------------
Loren A. Ridinger
Vice President of Administration and Director



/s/ Dennis Franks                                           August 13, 1997
--------------------------------------
Dennis Franks
Executive Vice President and Director



/s/ Martin Weissman                                         August 13, 1997
--------------------------------------
Martin Weissman
Executive Vice President and Director


                                      -12-

<PAGE>






                              MARKET AMERICA, INC.

                              EXHIBITS TO FORM 10-K

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>



       Exhibit
        Number                                           Identification
        ------                                           --------------

       <S>              <C>                                                             
        2(1)            Agreement and Plan of Merger dated as of October 1, 1993 between Atlantic
                        Ventures, Inc. and Market America, Inc. and Addendum (to same) dated
                        October 1, 1993 (incorporated by reference to Exhibits 2.1 and 2.2,
                        respectively, to the Company's Current Report on Form 8-K filed October 6,
                        1993, Commission File No. 000-23250)

        3(i)(1)         Articles of Incorporation of the Company (incorporated by reference to Exhibit
                        3.1 to the Company's Current Report on Form 8-K filed with the Commission
                        on November 3, 1993, Commission File No. 000-23250)

        3(i)(2)         Articles of Amendment of the Company (incorporated by reference to Exhibit
                        3.3 to the Company's Annual Report on Form 10-K filed with the Commission
                        on July 30, 1996, Commission File No. 000-23250)

        3(ii)           By-Laws of the Company (incorporated by reference to Exhibit 3.4 to the
                        Company's annual report on Form 10-K filed with the Commission on July 30,
                        1996, Commission File No. 000-23250)

        4(1)            Article 2 of the Articles of Incorporation of the Company (incorporated by
                        reference to Exhibit 3(i) to the Company's Current Report on Form 8-K filed
                        with the Commission on November 3, 1993, Commission File No. 000-23250)

        4(2)            Articles of Merger of Atlantis Ventures, Inc. and Market America, Inc.
                        (incorporated by reference to Exhibit 2.3 to the Company's Current Report on
                        Form 8-K filed with the Commission on November 3, 1993, Commission File
                        No. 000-23250)

       27               Financial Data Schedule*


</TABLE>


* Filed herewith.