SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  FORM 10-KSB
(Mark One)
[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934
                  For the Fiscal Year Ended: December 31, 1997
                                       OR
[ ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934
        For the transition period from _______________ to ______________

                        Commission File Number : 0-19693

                       BIO FLUORESCENT TECHNOLOGIES, INC.
             ------------------------------------------------------
             (exact name of Registrant as specified in its charter)

          Nevada                                                87-0485320
-------------------------------                              ----------------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)

8360 East Via De Ventura, Bldg.. L200, Scottsdale, Arizona         85258
-----------------------------------------------------------      ----------
         (Address of Principal Executive Offices)                (Zip code)

        Registrant's telephone number, including area code: 602-905-5579

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

    Securities registered pursuant to Section 12(g) of the Act: Common Stock

Check whether the Registrant  (1) has filed all reports  required to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
twelve (12) months (or for such shorter  period that the Registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past ninety (90) days. [ ] Yes [X] No

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

State Registrant's revenues for its most recent fiscal year. $0.00

As of March 5, 1998,  27,669,202 shares of the registrant's  common stock, $.001
par value, were outstanding. The aggregate market value of the common stock held
by non-affiliates  of the registrant  (i.e.,  excluding shares held by executive
officers,  directors,  and control  persons as defined in Rule 405) on that date
was  $413,648.  Computed  at the closing  price on that date.  There is only one
class of common stock outstanding.

APPLICABLE  ONLY TO REGISTRANTS  INVOLVED IN BANKRUPTCY  PROCEEDINGS  DURING THE
PRECEDING FIVE (5) YEARS:

Check whether the Registrant has filed all documents and reports  required to be
filed  by  Section  12,  13 or  15(d)  of the  Securities  Exchange  Act of 1934
subsequent to the  distribution of securities under a plan confirmed by a court.
[ ] Yes [ ] No
                      DOCUMENTS INCORPORATED BY REFERENCE

                                      None.
<PAGE>

                               TABLE OF CONTENTS

                                                                        Page
                                                                        ----

ITEM 1.   BUSINESS......................................................  1

ITEM 2.   PROPERTIES....................................................  2

ITEM 3.   LEGAL PROCEEDINGS.............................................  2

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........  3

ITEM 5.   MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED
          STOCKHOLDERS MATTERS..........................................  4

ITEM 6.   PLAN OF OPERATION.............................................  5

ITEM 7.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...................  7

ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE........................... 16

ITEM 9.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT............ 17

ITEM 10.  EXECUTIVE COMPENSATION........................................ 18

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT.................................................... 19

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................ 20

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.............................. 20

SIGNATURES.............................................................. 21

<PAGE>

                                     PART I
ITEM 1. BUSINESS

COMPANY BACKGROUND

         Bio  Fluorescent  Technologies,  Inc. (The  "Company") is a development
stage  company  that was  engaged  primarily  in the  medical  and  health  care
industry.  The Company was  incorporated  on February 15, 1990 under the laws of
Nevada as  Partisan  Corporation.  On March 10,  1995,  the  Company's  name was
changed to Bio Fluorescent  Technologies,  Inc. The Company was inactive through
approximately  January  of 1995  and  prior  to such  time  the  Company's  only
activities  consisted  of the sale or  transfer  of shares  of  common  stock in
private placements.

         The Company's initial business plan was based on developing,  licensing
or  otherwise  acquiring   state-of-the-art   advanced  diagnostic  testing  and
screening  technology and equipment  capable of early  detection of human immune
system  disorders  such as HIV-1,  HIV-2 and  Hepatitis B. In February  1995 the
Company licensed a development  stage diagnostic  technology  designed to detect
AIDS, described as the Mehica GP120 system.

         In July 1996 the Company filed a complaint  against the licensor of the
technology.  The  defendants  filed a  counter-claim  and third party  complaint
seeking  declaratory  relief in  respect of the  agreements  and  damages.  This
litigation  matter is more fully described in Item 3 "Legal  Proceedings" and in
the notes to the Company's financial statements set forth herein.

         Development  activities  were suspended and the Company has written off
the unamortized cost of the Mehica GP120 project as of December 31, 1996, and is
treating this write-off as a recision of the license agreement.

         In May 1996 the Company reorganized its management team and revised its
business plan to include  expansion of the Company's  core market and technology
application for a broader range of products and industries.

         The Company is selecting  and engaging the services of  scientists  and
other  technical  advisors to assist in its search to acquire other  products or
businesses compatible with the Company's primary goal of becoming operational as
soon as possible.

         Since its management reorganization in May 1996, the Company's business
development plan has been focused on a "growth by acquisition"  strategy and the
Company has been actively pursuing acquisition possibilities.

         The Company's  agreement dated February 11, 1997, to acquire all of the
assets of  Immune  Network  Research,  Ltd.  ("INR")  was  terminated  on , 1997
Management  decided  at that time to  restrict  its  solicitations  of  business
opportunities until the legal matters as described in Item 3 was fully resolved.
The  Company  adopted a plan of quiet  review of  possible  mergers  or  product
adoption.  This plan was maintained until December 1997. On September 25, 1997 a
settlement  order was  issued by the court to  dismiss  the case.  Both  parties
elected to not reopen the case within the allowable 30 days following the order.
Therefore  the case has been  dismissed.  The  Company  has begun to  vigorously
pursue industries and possible merger candidates.

                                       1
<PAGE>

         As the Company began to position  itself for the pursued  opportunities
the Company  discovered  that the maximum  capital limit had been  inadvertently
reduced with the three for one reverse  split of 2 December  1996. A majority of
shareholders  held a meeting  and  approved  the maximum  capitalization  of the
50,000,000  shares.  The Company also issued 16,452,731 Shares of Regulation 144
stock to its major creditors in exchange for $665,108. in the debts owed to them
as part of a planned  structuring  plan to make the Company more  attractive for
possible merger opportunities.

         The Company  plans to continue with its efforts to license or otherwise
acquire  products,  technology  or  businesses  compatible  with  its  corporate
strategies.

EMPLOYEES

         On March 20,  1998,  the  Company,  through an office  support  service
agreement  with a related  party,  employed a total of two persons,  who provide
management,  administrative and secretarial services to the Company. No employee
is subject to a collective  bargaining  agreement.  The Company  believes it has
favorable  relations  with its  employees.  As of March 31,  1997,  the  Company
suspended  all other  consulting  agreements.  On September 30, 1997 the Company
downsized  its office and its support  staff pending the location of products or
merger possibilities.

ITEM 2. PROPERTIES

         The Company  maintained its principal  executive office in 1,000 square
feet of a rented office facility in Scottsdale,  Arizona under an office support
services agreement with a related party which was abandoned on December 1, 1997.
The Company adopted the telecommuting office arrangement,  which it is operating
under  at  this  time.  The  Company  believes  that  this  arrangement  will be
sufficient for the Company's operations for the current foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

         The Company had secured  worldwide  rights to  manufacture,  market and
sell the Mehica  GP120  System  under an  exclusive  licensing  agreement  dated
February  1995.  On July 19, 1996,  the Company  filed a complaint in the United
States  District  Court for the  District  of  Maryland  (Civil  Action  No. CCB
96-2266)  against the licensor,  The Avriel Group,  and others  ("TAG")  seeking
declaratory  relief,  damages and other relief in respect to certain  agreements
relating to the rights to a  proprietary  automated  system for detection of the
HIV virus and for use in mass screening of individuals, the Packaged Antigen Kit
or "PAK" and the Mehica GP120 System.  On July 30, 1996, the defendants filed an
answer,  counter-claim and third party complaint,  seeking declaratory relief in
respect to the agreements and damages.

         The  Company  had made  attempts  to  resolve  this  matter  through  a
negotiated settlement without further extensive  litigation.  A settlement order
issued by the court to dismiss the case was entered  September  25,  1997.  Both
parties  elected to not reopen the case within the  allowable 30 days  following
the order. The case has been dismissed.

                                       2
<PAGE>

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

         As  referred  to Item 1, the  Company  held a  shareholders  meeting on
November 10, 1997,  where a majority of the  Company's  outstanding  shares were
represented and amended the Company Articles to reinstate the Company's  Maximum
Capital Limit to 50,000,000 shares.

         Subsequent to this reporting period, on January 20, 1998, pursuant to a
shareholders  meeting at which a majority of the  Company's  outstanding  shares
were  represented  authorized  the board of  directors  to  initiate a 100 for 1
reverse  stock split  effective  January 20, 1998.  This reverse will change the
current outstanding shares from 22,669,240 shares to become 226,695 shares.


                                       3
<PAGE>

                                    PART II

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

MARKET INFORMATION

         Trading  activity with respect to the  Company's  common stock has been
limited. A public trading market having the characteristics of depth,  liquidity
and  orderliness  depends  upon the  existence  of market  makers as well as the
presence of willing buyers and sellers,  which are circumstances  over which the
Company has no control.

         Prior to May 1,  1995,  there was no public  market  for the  Company's
common stock.  Since May 1, 1995, the Company's  common stock has been quoted in
the National Daily  Quotation  Service ("Pink  Sheets")  published  daily by the
National  Quotation  Bureau,  Inc. The Company's trading symbol was changed from
"BFTI" to "BFTK" in  connection  with  Company's  December 2, 1996 reverse stock
split.  Quotations  are also  available  through the  Electronic  Bulletin Board
operated by the National  Association  of  Securities  Dealers,  Inc.  Under the
symbol "BFTK".

         The  following  table  sets  forth the high and low bid  prices for the
Company's  common  stock  commencing  with the  second  fiscal  quarter  1995 as
reported  by  the  National  Quotation's  Bureau,  Inc.,  which  prices  reflect
inter-dealer prices without retail mark-up, mark-down or commission, and may not
necessarily represent actual transactions.

Quarter Ended                    BFTI, Before Split    BFTK, After Split
-------------                    ------------------    -----------------
BFTI before split and adjusted
as if reverse split had 
occurred retroactively            High        Low       High        Low
                                  ----        ---       ----        ---

June 30, 1995                    $5,00       $1.00     $15.00      $3.00
September 30, 1995               $4.00       $2.62     $12.00      $7.86
December 31, 1995                $1.19       $1.06     $ 3.57      $3.18
March 31, 1996                   $1.47       $1.00     $ 4.41      $3.00
June 30, 1996                    $1.22       $0.50     $ 3.66      $1.50
September 30, 1996               $0.91       $0.22     $ 2.73      $0.66
December 2, 1996                 $0.42       $0.22     $ 1.26      $0.66
BFTI after the reverse split
December 31, 1996                                      $ 0.72      $0.50
March 31, 1997                      --          --     $ 0.63      $0.19
June 30, 1997                       --          --     $ 0.25      $0.06
September 30, 1997                  --          --     $ 0.10      $0.06
December 31, 1997                   --          --     $ 0.13      $0.05

HOLDERS

         The  number of  stockholders  of  record  for the  common  stock of the
Company at the close of business on March 20, 1998, was 511, including brokerage
houses  holding  stock  for an  unknown  number  of  stockholders.  The  Company
estimates that there are  approximately  700 beneficial  owners of the Company's
common stock.
                                       4
<PAGE>

DIVIDENDS

         The Company's  present policy is to apply available  working capital to
expansion and acquisition; consequently, the Company has not previously declared
or paid any  dividends on its common stock and does not expect to pay  dividends
on its common stock within the foreseeable future.

ITEM 6. PLAN OF OPERATION

         The  Company  is  presently   concentrating  its  efforts  on  becoming
operational  by  licensing  or  otherwise  acquiring   technologically  advanced
state-of-the-art products which respond to the international market. The Company
is also exploring the possibility of acquiring other  technologies,  products or
businesses  compatible with its goal to become operational in shortest period of
time possible.

         The Company's  management team, which was re-organized on May 1996, has
been investigating and pursuing product and technology acquisition opportunities
compatible  within  corporate  strategies.  Although the Company  terminated its
agreement  dated  February  11,  1997,  to  acquire  all of the assets of Immune
Network  Research,  Ltd.  ("INR") it plans to continue to pursue other products,
industries, or companies for becoming an operational company.

         Based on the  litigation  relating to the Mehica GP120  System  license
agreement  (see  Item  3,  "Legal   Proceedings")   the  Company  suspended  its
development  efforts on the Mehica GP120 System  technology  and has written off
the unamortized license fee as a recision of the agreement.

         The Company plans to continue to aggressively pursue the acquisition of
other products and technology through licensing and/or acquiring businesses with
market ready products and/or  development stage technology with market potential
that is compatible with corporate strategies to become operational.

         To date, the Company's  operations have consisted primarily of pursuing
various product opportunities, assembling a management team and raising capital.
From the  Company's  inception  to December  31, 1997,  the  Company's  business
development costs have totaled approximately $3,414,787. These expenditures have
been funded  primarily with the proceeds from the private sales of the Company's
equity  securities  as well as with the issuance of its common stock in exchange
for services and assets.

                                       5
<PAGE>

         During the year ended  December 31,  1997,  the  Company's  development
stage  activities  resulted in a deficit in cash flow of  approximately  $6,327.
This deficit was primarily the result of the net operating loss of approximately
$674,887 offset by noncash charges totaling approximately $694,438. Additionally
the issue of Common  Regulation  144 stock  reduced the accrued  liabilities  of
approximately  $75,900. The Company's financing activities provided cash flow of
approximately  $50,000 during the year ended December 31, 1997, primarily as the
result of the private placement of the Company's common stock.

         The Company has raised  approximately  $1,330,000 of operating  capital
since  inception and plans to continue its efforts to raise  additional  capital
needed to fund  operating  expenses of the business  through  various  financing
methods  including  private  placements of its common  stock.  Funding of future
operations is dependent on  management's  ability to raise  additional  capital.
Failure by the  Company  to obtain  additional  financing  would have a material
adverse effect on the Company.

                                       6
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                       BIO FLUORESCENT TECHNOLOGIES, INC.
                          (A Development Stage Company)

                                 BALANCE SHEETS
                        December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
                                                December 31,  December 31,  December 31,
                                                   1997          1996          1995
                                                   ----          ----          ----
                         ASSETS
CURRENT ASSETS:
<S>                                            <C>           <C>           <C>        
Cash                                           $         0   $     6,327   $    18,832
Trade exchange receivable - barter (Note 2)         43,436        49,767        50,000
Media products and services receivable -
 current portion (Note 3)                          250,000       250,000       250,000
Prepaid expenses                                                                 1,875
                                               -----------   -----------   -----------
        Total current assets                       293,436       306,094       320,707

MEDIA PRODUCTS AND SERVICES - net of current
portion (Note 3)                                   250,000       250,000       250,000

LICENSE, net of accumulated amortization of
$85,000 (Note 4)                                                               935,000
                                               -----------   -----------   -----------
                                               $   543,436   $   556,094   $ 1,505,707
                                               ===========   ===========   ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable -
  Trade                                        $    69,125   $   158,823   $     8,437
  Related party (Note 6)                            40,919        27,090       157,542
Accrued expenses or bank overdraft                      47        55,056        27,563
                                               -----------   -----------   -----------
        Total Current liabilities                  110,091       240,969       183,542
                                               -----------   -----------   -----------
COMMITMENTS AND CONTINGENCIES (Notes 4 and 6)
STOCKHOLDERS' EQUITY (Note 5):

Common stock, $.001 par value, 8,333,334 
  shares authorized; 5,645,710 (1996) and
  3,790,750 (1995) issued and outstanding           22,145         5,646         3,791
Common stock to be issued (186,333 shares)                             9           186
Additional paid-in capital                       3,826,987     3,178,378     2,703,751
Stock subscription receivable                                   (128,000)
Deficit accumulated during the development
 stage                                          (3,415,787)   (2,740,900)   (1,385,563)
                                               -----------   -----------   -----------
        Total stockholders' equity                 433,345       315,125     1,322,165
                                               -----------   -----------   -----------
                                               $   543,436   $   556,094   $ 1,505,707
                                               ===========   ===========   ===========
</TABLE>
       The accompanying notes are an integral part of this balance sheet.

                                       7
<PAGE>
                       BIO FLUORESCENT TECHNOLOGIES, INC.
                          (A Development Stage Company)

                             STATEMENT OF OPERATIONS
            For the Years Ended December 31, 1997, 1996 and 1995 and
               For the Period From Inception of Development State
                    (February 15,1990 To December 31, 1997)
<TABLE>
<CAPTION>
                                                                               Cumulative
                                                                                from the
                                                                              Inception of
                                                                               Development
                                                                                 Stage
                                                                               February 15,
                                         1997          1996          1995          1990
                                         ----          ----          ----          ----
<S>                                  <C>           <C>           <C>           <C>        
NET SALES                            $     1,624   $        --   $        --   $     1,624

SELLING, GENERAL AND 
 ADMINISTRATIVE EXPENSES                 676,557     1,358,266     1,381,741     3,416,564
                                     -----------   -----------   -----------   -----------
       Loss from operations             (674,933)   (1,358,266)   (1,381,741)   (3,414,940)

INTEREST INCOME (NET)                         46         2,929        (2,822)          153
                                     -----------   -----------   -----------   -----------
LOSS BEFORE PROVISION FOR INCOME
 TAXES                                  (674,887)   (1,355,337)   (1,384,563)   (3,414,787)

PROVISION FOR INCOME TAXES                    --            --            --            --
                                     -----------   -----------   -----------   -----------
NET LOSS                             $  (674,887)  $(1,355,337)  $(1,384,563)  $(3,414,787)
                                     ===========   ===========   ===========   =========== 

LOSS PER COMMON SHARE (Note 1)       $     (0.12)  $     (0.27)  $     (1.72)
                                     ===========   ===========   =========== 
WEIGHTED AVERAGE NUMBER OF COMMON
 SHARES OUTSTANDING                    5,867,602     5,028,685     1,989,575
                                     ===========   ===========   ===========
</TABLE>

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

                                       8
<PAGE>
                       BIO FLUORESCENT TECHNOLOGIES, INC.
                          (A Development Stage Company)

                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
               For the Period From Inception of Development Stage
                    (February 15, 1990 to December 31, 1997)
<TABLE>
<CAPTION>
                                                                              Deficit   
                                           Common                           Accumulated
                          Common Stock     Stock   Additional Common Stock  During the 
                        ----------------   to Be    Paid-in   Subscription  Development
                        Shares    Amount   Issued   Capital    Receivable      State       Total
                        ------    ------   ------   -------    ----------      -----       -----
<S>                   <C>       <C>       <C>      <C>        <C>         <C>           <C>
Inception 2/15/90       333,333  $  1,000  $       $            $          $            $     1,000

Net loss                                                                        (1,000)      (1,000)
                     ----------   -------  -----   ----------   ---------  -----------  -----------
Balance 12/31/94        333,333     1,000                                       (1,000)

Sale of common stock,
net                   1,333,333     4,000              76,000                                80,000

Common stock issued   2,124,083     6,372           2,090,376                             2,096,748

Common shares
subscribed                                   559      529,421                               529,980

Net loss                                                                    (1,384,563)  (1,384,563)
                     ----------   -------  -----   ----------   ---------  -----------  -----------
Balance:12/31/95      3,790,749    11,372    559    2,695,797               (1,385,563)   1,322,165

Sale of common stock,
net                   1,001,834     3,006             794,791    (128,000)                  669,797

Common Stock issued,
net                   1,186,461     3,559   (550)     559,491                               562,500

Recision of license
agreement              (333,333)   (1,000)           (883,000)                             (884,000)

Reverse 1 for 3 split             (11,291)             11,291

Net loss                                                                   (1,355,337)   (1,355,337)
                     ----------   -------  -----   ----------   ---------  -----------  -----------
Balance:12/31/96      5,645,711     5,646      9    3,178,370    (128,000)  (2,740,900)     315,125

Common Stock issued
(net)                16,490,185    16,499     (9)     648,617     128,000                   793,107

Net loss                                                                     (674,887)     (674,887)
                     ----------   -------  -----   ----------   ---------  -----------  -----------
Balance: 12/31/97    22,135,896   $22,145  $ -0-   $3,826,987   $     -0-  $(3,415,787) $   433,345
                     ==========   =======  =====   ==========   =========  ===========  ===========
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                        9
<PAGE>

                       BIO FLUORESCENT TECHNOLOGIES, INC.
                         (A Development Stage Company)

                            STATEMENT OF CASH FLOWS
            For the Years Ended December 31, 1997, 1996 and 1995 and
               For the Period From Inception of Development Stage
                    (February 15, 1990 to December 31, 1997)
<TABLE>
<CAPTION>
                                                                                  From     
                                                                               inception to 
                                                                               December 31,
                                          1997         1996          1995          1997
                                          ----         ----          ----          ----
<S>                                    <C>         <C>           <C>           <C>         
Net loss                               $(674,887)  $(1,355,337)  $(1,384,563)  $(3,415,787)

Adjustments to reconcile net
  loss to net cash used in
  operating activities:
Write down of artwork                                                400,000       400,000
Amortization                                            51,000        85,000       136,000
Common stock issued for services         665,107       562,500       126,748     1,354,355
Change in assets and liabilities:
Decrease in trade account
  receivable                               6,331           233                       6,564
(Increase) decrease in prepaid
  expenses                                               1,875        (1,875)
Increase in checks issued in
  excess of cash in bank                      47                                        47
Increase (decrease) in accounts
  payable                               (130,925)       57,427       183,542       110,044
                                       ---------     ---------     ---------   -----------
Net cash used in operating
  activities                            (134,327)     (682,302)     (591,148)   (1,408,777)

Cash flows from financing activities:
Proceeds from issuance of common
  stock, (net)                           128,000       669,797       609,980     1,408,777
                                       ---------     ---------     ---------   -----------
Net increase(decrease) in cash            (6,327)      (12,505)       18,832           -0-

Cash, beginning of period                  6,327        18,832           -0-           -0-
                                       ---------     ---------     ---------   -----------
Cash, end of period                    $     -0-   $     6,327   $    18,832   $       -0-
                                       =========   ===========   ===========   =========== 
</TABLE>

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

                                       10
<PAGE>

                       BIO FLUORESCENT TECHNOLOGIES, INC.
                         (A Development Stage Company)

                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 1997

(1)  THE COMPANY AND ITS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     HISTORY AND REPORTING ENTITY

     Bio  Fluorescent  Technologies,  Inc. (the Company) is a development  stage
     company  that was  incorporated  under  the laws of the  state of Nevada in
     February  1990 as Partisan  Corporation.  On March 10, 1995,  the company's
     name was changed from Partisan Corporation to Bio Fluorescent Technologies,
     Inc. The Company was inactive  through February 1995 and prior to such time
     the Company's only  activities  consisted of the sale or transfer of shares
     of its common stock in private placements.

     DEVELOPMENT STAGE ACTIVITY AND MANAGEMENT'S PLANS

     The Company's  initial business plan was based on developing,  licensing or
     otherwise  acquiring   state-of-the-art  advanced  diagnostic  testing  and
     screening  technology  and  equipment  capable of early  detection of human
     immune system  disorders such as HIV-1,  HIV-2 and Hepatitis B. In February
     1995  the  Company  licensed  a  development  stage  diagnostic  technology
     designed to detect AIDS, described as the Mehica GP120 system.

     In July 1996 the  Company  filed a complaint  against  the  licensor of the
     technology.  The defendants filed an answer,  counter-claim and third party
     complaint  seeking  declaratory  relief in  respect of the  agreements  and
     damages. This litigation matter is more fully described in Note 4.

     Development  activities  were suspended and the Company has written off the
     unamortized  cost of the Mehica GP120 project as of December 31, 1996,  and
     is  treating  this write off as a  discontinued  research  and  development
     project.

     In May 1996 the Company  reorganized  its  management  team and revised its
     business  plan to  include  expansion  of the  Company's  core  market  and
     technology  application  for the screening and detection of a broader range
     of viral and infectious diseases.

     The Company is selecting and engaging the services of scientists  and other
     technical  advisors to assist in its search to acquire  infectious  disease
     technologies and other products or businesses compatible with the Company's
     primary goal of becoming operational as soon as possible.

     Since its management  reorganization  in May 1996,  the Company's  business
     development plan has been focused on a "growth by acquisition" strategy and
     the Company has been actively pursuing acquisition possibilities.

     The  Company's  agreement  dated  February 11, 1997,  to acquire all of the
     assets of Immune Network Research,  Ltd. ("INR") has since been terminated.
     The  Company  is  exploring  the  possibility  of  licensing  or  otherwise
     acquiring  from INR its  rights as  licensee  to an immune  system  disease
     treatment  technology currently in the development stage. As of the date of
     this filing no offer has been presented to INR by the Company. There can be
     no assurance that an offer, if presented, would be accepted by INR.

                                       11
<PAGE>

     The  Company  plans to continue  with its  efforts to license or  otherwise
     acquire  products,  technology or businesses  compatible with its corporate
     strategies.

     From the  Company's  inception  through  December 31, 1997,  the  Company's
     business  development costs have totaled  approximately  $3,425,000.  These
     expenditures  have been funded  primarily  with  proceeds  from the private
     sales of its equity  securities  as well as with the issuance of its common
     stock in exchange for services.

     The  Company  will  need  to  raise  additional   capital  to  satisfy  its
     obligations and to fund other operating expenses. The Company will continue
     its efforts to raise capital,  including  private  placements of its common
     stock. However, there is no assurance that such efforts will be successful.

     STOCK REVERSE SPLIT

     On December 2, 1996,  the Company made effective an one for three (1 for 3)
     reverse stock split, whereby for three shares of the Company's common stock
     was exchanged for one share of the Company's  common stock.  The amounts in
     the  respective  common  stock  accounts  were  divided  by  three  and the
     difference  adjusted to Additional Paid in Capital.  The December 31, 1995,
     year end balances were restated to reflect the effect of this reverse split
     as if it was in effect at that  date.  The  amount of this  adjustment  for
     1995's restatement was $7,954.  Without the restatement the adjustment made
     on December 2, 1996, was $11,291.

     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
     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.

     LOSS PER COMMON SHARE

     Loss per common  share is computed by dividing the net loss by the weighted
     average  number of common  shares  outstanding  during  the  period.  Fully
     diluted  loss per common  share is  considered  equal to  primary  loss per
     common share for all periods presented.

(2)  TRADE EXCHANGE RECEIVABLE - BARTER

     In August  1995,  the Company  issued  14,814  shares  (4,938  shares after
     reverse  split  effect) of its common stock in exchange  for $50,000  worth
     barter  credit on the ITEX Retail Trade  Exchange.  Management  is pursuing
     opportunities  to  utilize  the  barter  credit  for the cost of hotels and
     travel over the next year.

(3)  MEDIA PRODUCTS AND SERVICES RECEIVABLE

     In October 1995, the Company issued 200,000 shares  (66,666.67 shares after
     reverse split  effect) of its common stock in exchange for script  writing,
     music scoring, radio commercial production and radio advertising time to be
     received  in  the  future  valued  at  approximately  $500,000.  Management
     believes that they will be able to successfully  utilize the entire balance
     during 1998.
                                       12
<PAGE>

(4)  LEGAL PROCEEDINGS

     The Company had secured  worldwide  rights to manufacture,  market and sell
     the Mehica GP120  System in February  1995.  On July 19, 1996,  the Company
     filed a complaint in the United States  District  Court for the District of
     Maryland  (Civil Action No. CCB 96-2266)  against the licensor,  The Avriel
     Group and others ("TAG"),  seeking  declaratory  relief,  damages and other
     relief  in  respect  to  certain  agreements  relating  to the  rights to a
     proprietary  automated system for detection of the HIV virus and for use in
     mass screening of  individuals,  the Packaged  Antigen Kit or "PAK" and the
     Mehica GP120  System.  On July 30, 1996,  the  defendants  filed an answer,
     counter-claim  and third  part  complaint,  seeking  declaratory  relief in
     respect to the agreements and damages.

     The Company has made  attempts to resolve this matter  through a negotiated
     settlement and is cautiously  optimistic  that this dispute can be resolved
     without  further  extensive  litigation.  A settlement was reached when the
     court issued a settlement order on September 25, 1997. Both parties elected
     to not reopen the case within the 30 days following the Order. The case has
     been dismissed..

(5)  STOCKHOLDERS' EQUITY

     On December 2, 1996,  the Company  authorized a 3 for 1 reverse stock split
     of all the common stock. The stockholders'  equity and related earnings per
     share  amounts  for all of 1996 have been stated in shares  reflecting  the
     reverse split.  The 1995 shares issued and outstanding and related earnings
     per share have been restated to reflect the reverse  split for  comparative
     purposes.

(6)  RELATED PARTY TRANSACTIONS

     The Company paid a related party $497,388,  including $198,000 compensation
     for the acting  president  of the  Company,  and  $299,388  for  management
     services and expenses for the year ended December 31, 1997. At December 31,
     1997,  1996 and 1995,  the Company  owed  $40,919;  $27,090  and  $134,297,
     respectfully,   to  this  related  party  which  is  included  in  accounts
     payable-related party in the accompanying financial statements. The related
     company was one of the creditors to accept The Company's common  regulation
     144  stock in  exchange  for  accrued  liabilities  during  the year  ended
     December 31, 1997, in the amount of $390,848.

     Effective  May  1,  1996  the  Company  entered  into  an  chief  executive
     compensation agreement wherein a company controlled by the president of the
     Company  would bill and be  compensated  for the salary of the president of
     the Company.  This  compensation  amounted to $132,000.00 for the year 1996
     and common stock valued at $120,000.00 was exchanged for $120,000.00 of the
     billing.

(7)  INCOME TAXES

     The  Company  provides  for  income  taxes  under  Statement  of  Financial
     Accounting  Standards No. 109 (SFAS No. 109),  Accounting for Income Taxes.
     SFAS  No.  109  requires  the use of an asset  and  liability  approach  in
     accounting  for income  taxes.  Deferred  tax assets  and  liabilities  are
     recorded based on the differences  between the financial  statement and tax
     bases of assets  and  liabilities  and the tax rates in effect  when  these
     differences are expected to reverse.

                                       13
<PAGE>

(7)  INCOME TAXES - continued

     The  components  of deferred  taxes are as follows at December 31, 1996 and
     1995, respectfully:

                                            1997           1996          1995
                                            ----           ----          ----
     Tax effect of net operating loss
       carry forward                    $ 1,330,301    $ 1,069,660    $ 554,400
     Valuation allowance                 (1,330,301)    (1,069,660)    (554.500)
                                         ----------     ----------    ---------
                                        $        --    $        --    $      --
                                        ===========    ===========    =========

     SFAS No. 109 requires  the  reduction of deferred tax assets by a valuation
     allowance if, based on the weight of available evidence,  it is more likely
     than not that some or all of the  deferred tax assets will not be realized.
     In  management's  opinion,  there can be no assurance that the Company will
     generate  sufficient  taxable income in the future to fully utilize the net
     deferred  tax  asset  recorded  at  December  31,  1997,   1996  and  1995,
     respectfully;  therefore,  a valuation  allowance has been provided for the
     entire balance.

     Net  operating  loss  carry  forwards  totaled  approximately   $3,414,787;
     $2,729,000   and   $1,386,000   at  December  31,  1997,   1996  and  1995,
     respectfully.

(8)  STOCK COMPENSATION PLANS:

     On August 29, 1996, the Company adopted fixed and  performance  based stock
     compensation plans, which are described below. The Company accounts for the
     fair  value of its  grants  under  those  plans  in  accordance  with  FASB
     Statement 123,  Accounting for Stock Based  Compensation.  The compensation
     cost that has been charged  against  income for those plans was $50,000 for
     the year ended December 31, 1997.

     FIXED STOCK OPTION PLAN

     Under the 1996  incentive  Stock Option Plan, the Company may grant options
     to its  employees,  directors,  consultants  and advisors for up to 866,667
     shares of its $0.001 par value common stock.  The exercise  price for stock
     granted  pursuant to a  tax-qualified  option plan is to be greater than or
     equal to the market price of the Company's stock on the date of grant.  The
     exercise price of stock granted  pursuant to a  non-qualified  stock option
     plan is to be  greater  than or  equal  to 85% of the  market  price of the
     Company's stock on the date of grant. The maximum term for an option is ten
     years. Options are granted at the discretion of the board of directors.  No
     options were granted during the year ended December 31, 1997.

     The fair market value of the options  granted  during 1996 is considered to
     be zero. It is the opinion of  management  that the options are not capable
     of  valuation  due to the  inability  of the Company to  establish a viable
     business  operation at this point during the current  development stage and
     the  uncertainty  surrounding the likelihood that the Company will generate
     significant profits in the future.

                                       14
<PAGE>

     A summary of the status of the  Company's  fixed  stock  option  plan as of
     December  31,  1996 and  changes  during the year then  ended is  presented
     below:
                                                             Weighted
                                                             Average
                                                             Exercise
                                                Shares        Price
                                                ------        -----
     Outstanding at January 1, 1996                 --        $  --
     Granted                                   663,334         1.65
     Exercised                                      --           --
     Forfeited                                      --           --
                                               -------         ----
     Outstanding at December 31, 1996          663,334        $1.65
     Granted                                        --           --
     Exercised                                      --           --
     Forfeited                                 (16,667)        4.50
                                               -------         ----
     Outstanding at December 31, 1997          646,667        $1,57
                                               =======        =====

     The  following  table  summarized  information  about fixed  stock  options
     outstanding at December 31, 1997 and 1996:

                      Weighted Average                                Options
                     Options Outstanding   Remaining Contractual    exercisable
     Exercise Price       12/31/97                Life                12/31/97
     --------------  -------------------   ---------------------    -----------
        $1.34              388,333             2.99 years             388,333
        $1.80              241,668             0.67 years             241,668
        $3.75               16,666             3.33 years              16,666
                           -------                                    -------
                           646,667                                    646,667
                           =======                                    =======

                      Weighted Average                                Options 
                     Options Outstanding   Remaining Contractual    exercisable
     Exercise Price       12/31/96                Life                12/31/96
     --------------  -------------------   ---------------------    -----------
        $1.34              388,333             3.99 years             388,333
        $1.80              241,668             1.67 years             241,668
        $3.75               16,666             0.25 years              16,666
        $4.50               16,667             3.33 years              16,667
                           -------                                    -------
                           663,334                                    663,334
                           =======                                    =======

     PERFORMANCE BASED STOCK PLAN

     The Company grants selected  executives and other key individuals  deferred
     stock awards whose vesting is  contingent  upon the future  performance  of
     services  under terms and  conditions  specified by the board of directors.
     The number of shares  subject to grant  under this plan  together  with the
     number of shares  subject to option  under the fixed stock option under the
     fixed stock option plan cannot exceed 866,667 shares. The grant, which will
     completely  vest on August 29, 1997,  is valued at the fair market value of
     the stock on the date of the grant.

                                       15
<PAGE>

ITEM 8. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
        DISCLOSURE

         Effective March 18, 1997, the Company engaged J. Paul Kenote, CPA, P.C.
as its  independent  auditors  for the fiscal  year ended  December  31, 1996 to
replace the firm of Arthur  Andersen  LLP, who were  dismissed at the same time.
The decision to change accountants was approved by the Board of Directors of the
Company.

         The  reports  of  Arthur  Andersen  LLP  on  the  Company's   financial
statements  for the  fiscal  year ended  December  31,  1995 did not  contain an
adverse opinion or a disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope, or accounting principles.

         In connection with the audit of the Company's financial  statements for
the fiscal year ended  December  31, 1995 and the  subsequent  interim  periods,
there  were  no  disagreements  with  Arthur  Andersen  LLP  on any  matters  of
accounting principles or practices, financial statement disclosures, or auditing
scope and  procedures  which,  if not  resolved  to the  satisfaction  of Arthur
Andersen  LLP would have caused  Arthur  Andersen  LLP to make  reference of the
matter in their report.

         The prior two fiscal years, years ended December 31, 1994 and 1993 were
audited and  reported  on by Smith & Company.  The reports of Smith & Company on
the Company's financial  statements for the fiscal years ended December 31, 1994
and 1993 did not contain an adverse  opinion or a disclaimer of opinion and were
not  qualified  or  modified  as to  uncertainty,  audit  scope,  or  accounting
principles.

         In connection with the audits of the Company's financial statements for
each of the two  fiscal  years  ended  December  31,  1994  and  1993 and in the
subsequent  interim periods ending March 15, 1996,  there were no  disagreements
with  Smith & Company on any  matters of  accounting  principles  or  practices,
financial  statement  disclosures or auditing scope and procedures which, if not
resolved  to the  satisfaction  of Smith & Company  would  have  caused  Smith &
Company to make reference to the matter in their report.

         The Company has  authorized  its prior auditors to respond fully to any
inquires from their successors.

                                       16
<PAGE>
                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS AND EXECUTIVE OFFICERS.

         The  following  table sets forth the names,  ages and  positions of the
directors and executive  officers of the Company as of March 20, 1998. A summary
of the background and experience of each of these individuals is set forth after
the table.

     Name                Age              Position
     ----                ---              --------
Jan J. Olivier           56        President; Chief Executive
                                   Officer; Director

A. Richard Bullock       48        Secretary/Treasurer (Principal
                                   Financial and Accounting Officer);
                                   Director

Ray A. Triphahn          58        Vice President; Assistant
                                   Secretary; Director

         JAN J.  OLIVIER  has  been a  Director  and  the  President  and  Chief
Executive  Officer of the Company  since April 1996 and has served as a business
consultant to the Company since March 1995.  Since 1989 and 1993,  respectively,
Mr.  Olivier has owned Your Choice  International,  Inc. a marketing  consulting
company,  and Cactus  Consultants  International,  Inc., a financial  consulting
firm.  From April 1983 until July 1987, Mr. Olivier was the President of Olivier
Management Corp., a Nasdaq listed company that conducted  international merchant
banking activities and had offices in New York, Zurich,  Miami and Seattle.  Mr.
Olivier has over 30 years of national and international  business experience and
has served on the boards of directors of several companies.

         A. RICHARD BULLOCK has been a Director and the  Secretary/Treasurer  of
the  Company  since  February  1995.  In  addition  to his  responsibilities  as
Secretary/Treasurer  of  the  Company,  Mr.  Bullock  has  been  an  independent
management  consultant since 1979 with the Quidquida Management  Corporation and
has over ten years experience providing corporate and administrative services to
a wide variety of start-up and development  stage  companies.  He has five years
experience as an  independent  transportation  consultant  for both national and
international corporations and governments.

         RAY A. TRIPHAHN has been a Director,  the Vice  President and Assistant
Secretary  of the  Company  since  February  1995.  Mr.  Triphahn  is a  retired
businessman.  Prior to his  retirement,  Mr.  Triphahn held various offices with
entities engaged in various aspects of the construction industry.

MANAGEMENT CONSULTANTS

         The Company has retained John G. Charles to assist it with managing the
technical aspects of the Company's  medical product  acquisitions and technology
development  plan.  Mr.  Charles is a medical  technologist  who was  previously
employed by Providence Hospital in Seattle,  Washington where he was responsible
for testing  hematology,  virology and  microbiology.  His  experience  includes
seventeen years at the American  Optical  Corporation  with  responsibility  for
sales of technical products in the Pacific Northwest.  He also served as Western
Regional  Sales  Manager  for  the  Warner  Lambert  Division   responsible  for
microscopes,   microtome,   and  clinical  chemistry  systems.   His  management

                                       17
<PAGE>

responsibilities  with Warner  Lambert  Division  included sales and service for
eleven western states, including Washington and Alaska. For the past nine years,
Mr.  Charles  has  participated  in the  development  of early  stage  companies
specializing in marketing and exporting medical  instrumentation  and diagnostic
products  to the  laboratory  field,  including  clinical  chemistry  equipment,
automated semen analyzers and products for microbiology.

         The  Company  has also  retained  Coast  Northwest,  Inc.,  a  business
consulting  firm, to assist it in managing its general  business,  financial and
accounting matters and to lead the professional  search for qualified  personnel
to direct the Company's growth. The two principals of Coast Northwest, Inc. each
have over thirty years of business management experience,  including having held
senior positions with a "Big Six" international accounting firm.

         The Company has contracted with Cactus Consultants International,  Inc.
("CCI") for the management services of Mr. Olivier as President, Chief Executive
Officer and Manager of the Company.  It has also contracted the public relation,
investor relations, activities with CCI.

ITEM 10. EXECUTIVE COMPENSATION

         The following table summarizes all compensation paid to the persons who
served in the capacity of  president  during the three most  recently  completed
fiscal years. The Company did not have any executive officers whose total annual
salary and bonus  exceeded  $100,000 for services  rendered in all capacities to
the Company during the fiscal years ended December 31, 1997,  1996,  1995,  1994
and 1993 except for its president in 1996.

   Name and                   Fiscal                              Other Annual
Principal Position             year      Salary        Bonus     Compensation(1)
------------------             ----      ------        -----     ---------------
Jan J. Olivier,                1997    $198,000.00     $0.00           $0.00
President; Chief Executive     1996    $132,000.00     $0.00           $0.00
Officer Director (1)(2)

Clayton M. Hardman,            1995          $0.00     $0.00           $0.00
President; Chairman of the
Board (1)

Matthew M. Zuckermann,         1995          $0.00     $0.00           $0.00
President; Director (1)

Krista Castleton,              1995          $0.00     $0.00           $0.00
President; Director (1)        1994          $0.00     $0.00           $0.00
                               1993          $0.00     $0.00           $0.00
----------
(1)  Krista  Castleton  served as the President (The Chief Executive  Officer of
     the Company) from its inception  until her  resignation in February 1995 in
     connection  with the Company's  acquisition of the licensing  rights to the
     Mehica GP120 System.  In February 1995,  Matthew M.  Zuckermann  became the
     President  of the Company  and he  resigned  in  December of 1995.  Clayton
     M.Hardman  was  appointed  President  and Chairman of the Board in December
     1995. In April 1996, Mr. Hardman  resigned as President and Chairman of the
     Board and Mr.  Olivier  was  appointed  to the office of  President,  Chief
     Executive Officer and Director.
(2)  Compensation  for being  President and Chief  Executive  Officer by Mr. Jan
     Olivier was billed and paid to Cactus Consultants International, Inc.

                                       18
<PAGE>
COMPENSATION OF DIRECTORS

         Directors  do not  receive  compensation  for  service  on the Board of
Directors.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following  table sets forth the  beneficial  ownership of shares of
common  stock of the  Company on March 3, 1997 by each  director  and  executive
officer,  by all directors and executive  officers as a group and by all persons
known by the Company to be the beneficial  owners of more than five percent (5%)
of the Company's common stock.
                                                   Shares of Common Stock
                                                     Beneficially owned
                                                        Common Stock
                                              ----------------------------------
                                              Number of Shares       Percent of
Name and Address                              Beneficially Held      Ownership
----------------                              -----------------      ---------
A. Richard Bullock                                 675,000               3.%
19930 48 A Avenue
Langley, BC V3A 6Z7

Ray A. Triphahn                                    653,000               3.%
5200 South Lake Shore Drive #207
Tempe, Arizona 85283

Wendover Securities Corporation                  3,100,000              14.%
Charlotte house
Charlotte Street
P.O. Box N-8318
Nassau, Bahamas

Cactus Consultants International, Inc.          11,000,000              49.%
8360 East Via de Ventura, Bldg. L200
Scottsdale, AZ 85258

All directors and executive officers            12,328,000             55.7%
  as a group


                                       19
<PAGE>


ITEM 12, CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Cactus Consulting  International,  Inc. ("CCI") provided  substantially
all of the Company's corporate management and administrative services during the
years ended December 31, 1997,  1996 and 1995, for which the Company paid to CCI
$497,388; $404,395 and $211,561,  respectively.  The Company paid CCI 10,846,000
and 200,000  shares of Common Stock for  settlement  of $390,848 and $120,000 in
accumulated payables during 1997 and 1996, respectively.  The payments represent
payment for services  rendered and expenses advanced by CCI. The Company owed an
additional  $40,919;  $27,090 and $134,297 on December 31, 1997,  1996 and 1995,
respectively,  for services and or expenses advanced by CCI for the Company. The
Company's President, Jan J. Olivier, owns CCI.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     (a) EXHIBITS
          27 - Financial Data Schedule

     (b) REPORTS ON FORM 8-K
         There were two reports on Form 8-K filed  during the fiscal year ended
         December 31, 1997. February 26, 1997 and March 27, 1997.

     (c) The following financial statements are filed as part of this report as
         pages C-1 through C-11 following the signature page:
         Report of Independent Certified Public Accountants
         Balance Sheets
         Statements of Operations
         Statements of Changes in Stockholders' Equity
         Statements of cash Flows
         Notes to Financial Statements


                                       20
<PAGE>

                                   SIGNATURES

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

Date: March 30, 1998                 Bio Fluorescent Technologies, Inc.
                                     (Registrant)


                                     By: /s/ Jan J. Olivier
                                        ---------------------------------
                                             Jan J. Olivier
                                             President, Director

                                     By: /s/ Wynn J. Bott
                                        ---------------------------------
                                             Wynn J. Bott
                                             Controller



                                       21

<PAGE>
                          INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Shareholders of
Bio Fluorescent Technologies, Inc.
Scottsdale, Arizona

We have audited the accompanying balance sheets of Bio-Fluorescent Technologies,
Inc. (A  Development  Stage  Company)  as of December  31, 1997 and 1996 and the
related statements of operations, changes in stockholders' equity and cash flows
for the years then ended and for the period from  February 15, 1990  (inception)
to December 31, 1997. These financial  statements are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an  opinion  on the
financial  statements  based  on our  audits.  We did not  audit  the  financial
statements of BioFluorescent Technologies, Inc. for the period from inception to
December 31, 1995. Such  statements are included in the cumulative  amounts from
February 15, 1990  (inception)  to December 31, 1997 totals of the statements of
operations and cash flows and reflect total loss from operations and net loss of
41% of the cumulative  amount  totals.  Those  statements  were audited by other
auditors whose reports have been furnished to us and our opinion,  insofar as it
relates to the amounts  for the period from  February  15, 1990  (inception)  to
December 31, 1995 is based solely upon the reports of the other auditors.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits 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 statements presentation.
We believe that our audits provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Bio-Fluorescent  Technologies,
Inc. at December  31, 1997 and 1996 and the results of its  operations,  and its
cash flows for the years then ended and for the period  from  February  15, 1990
(inception)  to  December  31,  1997  in  conformity  with  generally   accepted
accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue as a going  concern.  The Company is in the  development
stage and has experienced  negative cash flow from operations  since  inception.
Furthermore,  the Company has not  obtained the  financing  required to fund its
planned  operations.  These factors raise  substantial doubt about the Company's
ability to continue as a going  concern.  Management's  plans in regard to these
matters are also described in Note 8. The accompanying  financial  statements do
not include any adjustments relating to the recoverability and classification of
recorded  asset amounts or the amount and  classification  of  liabilities  that
might result should the Company be unable to continue as a going concern.


J. Paul Kenote, CPA, P.C.
Portland, Oregon
February 15, 1998
                                      C-1
<PAGE>

                       BIO FLUORESCENT TECHNOLOGIES, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                                 BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1996

                                     ASSETS

                                                             1997         1996
                                                             ----         ----
CURRENT ASSETS:
  Cash                                                $        --   $     6,327
  Trade exchange receivable - barter (Note 2)              43,436        49,767
  Media products and services receivable -
    current portion (Note 3)                              500,000       250,000
                                                      -----------   -----------
                                                          543,436       306,094
                                                      -----------   -----------
OTHER ASSETS:
  Media products and services receivable -
    net of current portion (Note 3)                            --       250,000
                                                      -----------   ----------- 
                                                      $   543,436   $   556,094
                                                      ===========   ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Checks issued in excess of deposits in bank         $        47   $        --
  Accounts payable -
    Trade                                                  69,125       158,823
    Related party (Note 5)                                 40,919        27,090
  Accrued expenses                                             --        55,056
                                                      -----------   -----------
                                                          110,091       240,969
                                                      -----------   -----------
COMMITMENTS AND CONTINGENCIES (NOTES 5)
STOCKHOLDERS' EQUITY
  Common stock, $0.001 par value, 50,000,000
    shares authorized, issued and outstanding;
    22,135,896 in 1997 and 5,645,711 in 1996               22,136         5,646
  Common stock to be issued (9,363 shares in 1996)             --             9
  Additional paid-in capital                            3,826,996     3,178,370
  Common stock subscription receivable                         --      (128,000)
  Deficit accumulated during the development stage     (3,415,787)   (2,740,900)
                                                      -----------   -----------
                                                          433,345       315,125
                                                      -----------   -----------
                                                      $   543,436   $   556,094
                                                      ===========   ===========


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

                                      C-2
<PAGE>

                       BIO FLUORESCENT TECHNOLOGIES, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                             STATEMENT OF OPERATIONS
               FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 AND
     FOR THE PERIOD FROM FEBRUARY 15, 1990 (INCEPTION) TO DECEMBER 31, 1997

                                                                    Cumulative  
                                                                     from the   
                                                                   Inception of
                                                                    Development 
                                                                       Stage    
                                                                    February 15,
                                                                     1990) to   
                                                                    December 31,
                                            1997       1996            1997    
                                            ----       ----            ----    
SALES                                   $    1,624   $        --   $     1,624

SELLING, GENERAL AND ADMINISTRATIVE 
  EXPENSES                                 676,557     1,358,266     3,416,564
                                        ----------   -----------   -----------

LOSS FROM OPERATIONS                      (674,933)   (1,358,266)   (3,414,940)

INTEREST INCOME, NET                            46         2,929           153
                                        ----------   -----------   -----------

LOSS BEFORE PROVISION FOR INCOME TAXES    (674,887)   (1,355,337)   (3,414,787)

PROVISION FOR INCOME TAXES (NOTE 6)             --            --            --
                                        ----------   -----------   -----------

NET LOSS                                $ (674,887)  $(1,355,337)  $(3,414,787)
                                        ==========   ===========   ===========

LOSS PER COMMON SHARE (NOTE 1)          $    (0.12)  $     (0.27)  $     (1.72)
                                        ==========   ===========   ===========

WEIGHTED AVERAGE NUMBER OF COMMON
  SHARES OUTSTANDING                     5,867,602     5,028,685     1,989,575
                                        ==========   ===========   ===========






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


                                      C-3
<PAGE>
                       BIO FLUORESCENT TECHNOLOGIES, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                FOR THE PERIOD FROM FEBRUARY 15, 1990 (INCEPTION)
                              TO DECEMBER 31, 1997
<TABLE>
<CAPTION>
                                                                                Deficit
                                             Common                            Accumulated
                            Common Stock     Stock   Additional  Common Stock  During the
                       -------------------   to Be    Paid-in    Subscription  Development
                       Shares      Amount    Issued   Capital     Receivable     State       Total
                       ------      ------    ------   -------     ----------     -----       -----
<S>                 <C>          <C>           <C>   <C>         <C>         <C>           <C>       
Inception: 2/15/90      333,333   $ 1,000   $  --    $       --  $      --   $        --   $   1,000

Net loss                 (1,000)   (1,000)
                    -----------   -------   -----    ----------  ---------   -----------   ---------
Balance: 12/31/94       333,333     1,000                                         (1,000)

Sale of common
  stock, net          1,333,333     4,000               76,000                                80,000

Common stock
  issued              2,124,083     6,372            2,090,376                             2,096,748

Common shares
  subscribed                                  559      529,421                               529,980

Net loss                                                                     (1,384,563)  (1,384,563)
                    -----------   -------   -----    ---------  ---------   -----------   ----------
Balance: 12/31/95     3,790,749    11,372     559    2,695,797               (1,385,563)   1,322,165

Sale of common
  stock, net          1,001,834     3,006              794,791   (128,000)                   669,797

Common stock
  issued, net         1,186,461     3,559    (550)     559,491                               562,500

Recission of license
  agreement            (333,333)   (1,000)            (883,000)                             (884,000)

Reclass for reverse
  stock split                     (11,291)              11,291

Net loss                                                                     (1,355,337)  (1,355,337)
                    -----------   -------   -----    ---------  ---------   -----------   ----------
Balance: 12/31/96     5,645,711     5,646       9    3,178,370   (128,000)   (2,740,900)     315,125

Sale of common
  stock, net             37,454        37               49,963                                50,000

Common stock
  issued, net        16,452,731    16,453      (9)     598,663    128,000                    743,107

Net loss                                                                       (674,887)    (674,887)
                    -----------   -------   -----   ----------  ---------   -----------   ----------
Balance: 12/31/97    22,135,896   $22,136   $  --   $3,826,996  $      --   ($3,415,787)  $  433,345
                    ===========   =======   =====   ==========  =========   ===========   ==========
</TABLE>
   The accompanying notes are an integral part of these financial statements.
                                      C-4
<PAGE>

                       BIO FLUORESCENT TECHNOLOGIES, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                             STATEMENT OF CASH FLOWS
               FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 AND
               FOR THE PERIOD FROM FEBRUARY 15, 1990 (INCEPTION)
                              TO DECEMBER 31, 1997
<TABLE>
<CAPTION>
                                                                               Cumulative  
                                                                                from the   
                                                                              Inception of 
                                                                               Development 
                                                                                  Stage    
                                                                               February 15,
                                                                                1990) to   
                                                                               December 31,
                                                       1997          1996         1997     
                                                       ----          ----         ----     
<S>                                                  <C>         <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                             $(674,887)  $(1,355,337)  $(3,414,787)
Adjustments to reconcile net loss to net cash
 used in operating activities:
  Write down of artwork                                    --            --       400,000
  Write off of labor contract                          55,000            --        55,000
  Amortization                                             --        51,000       136,000
  Common stock issued for services                    633,107       562,500     1,322,355
  Change in assets and liabilities:
  (Increase) decrease in trade accounts receivable         --           233           233
  (Increase) decrease in prepaid expenses                6331          1875          6331
  Increase (decrease) in checks issued in excess
    of cash in bank                                        47            --            47
  Increase (decrease) in accounts payable             (75,925)       57,427       165,044
                                                    ---------   -----------   -----------

       Net cash used in operating activities          (56,327)     (682,302)   (1,329,777)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net            50,000       669,797     1,329,777
                                                    ---------   -----------   -----------
NET INCREASE (DECREASE) IN CASH                        (6,327)      (12,505)           --

CASH, BEGINNING OF PERIOD                               6,327        18,832            --
                                                    ---------   -----------   -----------
CASH, END OF PERIOD                                 $      --   $     6,327   $        --
                                                    =========   ===========   ===========

SUPPLEMENTARY SCHEDULE OF NONCASH TRANSACTIONS:
Conversion of indebtedness to 2,150,000 shares of
  common stock at $.02 per share                    $  43,000   $        --
Conversion of indebtedness to 13,802,731 shares of
  common stock at $.04 per share                    $ 552,109   $        --
Conversion of indebtedness to 500,000 shares of
  common stock at $.04 per share                    $  20,000   $        --
</TABLE>

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

                                      C-5
<PAGE>

                       BIO FLUORESCENT TECHNOLOGIES, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                         NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1997 AND 1996

NOTE 1 - THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     HISTORY AND REPORTING ENTITY

     Bio Fluorescent  Technologies,  Inc. ("the Company") is a development stage
     company  that  was  incorporated  under  the laws of the  state  of  Nevada
     February 15, 1990 as Partisan Corporation. On March 10, 1995, the Company's
     name was  changed to BIO  Fluorescent  Technologies,  Inc.  The Company was
     inactive  through  February 1995 and prior to such time the Company's  only
     activities  consisted of the sale or transfer of shares of its common stock
     in private placements.

     DEVELOPMENT STAGE ACTIVITY AND MANAGEMENT'S PLANS

     The Company's  initial business plan was based on developing,  licensing or
     otherwise  acquiring   state-of-the-art  advanced  diagnostic  testing  and
     screening  technology  and  equipment  capable of early  detection of human
     immune system  disorders such as HIV-1,  HIV-2 and Hepatitis B. In February
     1995,  the  Company  licensed a  development  stage  diagnostic  technology
     designed to detect AIDS, described as the Mehica GP 120 system.

     In July 1996,  the Company  filed a complaint  against the  licensor of the
     technology.  The defendant filed an answer,  counter-claim  and third party
     complaint  seeking  declaratory  relief in  respect of the  agreements  and
     damages. This litigation matter is more fully described in Note 4.

     Development  activities  were  suspended  and  the  Company  wrote-off  the
     unamortized  cost of the  Mehica GP 120  project  as of July 1,  1996.  The
     Company  treated  the  suspension  of  further  development  activity  as a
     recission of the license  agreement and reduced common stock and additional
     paid in capital for the unamortized cost of the license agreement.

     In May 1996, the Company  reorganized  its management  team and revised its
     business  plan to  include  expansion  of the  Company's  core  market  and
     technology  application  for the screening and detection of a broader range
     of viral and infectious diseases.

     The Company is selecting and engaging the services of scientists  and other
     technical  advisors to assist in its search to acquire  infectious  disease
     technologies  and other products or business  compatible with the Company's
     primary goal of becoming operational as soon as possible.

     Since its management  reorganization  in May 1996,  the Company's  business
     development plan has been focused on a "growth by acquisition" strategy and
     the Company has been actively pursuing acquisition possibilities.

     The  Company's  agreement  dated  February  11,  1997 to acquire all of the
     assets of Immune Network Research,  Ltd. ("INR") has since been terminated.
     The  Company  is  exploring  the  possibility  of  licensing  or  otherwise
     acquiring  from INR its  rights as  licensee  to an immune  system  disease
     treatment  technology currently in the development stage. As of the date of
     this report,  no offer has been presented to INR by the Company.  There can
     be no assurance that an offer, if presented, would be accepted by INR.

                                      C-6
<PAGE>

                       BIO FLUORESCENT TECHNOLOGIES, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                         NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1997 AND 1996

NOTE 1 - THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

     From the  Company's  inception  through  December 31, 1997,  the  Company's
     business  development costs have totaled  approximately  $3,400,000.  These
     expenditures  have been funded primarily with the proceeds from the private
     sales of equity  securities as well as with the issuance of common stock in
     exchange for services.

     The Company will need to raise additional  operating capital to satisfy its
     obligations and to fund other operating expenses. The Company will continue
     its  efforts to raise  capital to fund its  operations,  including  private
     placements of its common stock.  However,  there is no assurance  that such
     efforts will be successful.

     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 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.

     LOSS PER COMMON SHARE

     Loss per common  share is computed by dividing the net loss by the weighted
     average  number of common  shares  outstanding  during  the  period.  Fully
     diluted  loss per common  share is  considered  equal to  primary  loss per
     common share for all periods presented.

     CASH AND CASH EQUIVALENTS

     The company  considers  all highly  liquid  investments  with a maturity of
     three months or less at the date of acquisition to be cash equivalents.

NOTE 2 - TRADE EXCHANGE RECEIVABLE - BARTER:

     In August  1995,  the Company  issued  4,938  shares of its common stock in
     exchange  for  $50,000  worth of  barter  credit on the ITEX  Retail  Trade
     Exchange.  Management  believes  that  they  will be  able to  successfully
     utilize the barter credit for the cost of hotels and other travel expenses.

NOTE 3 - MEDIA PRODUCTS AND SERVICES RECEIVABLE:

     In October 1995,  the Company  issued 200,000 shares of its common stock in
     exchange for script writing, music scoring, radio commercial production and
     radio advertising time to be received in the future valued at approximately
     $500,000.  Management  believes  that  they  will be  able to  successfully
     utilize the entire balance during 1997 and 1998.

                                      C-7
<PAGE>

                       BIO FLUORESCENT TECHNOLOGIES, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                         NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1997 AND 1996

NOTE 4 - LEGAL PROCEEDINGS:

     The Company had secured  worldwide  rights to manufacture,  market and sell
     the Mehica GP 120 System in February  1995.  On July 19, 1996,  the Company
     filed a complaint in the United States  District  Court for the District of
     Maryland  (Civil Action No. CCB 96-2266)  against the licensor,  The Avriel
     Group,  and others ("TAG") seeking  declaratory  relief,  damages and other
     relief  in  respect  to  certain  agreements  relating  to the  rights to a
     proprietary  automated system for detection of the HIV virus and for use in
     mass screening of  individuals,  the Packaged  Antigen Kit or "PAK" and the
     Mehica  GP  120.  On  July  30,  1996,  the  defendants  filed  an  answer,
     counter-claim,  and third party complaint,  seeking  declaratory  relief in
     respect of the agreements and damages.

     A  settlement  order  issued by the court to dismiss  the case was  entered
     September 25, 1997.  Both parties elected to not reopen the case within the
     allowable 30 days following the order. The case has been dismissed.

NOTE 5 - RELATED PARTY TRANSACTIONS:

     The Company paid a related  party  $637,480  and  $407,809  for  management
     services and expenses for the years ended  December 31, 1997 and 1996.  The
     amount  paid  during  1997 and  1996  included  $198,000  and  $165,000  of
     compensation  paid on behalf of the Company's  CEO. As of December 31, 1997
     and 1996,  the Company  owed $40,919 and  $27,090,  respectively,  which is
     included in accounts  payable - related party in the  accompanying  balance
     sheets.

     Office  support  services  are provided to the Company for $7,000 per month
     under an agreement  with a related  party which  expires  April 1998.  Such
     services  include  office  personnel,  supplies and the  maintenance of the
     Company's  principal  executive  office  within the related  party's  1,000
     square foot rented office facility in Scottsdale, Arizona.

NOTE 6 - INCOME TAXES:

     The  Company  provides  for  income  taxes  under  Statement  of  Financial
     Accounting  Standards No. 109 (SFAS No. 109),  ACCOUNTING FOR INCOME TAXES.
     SFAS  No.  109  requires  the use of an asset  and  liability  approach  in
     accounting  for income  taxes.  Deferred  tax assets  and  liabilities  are
     recorded based on the differences  between the financial  statement and tax
     bases of assets  and  liabilities  and the tax rates in effect  when  these
     differences are expected to reverse.

     The  components  of deferred  taxes are as follows at December 31, 1997 and
     1996:
                                            1997                  1996
                                            ----                  ----
     Tax effect of net operating 
       loss carryforward                 $ 1,330,301           $ 1,069,660
     Valuation allowance                  (1,330,301)           (1,069,660)
                                         -----------           -----------
                                         $        --           $        --
                                         ===========           ===========

                                      C-8
<PAGE>

                       BIO FLUORESCENT TECHNOLOGIES, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                         NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1997 AND 1996

     SFAS No. 109 requires  the  reduction of deferred tax assets by a valuation
     allowance if, based on the weight of available evidence,  it is more likely
     than not that some or all of the  deferred tax assets will not be realized.
     In  management's  opinion,  there can be no assurance that the Company will
     generate  sufficient  taxable income in the future to fully utilize the net
     deferred tax assets  recorded at December 31, 1997 and 1996;  therefore,  a
     valuation allowance has been provided for the entire balance.

NOTE 7 - STOCK COMPENSATION PLANS:

     On August 29, 1996, the Company adopted fixed and  performance  based stock
     compensation plans, which are described below. The Company accounts for the
     fair  value of its  grants  under  those  plans  in  accordance  with  FASB
     Statement 123,  Accounting for Stock Based  Compensation.  The compensation
     cost that has been charged  against  income for these plans was $50,000 for
     the year ended December 31, 1997.

     FIXED STOCK OPTION PLAN

     Under the 1996  Incentive  Stock Option Plan, the Company may grant options
     to its  employees,  directors,  consultants  and advisors for up to 866,667
     shares of its $0.001 par value common stock.  The exercise  price for stock
     granted  pursuant to a  tax-qualified  option plan is to be greater than or
     equal to the market price of the Company's stock on the date of grant.  The
     exercise price of stock granted  pursuant to a  non-qualified  stock option
     plan is to be  greater  than or  equal  to 85% of the  market  price of the
     Company's stock on the date of grant. The maximum term for an option is ten
     years. Options are granted at the discretion of the board of directors.  No
     options were granted during the year ended December 31, 1997.

     The fair market value of the options  granted during 1996 was considered to
     be zero. It is the opinion of  management  that the options are not capable
     of valuation due to the lack of an active trading market.

                                      C-9
<PAGE>

                       BIO FLUORESCENT TECHNOLOGIES, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                         NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1997 AND 1996

     A summary of the status of the  Company's  fixed  stock  option  plan as of
     December  31,  1997 and 1996 and  changes  during  the year then  ended are
     presented below:

                                                           Weighted
                                                           Average
                                                           Exercise
                                             Shares         Price
                                             ------         -----
     Outstanding at January 1, 1996              --         $  --
     Granted                                663,334          1.65
     Exercised                                   --            --
     Forfeited                                   --            --
                                            -------         -----
     Outstanding at December 31, 1996       663,334          1.65
     Granted                                     --            --
     Exercised                                   --            --
     Forfeited                              (16,667)         4.50
                                            -------         -----
     Outstanding at December 31, 1997       646,667         $1.57
                                            =======         =====


     The  following  table  summarizes  information  about fixed  stock  options
     outstanding at December 31, 1997:

                                          Weighted Average
      Option                  Options        Remaining       Options 
      Grant     Exercise    Outstanding     Contractual    Exercisable
      Date       Price       12/31/97          Life          12/31/97
      ----       -----       --------          ----          --------
     8/29/96     $1.34        300,000      3.67 years        300,000
     8/29/96     $1.34         88,333       .67 years         88,333
     8/29/96     $1.80        133,334      3.67 years        133,334
     8/29/96     $1.80        108,333       .67 years        108,333
     8/29/96     $3.75         16,667      3.33 years         16,667
                              -------                        -------
                              646,667                        646,667
                              =======                        =======

     PERFORMANCE BASED STOCK PLAN

     The Company grants selected  executives and other key individuals  deferred
     stock awards whose vesting is  contingent  upon the future  performance  of
     services  under terms and  conditions  specified by the board of directors.
     The number of shares  subject to grant  under this plan  together  with the
     number of shares subject to option under the fixed stock option plan cannot
     exceed 866,667.  The grant,  which completely vested on August 29, 1997, is
     valued at the fair market value of the stock on the date of grant.

                                      C-10
<PAGE>

                       BIO FLUORESCENT TECHNOLOGIES, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                         NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1997 AND 1996

NOTE 8 - CONTINUED OPERATIONS:

     The accompanying  financial statements have been prepared assuming that the
     Company  will  continue as a going  concern.  The Company is a  development
     stage company as defined in Financial  Accounting Standards Board Statement
     No. 7 (FASB 7). It is devoting  substantially  all of its effort to raising
     capital  and  identifying  a business  opportunity  or assets to acquire in
     order  to  generate  significant  operations.  It is not  certain  that the
     Company will locate a profitable business opportunity or significant assets
     or be able  to  obtain  the  financing  required  to  fund  future  planned
     operations or retain  sufficient  management  expertise to cintinue  future
     planned business  operations.  These factors raise  substantial doubt about
     the  company's  ability  to  continue  as a going  concern.  The  financial
     statements do not include any  adjustments  relating to the  recoverability
     and   classification   of  assets  carrying   amounts  or  the  amount  and
     classification  of  liabilities  that might  result  should the  Company be
     unable to continue as a going concern.

NOTE 9 - SUBSEQUENT EVENTS:

     To  facilitate  the  sale  of the  stock  of  the  Company  and to  satisfy
     outstanding  corporate  debt,  the board of  directors  on January 17, 1998
     voted to reverse  split the  outstanding  shares of all common stock on a 1
     for 100 basis.

     On February 4, 1998,  Management authorized the issuance of up to 5,000,000
     shares of common stock at the price of $.01 per share for the  satisfaction
     of outstanding accounts payable.

     On February 13, 1998,  Management  authorized the registration of 3,000,000
     shares of common  stock at $.001 par value  issuable in  connection  with a
     stock option plan to be initiated during the coming year.

                                      C-11