SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
--------------------------------------------------------------------------------

                                   FORM 10-KSB

          [X]  Annual report under Section 13 or 15(d) of the Securities
               Exchange Act of 1934

                   FOR THE FISCAL YEAR ENDED OCTOBER 31, 1997

                                       OR

          [ ]  Transition report under Section 13 or 15(d) of the Securities
               Exchange Act of 1934

                         Commission File Number: 0-21394
                       DEVELOPED TECHNOLOGY RESOURCE, INC.

        MINNESOTA                                        41-1713474
   State of Incorporation                   I.R.S. Employer Identification No.

                         7300 METRO BOULEVARD, SUITE 550
                             EDINA, MINNESOTA 55439
                      Address of Principal Executive Office

                                 (612) 820-0022
                            Issuer's Telephone Number

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

      Securities registered pursuant to Section 12(g) of the Exchange Act:
                     COMMON STOCK, $0.01 PAR VALUE PER SHARE

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

Check if no disclosure of delinquent filers pursuant to Item 405 of Regulation
S-B contained in this form, and no disclosure will be contained, to the best of
the registrant's knowledge, in the definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB { }

Issuer's revenues for its most recent fiscal year:  $3,310,043

As of March 6, 1998, 805,820 shares of the Registrant's Common Stock were
outstanding. The aggregate market value of the Common Stock held by
non-affiliates of the registrant on such date, based upon the closing bid price
of the Common Stock as reported by the OTC Bulletin Board on March 6, 1998 was
$2,140,459. For purposes of this computation, affiliates of the registrant are
deemed only to be the registrant's executive officers and directors. See Item
11.

                       DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Proxy Statement for its April 14, 1998 Annual Meeting
are incorporated by reference in Part III.


<PAGE>


                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

         Developed Technology Resource, Inc. (the Company or DTR) was
incorporated on November 13, 1991 in the State of Minnesota to locate
potentially viable technologies in the former Soviet Union (fSU) for transfer
and sale to companies in the West. During the first two years of operations, the
Company experienced limited success in technology transfer and shifted its focus
to the sale and distribution of aviation security equipment in the fSU. In 1995,
the Company formed a joint venture called FoodMaster Corporation (hereinafter
FoodMaster) with Ak-Bulak to re-open the dairy in Almaty, Kazakhstan to produce
and sell yogurt and other dairy products.

         During the first quarter of 1996, the Company sold its aviation
security sales and service business to Gate Technologies for $810,000 which
includes reimbursement of expenses of $45,000. This transaction is more fully
described in Item 6, "Discontinued Operations." The financial statements and
related information reflect the sale of this business as discontinued
operations. Additionally, overhead was reduced to the level necessary to
effectively support continuing operations.

         After the sale of the aviation security business, the Company focused
its attention almost exclusively on development of the dairy business. Effective
August 1996, the Company obtained an option to purchase 80% of Ak-Bulak, an
inactive company which owned the other 50% of the FoodMaster joint venture. This
purchase of 80% of Ak-Bulak would give DTR an additional 40% ownership of
FoodMaster. In January 1997, FoodMaster formed a joint venture in Akmola, the
new capital of Kazakhstan, and began production at this location in March 1997.

         In March 1997, DTR formed a limited liability company called FoodMaster
International L.L.C. (FMI) with Agribusiness Partners International L.L.C. and
affiliates (API) to expand the dairy business in Kazakhstan and elsewhere in the
fSU. DTR contributed its ownership interest in FoodMaster and API agreed to
contribute a total of $6 million in cash, of which $3.245 million was
contributed as of October 31, 1997. DTR owns 40% of FMI and has a right to earn
a greater ownership interest of FMI by achieving certain defined performance
targets based on returns to API. DTR manages the day-to-day operations of FMI
under a management contract.

         FMI currently owns 90% of FoodMaster and 73.8% of a dairy in Hincesti,
Moldova. In December 1997, FMI received the right, by shareholder approval to
obtain at least 50% of the shares of a dairy located in Uman, Ukraine.

         In November 1997, DTR's Board of Directors voted to establish a
wholly-owned subsidiary company called SXD, Inc. with a contribution of $800,000
consisting primarily of cash and receivables. SXD will own and operate the
non-dairy portion of DTR's business, which includes the x-ray tube distribution
business, ownership interests in the coating technology business of Phygen,
Inc., and the cancer detection business of Armed.

ONGOING BUSINESS STRATEGY

         The Company's strategy is to expand its food business both by acquiring
additional dairies for FMI and selling additional products, including but not
limited, to dairy products. Standard dairy products 


<PAGE>

will be used to enter new markets. FMI plans to increase the profitability of
the dairy operations through the introduction of additional value added
products.

BUSINESS OPERATIONS

DAIRY AND FOOD PROCESSING

         DTR manages all of the dairy operations which are owned by FMI. These
dairy operations manufacture and sell a variety of different dairy products,
including but not limited to kefir, yogurt, cottage cheese, ice cream, ice pops,
and sour cream.

         From November 1996 through February 1997, FoodMaster sales, which are
included in the statement of operations for the year ended October 31, 1997,
were $1,774,870. After February 1997, FoodMaster's income and expenses were no
longer reported on a consolidated basis with DTR due to the transfer of
FoodMaster's dairy operations to FMI. Since March 1997, FoodMaster's income and
expenses are consolidated in the financial statements of FMI, and DTR recognizes
40% of FMI's income or loss using the equity method of accounting. FoodMaster
recorded sales of $3,393,705 for the twelve months ended October 31, 1996.

X-RAY TUBES

         The Company continues to distribute x-ray tubes under an exclusive
distribution agreement with Svetlana-Rentgen ("Svetlana"), a company located in
the fSU. Revenues from the sale of x-ray tubes accounted for 8% and 5% of DTR's
total revenues in fiscal 1997 and 1996, respectively.

FOOD PACKAGING EQUIPMENT

         In November 1994, the Company signed an International Distribution
Agreement with NiMCO Corporation, of Crystal Lake, Illinois, granting the
Company exclusive rights to sell certain NiMCO products in most areas of the
fSU. From June 1995 to December 1996, the Company had a sub-distribution
agreement with Professional Packaging, Inc. (ProPak), under which the Company
received commissions on sales made by ProPak. Through this sub-distribution
agreement, DTR sold eight NiMCO packaging machines, which accounted for 16% of
DTR's revenues in fiscal 1996. The exclusive agreement with NiMCO and the
distribution agreement with ProPak expired as of December 31, 1996. DTR
continues to distribute NiMCO packaging machines on a non-exclusive basis. Sales
from these machines accounted for 13% of DTR's fiscal 1997 revenues.

COMPETITION

DAIRY AND FOOD PROCESSING. These operations compete with several local
companies, as well as foreign importers of products. However, the Company
believes that its products are superior to any other local competitors and it is
price competitive with the current imports. Currently, the Company cannot
measure its market share.

X-RAY TUBES. There are several companies that manufacture and sell x-ray tubes
in direct competition to DTR. At present, the Company does not have a measurable
market share.

FOOD PACKAGING EQUIPMENT SALES. Manufacturers producing competing equipment of
similar performance to the NiMCO line of equipment include Tetra-Laval of
Sweden, Elo-Pak of Norway, International Paper of the United States, Pastu-Pack
of the UK, and Galdi of Italy. Some of these 


<PAGE>

companies have been selling equipment in the fSU more than 20 years. The Company
does not currently have a measurable market share.

PRINCIPAL SUPPLIERS

DAIRY AND FOOD PROCESSING. Suppliers to the dairy operations consist of numerous
dairy farmers located in the vicinity of the dairies. In addition, the Company
receives packaging supplies from many suppliers throughout Europe and the United
States.

X-RAY TUBES. Svetlana Rentgen, based in the fSU, is the exclusive supplier of
tubes to DTR.

FOOD PACKAGING EQUIPMENT. NiMCO, based in Crystal Lake, Illinois, is the sole
supplier of food packaging equipment to the Company.

MAJOR CUSTOMERS

         For the fiscal years ended October 31, 1997 and 1996, the Company
recorded net sales of $2,467,790 and $4,466,463, respectively. The Company had
one customer that made up more than 10% of its sales in fiscal 1997. S.J.
Agro-Leasing accounted for 12.9% of the Company's net sales in fiscal 1997
through its purchases of food packaging equipment. In fiscal 1996, the Company
had no one customer that accounted for more than 10% of its sales.

GOVERNMENTAL REGULATIONS

         The Company's principal revenue-generating business activity in fiscal
1997 and 1996 was the manufacturing and selling of dairy products in the fSU.
The governmental, political, social, and legal structures within countries of
the fSU are evolving. In general, business must comply with decrees, laws, and
instructions issued from a multitude of government bodies at the national and
local levels.

         The government regulations that most affect the Company are in the
areas of taxation, currency and customs regulation, business registration, and
labor laws. The Company attempts to fully comply with the laws in all the
countries of the fSU in which business is conducted, and as necessary, may seek
legal counsel in the United States or from local counsel in the applicable fSU
country.

EMPLOYEES

         As of March 6, 1998, the Company has three full-time employees in its
offices in Edina, Minnesota; two full-time employees in Almaty, Kazakhstan; two
full-time employees in Hincesti, Moldova; and one full-time employee in Uman,
Ukraine. All of the foreign based employees are responsible for managing the
dairy operations of FMI. The Company is not a party to any collective bargaining
agreements and it considers its employee relations to be satisfactory.


ITEM 2.  DESCRIPTION OF PROPERTY

         During fiscal 1997, the Company moved its Corporate Headquarters in
Minnentonka, Minnesota to Edina, Minnesota. This move allowed the Company to
reduce its space from 2,139 to 1,009 square feet and its monthly base rent from
approximately $2,900 to $1,500. The lease has a term of 60 months and expires on
April 30, 2002.


<PAGE>

ITEM 3.  LEGAL PROCEEDINGS

         In 1996, the Company filed suit against a former officer for breach of
contract. The employee filed a counterclaim for breach of the severance
agreement. In January 1997, the lawsuit was settled with the former officer
relinquishing 48,190 shares of the Company's Common Stock to satisfy a $29,035
receivable. DTR has no contingent future liability.

         In 1996, a former employee filed a claim with the Minnesota Department
of Human Rights and concurrently with the Equal Employment Opportunity
Commission (EEOC), charging the Company with age and national origin
discrimination. In 1997, the Minnesota Department of Human Rights denied the
claim. No further action has been taken by the former employee since the
Department's decision.

         In the opinion of management, there are no material legal proceedings
pending or threatened against the Company as of October 31, 1997 or as of the
date of filing of this Form 10-KSB.


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

         No matters were submitted to a vote of the shareholders during the
fourth quarter ended October 31, 1997.


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Company's Common Stock was traded on the National Association of
Securities Dealer Automated Quotation System (NASDAQ) from April 23, 1993 until
November 3, 1995, when the Company was de-listed as a result of noncompliance
with minimum per-share price requirements. After a three for one reverse split
in December 1995, the Company was re-listed. In the first quarter of 1996, the
Company fell below the listing requirements and was again de-listed. Since then,
the Company's Common Stock has been quoted on the OTC Bulletin Board under the
symbol of DEVT.

         The following table sets forth the high and low daily average between
the bid and sales prices for each quarter as reported on the NASDAQ or the OTC
Bulletin Board during the fiscal years ended October 31, 1997 and 1996.

                                          Average Price
         FISCAL 1997              Low                     High
         -----------              ---                     ----
         First Quarter         $    7/8                 $ 1 17/32
         Second Quarter           1                       1 15/16
         Third Quarter            1 3/16                  1 31/32
         Fourth Quarter           1 1/8                   2

         FISCAL 1996
         -----------
         First Quarter          $   3/4                 $ 1 1/8
         Second Quarter             7/8                   1 1/4
         Third Quarter              7/8                   1 1/8
         Fourth Quarter             7/8                   1/1/2



<PAGE>


         As of March 6, 1998, the Company had 76 shareholders of record of its
Common Stock. The Company estimates there are 660 beneficial owners of its
Common Stock.

         The transfer agent for the Company's Common Stock is Norwest Bank
Minnesota, N.A., 161 North Concord Exchange, South St. Paul, Minnesota,
55075-0738, telephone: (800) 468-9716 or (612) 450-4058.

         The Company has never declared or paid any dividends on its Common
Stock. The Board of Directors presently intends to retain all earnings, if any,
for use in the Company's business in the foreseeable future. Any future
determination as to declaration and payment of dividends will be made at the
discretion of the Board of Directors.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         Statements other than current or historical information included in
this Management's Discussion and Analysis and elsewhere in this Form 10-KSB, in
future filings by Developed Technology Resource, Inc. (the Company or DTR) with
the Securities and Exchange Commission and in DTR's press releases and oral
statements made with the approval of authorized executive officers, should be
considered "forward-looking statements" made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical earnings and those presently
anticipated or projected. DTR wishes to caution the reader not to place undue
reliance on any such forward-looking statements.

         On March 3, 1997, DTR and API established the FMI joint venture to
acquire and operate dairies in the former Soviet Union. DTR contributed to FMI
its 50% ownership in FoodMaster, the Ak-Bulak option and its opportunities for a
future acquisition of a diary in Moldova. API agreed to fund $2.945 million to
further develop the dairy operations in Kazakhstan and Moldova and to provide an
additional $3.055 million over two years to expand FMI. By October 31, 1997, API
contributed $3.245 million of its $6 million commitment to FMI. Under the
agreement, API currently owns 60% of FMI. DTR owns 40% of FMI. However, DTR has
a right to earn a greater ownership interest of FMI by achieving certain defined
performance targets based on returns to API. Effective March 1997, DTR records
its proportionate share of the net income or loss of FMI in the statement of
operations as equity in earnings of FMI joint venture under the equity method of
accounting.

         DTR also entered into a management agreement with FMI, whereby DTR
manages the day to day operations of FMI and the dairy operations owned by FMI,
and pursues future dairy acquisitions for FMI for a management fee. The Company
recorded management fee income of $802,492 from March 1997 to October 31, 1997
in accordance with its management agreement with FMI.

         Fiscal 1996 revenues and operating expenses have been adjusted to
eliminate the sales and operating expenses of discontinued operations related to
the aviation security system and service divisions which were sold in the first
quarter of 1996.

RESULTS OF OPERATIONS

REVENUES

         The Company generated total revenues of $3,310,043 in fiscal 1997,
compared to $4,616,361 in fiscal 1996. This 28.3% decrease in revenues is the
result of a 44.7% decrease in sales primarily due to 


<PAGE>

DTR's consolidating only four months of FoodMaster revenue in 1997, compared to
twelve months in 1996 as a result of the transfer discussed above. The decrease
in sales was offset by the receipt of management fee revenue of $802,492 from
FMI for eight months of fiscal 1997.

         Sales for fiscal 1997 and 1996 totaled $2,467,790 and $4,466,463,
respectively. Sales resulted from four areas within DTR - dairy operations of
FoodMaster, equipment, x-ray tubes and communication services. FoodMaster sales
from November 1996 through February 1997 were $1,774,870 or 71.9% of DTR's total
sales for the year ended October 31, 1997. After February 1997, FoodMaster's
income and expenses were no longer reported on a consolidated basis with DTR due
to the transfer of FoodMaster to FMI. Since March 1997, FoodMaster's income and
expenses are consolidated in the financial statements of FMI, and DTR recognizes
40% of FMI's income or loss as equity in earnings of FMI joint venture in DTR's
Statements of Operations. FoodMaster sales of $3,393,705 made up 76% of DTR's
fiscal 1996 sales.

         Sales of food packaging equipment were $428,890 (17.4%) and $728,800
(16.3%) of total sales in fiscal 1997 and 1996, respectively. This $299,910
decrease in sales revenue is the result of DTR's shift in focus to its dairy
operations in the fSU. Sales of x-ray tubes increased slightly to $264,030 in
fiscal 1997 from $243,860 in fiscal 1996. In fiscal 1996, DTR also had $100,097
in sales of copy centers, communication services and other miscellaneous
services, which the Company discontinued in fiscal 1996 due to the shift in
focus mentioned above.

COST OF SALES

         Cost of sales for fiscal 1997 was $1,398,449, compared to $3,434,683
for the same period last year. The gross profit percentage on sales for fiscal
1997 was 43.3% compared to 23.1% for fiscal 1996. Cost of sales reflects the
cost of manufacturing the dairy products in Kazakhstan for the first four months
of fiscal 1997 and twelve months of fiscal 1996 as noted above, and to a lesser
extent, the cost of purchasing food packaging equipment, x-ray tubes and
communication services.

         Gross profit on dairy sales was $902,933 and $925,545 in fiscal 1997
and 1996, respectively. Gross profit on equipment sales of $130,823 or 30.5% in
fiscal 1997 also increased from gross profit of $73,137 or 10% in fiscal 1996.
Although sales of equipment was down due to the shift in DTR's focus, the gross
profit has improved due to sales to fewer but higher margin customers and
improved pricing from DTR's supplier. Gross profit on x-ray tubes decreased
slightly to $35,585 or 13.5% in fiscal 1997 compared to $41,400 or 17.0% in
fiscal 1996 due to sales price reductions on x-ray tubes.

SELLING, GENERAL AND ADMINISTRATIVE

         Selling, general and administrative expenses for fiscal 1997 were
$1,382,334 compared to $1,104,187 for 1996. FoodMaster comprised $515,491 and
$524,355 of the expenses in fiscal 1997 and 1996, respectively. The increase in
the remaining SG&A of approximately $287,000 is the result of DTR hiring
additional employees and extensive traveling in the management of its dairy
operations. Any dairy related expenses after February 1997 were reimbursed 100%
through the management fees billed to FMI.

DISCONTINUED OPERATIONS

         Effective December 31, 1995, DTR entered into an agreement to sell
certain assets and the rights to its airport security equipment in the fSU to
Gate Technologies, Inc., a United Kingdom company owned by a former DTR
employee. DTR transferred assets, inventory, customer lists, promotional
materials, and other items with a net book value on January 31, 1996 of
$143,293. In exchange for these items, DTR received a cash payment of $45,000 to
reimburse DTR for expenses related to this business during the first quarter of
fiscal 1996 and a note receivable totaling $765,000 payable over 30 months. A
portion of these 


<PAGE>

payments is personally guaranteed by the former employee, and is collateralized
by 16,430 shares of DTR's common stock owned by the former employee. Additional
contingent payments may also be received based on future performance. DTR
retained the right to pursue airport security management contracts.

         Due to the inherent risks associated with operating in the fSU,
including credit risk, the gain on this sale has been deferred and is being
recognized as payments are received. DTR received total payments of $200,000 and
$170,000 during fiscal 1997 and 1996, respectively. As a result, DTR recorded a
gain (loss) on discontinued operations of $200,000 and ($30,166) in fiscal 1997
and 1996, respectively.

         In August 1997, the Board of Directors approved a revision in the sale
agreement that increased the balance due to DTR by $40,000 representing interest
on the outstanding balance. The increase in the receivable balance was accounted
for as an increase in deferred revenues. In addition, the payment terms were
revised to require two payments in 1998 with the final payment due on January 1,
1999.

LIQUIDITY AND CAPITAL RESOURCES

OPERATING ACTIVITIES

         DTR increased its cash received from operating activities to $488,156
in fiscal 1997 due to improvements in its gross profit margins. In addition, a
majority of the operating expenses from March 1997 to October 1997 were
reimbursed in accordance with the management agreement between DTR and FMI. In
fiscal 1996, DTR used net cash of $277,042 primarily to pay down its debt from
vendors and to fulfill customer orders.

INVESTING ACTIVITIES

DTR used $803,424 and $454,502 of cash for investing activities largely to
support its FoodMaster and FMI joint ventures during fiscal 1997 and to support
its FoodMaster joint venture in 1996, respectively. Most of the 1997
expenditures will be reimbursed by the FMI joint venture in the future as FMI
improves its cash flows.

FINANCING ACTIVITIES

         DTR's FoodMaster operations obtained $70,910 in bank financing during
fiscal 1996 and began to make principal payments on this note in fiscal 1997.
FoodMaster made total principal payments of $8,900 on its bank note payable
during the period from November 1996 to February 1997. After this period, the
FoodMaster cash flows were consolidated with FMI per the transfer discussed
above.

         Based on current projections, the Company believes there will be
sufficient working capital and liquidity to fund its current operations through
fiscal 1998. In November 1997, DTR's Board of Directors voted to establish a
wholly-owned subsidiary company called SXD, Inc. with a contribution of $800,000
consisting primarily of cash and receivables. SXD will own and operate the
non-dairy portion of DTR's business, which includes the x-ray tube distribution
business, ownership interests in the coating technology business of Phygen,
Inc., and the cancer detection business of Armed.


<PAGE>


ITEM 7.  FINANCIAL STATEMENTS - DEVELOPED TECHNOLOGY RESOURCE, INC.

                          INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders 
DEVELOPED TECHNOLOGY RESOURCE, INC.


We have audited the accompanying balance sheet of Developed Technology Resource,
Inc. as of October 31, 1997 and the related statements of operations,
shareholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the 1997 financial statements referred to above present fairly,
in all material respects, the financial position of Developed Technology
Resource, Inc. as of October 31, 1997 and the results of its operations and its
cash flows for the year then ended, in conformity with generally accepted
accounting principles.



/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
March 20, 1998




<PAGE>


                          INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Developed Technology Resource, Inc.
Edina, Minnesota

We have audited the accompanying statements of operations, shareholders' equity,
and cash flows of DEVELOPED TECHNOLOGY RESOURCE, INC. for the year ended October
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the 1996 financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of DEVELOPED
TECHNOLOGY RESOURCE, INC. for the year ended October 31, 1996 in conformity with
generally accepted accounting principles.



                                   /s/  LURIE, BESIKOF, LAPIDUS & CO., LLP
Minneapolis, Minnesota
January 2, 1997

<PAGE>




                       DEVELOPED TECHNOLOGY RESOURCE, INC.
                                  BALANCE SHEET
                                OCTOBER 31, 1997

                                     ASSETS
Current Assets:
         Cash and cash equivalents                             $   311,441
         Receivables:
              Trade, net of allowance of $10,508                    97,939
              Sale of discontinued operations                      440,000
              FoodMaster International L.L.C. (FMI)                579,582
              Other                                                    714
         Prepaid and other current assets                           46,046
                                                               -----------
              Total current assets                               1,475,722

Furniture and Equipment, net                                        45,466

Investment in FMI                                                  788,785

Receivable from Sale of Discontinued Operations                     40,000
                                                               -----------

                                                               $ 2,349,973
                                                               ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
         Accounts payable                                      $   100,269
         Accrued liabilities                                       124,838
         Deferred gain short-term                                  426,590
                                                               -----------
              Total current liabilities                            651,697

Non-current Deferred Gain                                           80,675

Shareholders' Equity:
         Undesignated stock, $.01 par value, 1,666,667
              shares authorized, no shares issued or
              outstanding                                             --
         Common stock, $.01 par value, 3,333,334
              shares authorized, 790,820 shares issued
              and outstanding                                        7,908
         Additional paid-in capital                              5,319,298
         Accumulated deficit                                    (3,709,605)
                                                               -----------
              Total shareholders' equity                         1,617,601
                                                               -----------

                                                               $ 2,349,973
                                                               ===========







               See accompanying notes to the financial statements.


<PAGE>


                       DEVELOPED TECHNOLOGY RESOURCE, INC.
                            STATEMENTS OF OPERATIONS
                      YEARS ENDED OCTOBER 31, 1997 AND 1996

                                                    1997             1996
                                                 -----------      -----------
Revenues:
     Sales                                       $ 2,467,790      $ 4,466,463
     Management fees from FMI joint venture          802,492             --   
     Commissions and other income                     39,761          149,898
                                                 -----------      -----------
                                                   3,310,043        4,616,361
                                                 -----------      -----------
Cost and expenses:
     Cost of sales                                 1,398,449        3,434,683
     Selling, general and administrative           1,382,334        1,104,187
                                                 -----------      -----------
                                                   2,780,783        4,538,870
                                                 -----------      -----------

Operating income                                     529,260           77,491

Other income:
     Interest income, net                             12,059           52,548
     Equity in earnings of FMI joint venture          62,650             --
                                                 -----------      -----------

Income from continuing operations before
     income taxes and minority interest              603,969          130,039

Income tax expense                                      --            125,500
                                                 -----------      -----------

Income from continuing operations
     before minority interest                        603,969            4,539

Minority interest in earnings of FoodMaster          (93,553)        (131,522)
                                                 -----------      -----------

Income (loss) from continuing operations             510,416         (126,983)

Income (loss) from discontinued operations:
     Loss from discontinued operations               (30,166)
     Gain from discontinued operations               200,000             --
                                                 -----------      -----------

Net Income (Loss)                                $   710,416      $  (157,149)
                                                 ===========      ===========


Net Income (Loss) per Common Share:
     Continuing operations                       $      0.45      $     (0.15)
     Discontinued operations                            0.16            (0.04)
                                                 -----------      -----------
                                                 $      0.61      $     (0.19)
                                                 ===========      ===========


Weighted Average Common Shares
Outstanding                                        1,285,110          839,010
                                                 ===========      ===========







               See accompanying notes to the financial statements.


<PAGE>


<TABLE>
<CAPTION>
                       DEVELOPED TECHNOLOGY RESOURCE, INC.
                       STATEMENTS OF SHAREHOLDERS' EQUITY
                      YEARS ENDED OCTOBER 31, 1997 AND 1996

                                              Common Stock                Additional
                                              ------------                  Paid-in     Accumulated
                                          Shares         Amount             Capital          Deficit             Total
                                          ------         ------             -------          -------             -----

<S>                                        <C>      <C>               <C>              <C>               <C>            
Balance, October 31, 1995                   838,966  $          8,389  $     5,347,852  $     (4,262,872) $     1,093,369

         Adjustment for fractional
              shares related to the
              December 1995, 1 for
              3 reverse stock split              44                 1               (1)               --               --

         Net loss                                --                --               --          (157,149)        (157,149)
                                    ---------------  ----------------  ---------------  ----------------  ---------------

Balance, October 31, 1996                   839,010             8,390        5,347,851        (4,420,021)         936,220

         Redemption of shares
              in exchange for  
              accounts receivable           (48,190)             (482)         (28,553)               --          (29,035)

         Net income                              --                --               --           710,416          710,416
                                    ---------------  ----------------  ---------------  ----------------  ---------------
Balance, October 31, 1997                   790,820  $          7,908  $     5,319,298  $     (3,709,605) $     1,617,601
                                    ===============  ================  ===============  ================  ===============

</TABLE>


               See accompanying notes to the financial statements.


<PAGE>


<TABLE>
<CAPTION>
                       DEVELOPED TECHNOLOGY RESOURCE, INC.
                            STATEMENTS OF CASH FLOWS
                      YEARS ENDED OCTOBER 31, 1997 AND 1996

                                                                      1997              1996
                                                                   -----------      -----------
<S>                                                                <C>              <C>         
OPERATING ACTIVITIES:
         Net Income (Loss)                                         $   710,416      $  (157,149)
         Adjustments to Reconcile Net Income (Loss)
              to Cash Provided/(Used) by Operating Activities:
              Depreciation                                              39,390           98,762
              Provision for doubtful accounts                         (224,492)          22,000
              (Gain) loss on sale of furniture
              and equipment                                             (2,541)           6,122
              Gain on sale of discontinued
              operations                                              (200,000)            --
              Minority interest in earnings
              of joint venture                                          93,553          131,522
              Equity in earnings of FMI joint
              venture                                                  (62,650)            --

         Changes in Operating Assets and Liabilities,
         net of transfers to joint venture:
              Receivables                                              212,826          128,386
              Inventories                                             (226,517)         294,707
              Prepaid and other current assets                          40,570         (201,667)
              Accounts payable and accrued
              liabilities                                              220,894         (458,667)
              Deferred gains                                           (68,417)         (23,480)
              Customer deposits                                        (44,876)        (117,578)
                                                                   -----------      -----------
              Net cash provided/(used) by
              operating activities                                     488,156         (277,042)
                                                                   -----------      -----------

INVESTING ACTIVITIES:
         Net sales of short-term investments                              --             53,717
         Proceeds from sale of furniture
         and equipment                                                  81,438            6,904
         Purchases of furniture and equipment                         (294,751)        (230,615)
         Advances/contributions to joint
         ventures                                                     (625,727)        (256,198)
         Cash of FoodMaster                                               --              7,306
         Deferred acquisition costs                                     35,616          (35,616)
                                                                   -----------      -----------
              Net cash used by investing
              activities                                              (803,424)        (454,502)
                                                                   -----------      -----------

FINANCING ACTIVITIES:
         Principal payments on note payable                             (8,900)            --
         Proceeds from note payable                                       --             70,910
                                                                   -----------      -----------
              Net cash provided/(used) by
              financing activities                                      (8,900)          70,910
                                                                   -----------      -----------

DECREASE IN CASH AND CASH EQUIVALENTS                                 (324,168)        (660,634)

CASH AND CASH EQUIVALENTS, Beginning
         of year                                                       635,609        1,296,243
                                                                   -----------      -----------

CASH AND CASH EQUIVALENTS, End of year                             $   311,441      $   635,609
                                                                   ===========      ===========

</TABLE>

               See accompanying notes to the financial statements.


<PAGE>


                       DEVELOPED TECHNOLOGY RESOURCE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                      YEARS ENDED OCTOBER 31, 1997 AND 1996

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     Business
     Developed Technology Resource, Inc. (DTR or the Company) owns and manages
     food businesses in the countries of the former Soviet Union (fSU) through
     its joint venture, FoodMaster International L.L.C. (FMI), with Agribusiness
     Partners International L.P. (API). FMI purchases dairy manufacturing
     facilities in the fSU and provides equipment and necessary capital. DTR
     manages the dairies and pursues future acquisitions for FMI. Using modern
     marketing techniques and packaging equipment, the dairies provide customers
     in the fSU better quality branded dairy products.

     During fiscal 1997 and 1996, DTR also distributed X-ray tubes under an
     exclusive arrangement with a Russian manufacturer, sold food packaging
     equipment, and held ownership interests in the coatings technology business
     of Phygen and the cancer detection business of Armed.

     Basis of Presentation
     From November 1995 through February 1997, the financial statements include
     the operations of DTR and FoodMaster Corporation (FoodMaster), DTR's 50%
     owned subsidiary in Almaty, Kazakhstan. All significant intercompany
     transactions and balances were eliminated in consolidation. On March 3,
     1997, DTR contributed its 50% ownership of FoodMaster to the FMI joint
     venture for a 40% ownership in FMI. Effective March 1997, DTR records its
     proportionate share of the net income or loss of FMI in the statement of
     operations as equity in earnings of FMI joint venture under the equity
     method of accounting. The excess of DTR's underlying equity in net assets
     of FMI over the carrying value of its investment is being amortized to
     income over 15 years.

     Cash and Cash Equivalents
     Cash and cash equivalents include all highly liquid investments with
     original maturities of three months or less at the time of purchase.

     The Company maintains its cash in bank deposit accounts, which at times may
     exceed federally insured limits. The Company has not experienced any losses
     in such accounts and believes it is not exposed to any significant credit
     risk on cash.

     Furniture and Equipment
     Furniture and equipment are recorded at cost. Depreciation is calculated on
     the straight-line basis over the estimated useful lives of the assets,
     primarily three to ten years.

     Revenue Recognition
     Revenue is recognized upon shipment of products to the customer and as
     services are provided to FMI under the management agreement.

     Net Income (Loss) per Common Share
     Net income (loss) per common share is computed by dividing net income
     (loss) by the weighted average number of common and common equivalent
     shares outstanding during the year. Common equivalent shares, such as
     options or warrants, were not included in computing the net loss per common
     share for the year ended October 31, 1996 since the effect would be
     antidilutive.
<PAGE>

     In February 1997, the Financial Accounting Standards Board (FASB) issued
     Statement of Financial Accounting Standards (FAS) No. 128, EARNINGS PER
     SHARE, which is required to be adopted by DTR in the reporting period
     ending January 31, 1998. At that time, DTR will be required to change the
     method currently used to compute net income (loss) per share and restate
     all prior periods. Under the new standard for calculating basic net income
     (loss) per share, the dilutive effect of stock options and warrants will be
     eliminated. However, stock options and warrants will be included in the
     calculation of diluted net income (loss) per share. The impact of
     implementing FAS No. 128 on the calculation of net income (loss) per share
     for fiscal 1997 has not yet been fully evaluated.

     Segment Reporting
     In June 1997, the Financial Accounting Standards Board issued Statement of
     Financial Accounting Standards (FAS) No. 131, DISCLOSURES ABOUT SEGMENTS OF
     AN ENTERPRISE AND RELATED INFORMATION. This statement is effective for
     fiscal years beginning after December 15, 1997. The Company has not yet
     evaluated the full impact of the adoption FAS 131.

     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 reported amounts of revenues and
     expense during the reporting period. Actual results could differ from those
     estimates.

     Financial Instruments
     SFAS No. 107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS,
     requires disclosure of fair value information about financial instruments.
     Fair value estimates discussed herein are based upon certain market
     assumptions and pertinent information available to management as of October
     31, 1997.

     The respective carrying value of financial instruments approximated their
     fair values. These financial instruments include cash and cash equivalents,
     trade receivables, accounts payable and accrued liabilities. Fair values
     were assumed to approximate carrying values for these financial instruments
     since they are short term in nature and their carrying amounts approximate
     fair values or they are receivable or payable on demand.

     Reclassifications
     Certain reclassifications were made to the 1996 financial statements to
     present those financial statements on a basis comparable with the current
     year. The reclassifications had no effect on previously reported net loss
     or accumulated deficit.

2.   AK-BULAK OPTION
     Effective August 1996, the Company obtained an option to purchase 80% of
     Ak-Bulak, an inactive company which owned the other 50% of the FoodMaster
     joint venture. This purchase of 80% of Ak-Bulak would give DTR an
     additional 40% ownership of FoodMaster. To exercise the option, the Company
     agreed to pay certain pre-defined outstanding debts of Ak-Bulak, the other
     owner of FoodMaster, and to make capital improvements to the dairy owned by
     FoodMaster. As of March 2, 1997 and October 31, 1996, DTR had paid $171,774
     and $35,616, respectively, in connection with the exercise of this option.
     On March 3, 1997, DTR contributed its 50% ownership in FoodMaster along
     with its option to acquire the additional 40% ownership to the FMI joint
     venture. FMI repaid DTR for all but $14,045 of the costs paid through March
     2, 1997 to exercise the option (See Note 3).

<PAGE>

3.   INVESTMENT IN FOODMASTER INTERNATIONAL L.L.C. (FMI)
     On March 3, 1997, DTR and API established the FMI joint venture, to acquire
     and operate dairies in the former Soviet Union. DTR contributed to FMI its
     50% ownership in FoodMaster, the Ak-Bulak option (See Note 2) and its
     opportunities for a future acquisition of a dairy in Moldova. API agreed to
     fund $2.945 million to further develop the dairy operations in Kazakhstan
     and Moldova and to provide an additional $3.055 million over two years to
     expand FMI. By October 31, 1997, API contributed $3.245 million of its $6
     million commitment to FMI. Under the agreement, API currently owns 60% and
     DTR owns 40% of FMI. However, DTR has a right to earn a greater ownership
     interest of FMI by achieving certain defined performance targets based on
     returns to API. Effective March 1997, DTR records its proportionate share
     of the net income or loss of FMI in the statement of operations as equity
     in earnings of FMI joint venture under the equity method of accounting.

     DTR also entered into a management agreement with FMI, whereby DTR manages
     the day to day operations of FMI and the dairy operations owned by FMI, and
     pursues future dairy acquisitions for FMI for a management fee. The Company
     recorded management fee income of $802,492 from March 1997 to October 31,
     1997 in accordance with its management agreement with FMI.

     Summarized financial information from the audited financial statements of
     FMI carried on the equity basis is as follows: 

                                                                October 31, 1997
                                                                ----------------
     Current assets                                               $ 3,944,710
     Total assets                                                  10,514,329
     Noncurrent liabilities                                           946,832
     Shareholders' equity                                           7,032,719
     DTR's share of FMI 's equity                                   2,813,088
     DTR's carrying value of FMI's equity                             788,785

                                                              Eight Months Ended
                                                                October 31, 1997
                                                               ----------------
     Sales                                                        $ 6,784,384
     Gross profit                                                   2,504,523
     Net loss                                                        (207,138)
     DTR's share of FMI's loss before adjustment
      of DTR's excess of net equity over carrying
      value of the investment                                         (82,855)
     DTR's share of equity in earnings of
      FMI joint venture after adjustment                               62,650

 4.  FURNITURE AND EQUIPMENT
     Furniture and equipment are summarized as follows:
                                                  Estimated
                                                  Useful Life
                                                  -----------
     Software                                        5 years      $    23,605
     Furniture & equipment                           5 years          148,869
     Leasehold improvements                          5 years            4,982
                                                                  -----------
                                                                      177,456
     Less accumulated depreciation                                    131,990
                                                                  -----------
     Furniture and equipment, net                                 $    45,466
                                                                  ===========

 5.  DISCONTINUED OPERATIONS
     Effective December 31, 1995, DTR entered into an agreement to sell certain
     assets and the rights to its airport security equipment in the fSU to Gate
     Technology, a United Kingdom company owned by a 


<PAGE>

     former DTR employee. DTR transferred assets, inventory, customer lists,
     promotional materials, and other items with a net book value on January 31,
     1996 of $143,293. In exchange for these items, DTR received a cash payment
     of $45,000 to reimburse DTR for expenses related to this business during
     the first quarter of fiscal 1996 and a note receivable totaling $765,000
     payable over 30 months. A portion of these payments is personally
     guaranteed by the former employee, and is collateralized by his ownership
     of 16,430 shares of DTR's common stock. Additional contingent payments may
     also be received based on future performance. DTR retained the right to
     pursue airport security management contracts.

     Due to the inherent risks associated with operating in the fSU, including
     credit risk, the gain on this sale has been deferred and will be recognized
     as payments are received. DTR received total payments of $200,000 and
     $170,000 during fiscal 1997 and 1996, respectively. As a result, DTR
     recorded a gain (loss) on discontinued operations of $200,000 and ($30,166)
     in fiscal 1997 and 1996, respectively. The operations of the business
     segment and the gain on sale are presented as discontinued operations in
     the statements of operations.

     In August 1997, the Board of Directors approved a revision in the sale
     agreement that increased the balance due to DTR by $40,000 representing
     interest on the outstanding balance. The increase in the receivable balance
     was accounted for as an increase in deferred revenues. In addition, the
     payment terms were revised to require two payments in 1998 with the final
     payment due on January 1, 1999.

 6.  COMMITMENTS & CONTINGENCIES
     Leases
     The Company leases its operating facilities under a five year operating
     lease that expires on April 30, 2002. The following schedule sets forth the
     future minimum rental payments required under the operating lease:
                     Year Ending                         Operating
                     October 31,                            Leases
                     -----------                       --------------
                         1998                          $       18,414
                         1999                                  18,919
                         2000                                  19,423
                         2001                                  19,928
                         2002                                  10,090
                                                       --------------
                                                       $       86,774
                                                       ==============

     Rental expense was approximately $25,500 and $40,500 for the fiscal years
ended October 31, 1997 and 1996, respectively.

7.   STOCK OPTIONS AND WARRANTS
     Under the Company's 1992 Stock Option Plan (the Plan), the Board of
     Directors may grant qualified or nonqualified options for up to 66,667
     shares of common stock to employees and non-employees. Options granted to
     employees generally vest over a three to five year period. Certain options
     granted to employees contain provisions whereby vesting is accelerated in
     the event the employee is terminated without cause as defined in the option
     agreements. Options granted to non-employees, including directors and
     consultants, vest one year after the date of grant and are exercisable for
     three years from the date of grant. Effective September 30, 1996, the Plan
     was amended to increase the shares available for granting to 600,000
     shares.

     In March 1994, the shareholders ratified the 1993 Outside Directors Stock
     Option Plan. Under the terms of this plan, the Company reserved 83,333
     shares of common stock for issuance to outside 
<PAGE>

     directors as compensation for their services as board members. Options for
     1,667 shares are issued to the directors each year upon their election at
     the annual shareholders meeting. The options vest after one year.

     The Company applies APB Opinion 25, ACCOUNTING FOR STOCK ISSUED TO
     EMPLOYEES, and related interpretations in accounting for the above employee
     plans. Under the provisions of APB Opinion 25, if options are granted or
     extended at exercise prices less than fair market value, compensation
     expense is recorded for the difference between the grant price and the fair
     market value at the date of the grant.

     SFAS No. 123, ACCOUNTING FOR STOCK BASED COMPENSATION, requires the Company
     to provide pro- forma information regarding net income (loss) and per share
     amounts as if compensation cost for the Company's stock options had been
     determined in accordance with the fair value based method prescribed by
     SFAS No. 123. The Company estimates the fair value of each stock option at
     the grant date by using a Black-Scholes option-pricing model with the
     following assumptions used for grants in 1997: no dividend yield,
     volatility from 102.6% to 120.8%, risk-free interest rates of 6%, and
     expected lives ranging from 18 months to 10 years. Assumptions used in the
     fiscal 1996 option-pricing models are as follows: no dividend yield,
     volatility from 103.6% to 132.9%, risk-free interest rates of 6%, and
     expected lives ranging from 18 months to 10 years. Had compensation costs
     been determined based on the fair value of options at their grant dates in
     accordance with SFAS No. 123, the Company's net income would have decreased
     by $98,567 in fiscal 1997 and the Company's net loss would have increased
     by $462,634 in fiscal 1996. The effect on net income (loss) per share is
     $0.08 and $0.55 per share for fiscal 1997 and 1996, respectively.

     The following table summarizes the information about the Company's warrant
     and stock option activity for the years ended October 31, 1997 and 1996:

<TABLE>
<CAPTION>
                               1992 Stock Option Plan       Outside                   Weighted-
                               ----------------------       Directors                  Average
                                             Employee      Stock Option               Exercise
                                Warrants      Options         Plan        Total      Price/Share
                                --------      --------      --------      ------
<S>                             <C>           <C>            <C>          <C>         <C>      
Balance, October 31, 1995       46,667        41,444         6,667        94,778      $   12.34

Granted                           --         500,972         3,334       504,306      $    1.22

                                ------       -------        ------       -------

Balance, October 31, 1996       46,667       542,416        10,001       599,084      $    2.90

Cancelled/expired/
    or surrendered             (18,334)      (17,416)       (3,333)      (39,083)     $   11.84

Granted                           --          85,000         3,334        88,334      $    1.23
                                ------       -------        ------       -------

Balance, October 31, 1997       28,333       610,000        10,002       648,335      $    2.22
                                ======       =======        ======       =======

Exercisable, October 31, 1997   28,333       125,000         6,668       160,001      $    5.28
                                ======       =======        ======       =======

</TABLE>

<PAGE>


     The following table summarizes information about the Company's stock plans
at October 31, 1997:

<TABLE>
<CAPTION>
                                                       Options Outstanding                      Options Exercisable
                                                       -------------------                      -------------------
                                                        Weighted-         Weighted-                             Weighted-
                                          Number          Average           Average           Number             Average
             Range of                  Outstanding      Remaining           Exercise       Exercisable           Exercise
         Exercise Price                at 10/31/97       Life (years)       Price           at 10/31/97           Price
         --------------                -----------       ------------       -----           -----------           -----

<S>                                         <C>           <C>                <C>                 <C>              <C>  
     $1.19 to $3.00                         608,335       4.61               $1.27               120,001          $1.47
     $6.75                                    5,001        .36                6.75                 5,001           6.75
     $15.00 to $22.50                        34,999        .28               18.14                34,999          18.14
                                      -------------                                       --------------
                                            648,335                                              160,001
                                      =============                                       ==============
</TABLE>

8.   ECONOMIC DEPENDENCE
     For the fiscal year ended October 31, 1997 and 1996, the Company had two
     customers which comprised 100% of its x-ray tube sales of $264,030 and
     $243,860, respectively. In addition, the Company had one supplier for these
     x-ray tubes. Purchases from this supplier totaled $228,445 and $202,460 in
     fiscal 1997 and 1996, respectively.

9.   INCOME TAXES
     The Company utilizes the liability method of accounting for income taxes as
     set forth in Statement of Financial Accounting Standards (FAS) No. 109,
     Accounting for Income Taxes. FAS No. 109 requires an asset and liability
     approach to financial accounting and reporting for income taxes. Deferred
     income tax assets and liabilities are computed annually for differences
     between the financial statement and tax basis of assets and liabilities
     that will result in taxable or deductible amounts in the future based on
     enacted tax laws and rates applicable to the periods in which the
     differences are expected to affect taxable income. Valuation allowances are
     established when necessary to reduce deferred tax assets to the amount
     expected to be realized. Income tax expense is the tax payable or
     refundable for the period plus or minus the change during the period in
     deferred tax assets and liabilities.

     Deferred income tax assets and liabilities as of October 31, were as
follows:
                                                1997              1996
                                            ------------       ----------
     Deferred tax asset                     $  1,256,400      $ 1,542,700
     Deferred tax liabilities                     (6,500)          (6,500)
     Valuation allowance                      (1,249,900)      (1,536,200)
                                            ------------       ----------
                                                      --               --
                                            ============       ==========

     Deferred income tax assets and liabilities consist primarily of NOL's and
     the allowance for doubtful accounts, and differences between the financial
     and tax basis of furniture and equipment, respectively.

     At October 31, 1997, the Company had a net operating loss (NOL)
     carryforwards of approximately $3,354,000 for income tax purposes. The NOL
     carryforwards expire in years 2007 through 2011 if not previously utilized.
     Utilization of the available NOL carryforward may be limited due to future
     significant changes in ownership under Internal Revenue Codes Section 382.
     These potential future tax benefits are not recognized in the financial
     statements since realization is not currently supportable.

     The Company intends to permanently reinvest the earnings of FMI. Therefore,
     no U.S. deferred income taxes are provided on these earnings.

<PAGE>

10.  STOCK REDEMPTION
     In the first quarter of fiscal 1997, 48,190 shares of common stock were
     redeemed in exchange for the satisfaction of a $29,035 account receivable
     owed by a former employee.

11.  SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: 
     Non-cash operating and investing activities:
     The Company contributed $626,917 in net assets of its FoodMaster joint
     venture to FoodMaster International L.L.C. (FMI) for its 40% interest as
     discussed in Note 3. In addition, the Company redeemed 48,190 shares of
     common stock in exchange for the satisfaction of a $29,035 account
     receivable as discussed in Note 10. Finally, the Company increased the
     deferred gain and a corresponding receivable from the sale of discontinued
     operations by $40,000 for additional interest due to DTR as discussed in
     Note 5.

     In fiscal 1996, DTR contributed $364,450 in inventory and equipment to its
     FoodMaster joint venture. In addition, the Company recorded a note
     receivable of $765,000 for the sale of its aviation security business as
     discussed in Note 5 of which $15,934 was related to the transfer of
     equipment and $621,707 was offset by an increase in deferred gain.

     The non-cash effects of these transactions have been removed from the
     appropriate categories in the operating and investing section of the
     Company's Statements of Cash Flows for the year ended October 31, 1997 and
     1996.

     Supplemental cash flow information:        1997                 1996
     -----------------------------------    -----------         ----------
     Cash paid for:
         Interest                                --                6,600
         Taxes                                   --               91,376

12.  SUBSEQUENT EVENTS
     On November 6, 1997, the Board of Directors adopted the 1997 Outside
     Directors Stock Option Plan, superseding the 1993 Outside Directors Stock
     Option Plan. In exchange for the surrender of all stock options previously
     granted to the outside directors, the Board granted stock options for
     15,000 shares of common stock at an exercise price of $1.50 per share to
     the current outside directors. As of November 6, 1997, 13,750 of the 15,000
     options were vested. The remaining 1,250 were vested by December 31, 1997.




<PAGE>


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

         On December 23, 1997, Developed Technology Resource, Inc. dismissed
Lurie, Besikof, Lapidus & Co., LLP, the principal accountant previously engaged
to audit the registrant's financial statements for the fiscal year ended October
31, 1996, as its independent accountant. The registrant's financial statements
for the fiscal year ended October 31, 1995 were audited by another independent
accountant and a Form 8-K was filed in accordance with such dismissal on April
23, 1996. Lurie, Besikof, Lapidus & Co., LLP's reports on the financial
statements for the fiscal year ended October 31, 1996 do not contain an adverse
opinion or disclaimer of opinion, and was not modified as to uncertainty, audit
scope, or accounting principles. In connection with the audit for the fiscal
year ended October 31, 1996 and through December 23, 1997, there have been no
disagreements with Lurie, Besikof, Lapidus & Co., LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Lurie, Besikof, Lapidus & Co., LLP would have caused them to make reference
thereto in their report on the financial statements for such period. The
decision to change accountants has been approved by the Board of Directors of
the registrant.

         On December 23, 1997 Deloitte & Touche LLP was appointed as the
registrant's new independent accountant to audit the registrant's financial
statements. During the past fiscal year and through December 23, 1997, the
registrant has not, prior to engaging the new accountant, consulted the new
accountant regarding the application of accounting principles to a specific or
contemplated transaction or regarding the type of audit opinion that might be
rendered on the registrant's financial statements.



                                    PART III

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

         The information required by Item 9 is incorporated herein by reference
to the section entitled "Principal Shareholders and Ownership of Management" in
the Company's proxy statement for its 1997 Annual Meeting of Shareholders, which
will be filed with the Securities and Exchange Commission pursuant to Regulation
14A within 120 days of the Company's fiscal year ended October 31, 1997.


ITEM 10. EXECUTIVE COMPENSATION

         The information required by Item 10 is incorporated herein by reference
to the section entitled "Compensation of Directors and Executive Officers" in
the Company's proxy statement for its 1997 Annual Meeting of Shareholders, which
will be filed with the Securities and Exchange Commission pursuant to Regulation
14A within 120 days of the Company's fiscal year ended October 31, 1997.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required in Item 11 is incorporated herein by reference
to the section entitled "Principal Shareholders and Ownership of Management" in
the Company's proxy statement for its 1997

<PAGE>

Annual Meeting of Shareholders, which will be filed with the Securities and
Exchange Commission pursuant to Regulation 14A within 120 days of the Company's
fiscal year ended October 31, 1997.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by Item 12 is incorporated herein by reference
to the section entitled "Certain Transactions" in the Company's proxy statement
for its 1997 Annual Meeting of Shareholders, which will be filed with the
Securities and Exchange Commission pursuant to Regulation 14A within 120 days of
the Company's fiscal year ended October 31, 1997.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     The following exhibits are submitted herewith:
         3.1      Articles of Incorporation of the Company(1)

         3.2      Certificate of Amendment of Articles of Incorporation of the
                  Company(1)

         3.3      Bylaws of the Company(1)

         3.4      Certificate of Amendment of Articles of Incorporation of the
                  Company, changing registered office address(1)

         3.5      Certificate of Amendment of Articles of Incorporation of the
                  Company as filed on Form 8-A/A dated November 30, 1995(5)

         4.1      Form of stock certificate representing Common Stock, $.01 par
                  value per share, of the Company, as filed on Form 8-A/A dated
                  November 30, 1995 and issued by Company after 1 for 3 reverse
                  split effective 12/12/95(5)

         4.2      Form of Subscription Agreement and Investment Representations
                  in connection with private placement of 300,000 shares of
                  Common Stock(1)

         10.1     Asset Sale Agreement between Company and a corporation to be
                  organized by Oleg Yermakov selling the Company's security
                  equipment distribution business and certain assets to Oleg
                  Yermakov, contingent on certain future events(6)

         10.2     Exclusive Distributor Agreement dated October, 1995 between
                  Company and SECTOR 6, Security Division of N.V. COMAUTO
                  S.A.(6)

         10.4     1992 Stock Option Plan(1)

         10.5     Form of Stock Option Agreement(1)

         10.6     Technology Agreement effective May 1, 1992 between the Company
                  and Fluxatron Systems International, Inc.(1)

         10.7     Consulting Agreement effective May 1, 1992 between Atarius
                  U.S., Inc. and the Company, attaching the separate employment
                  agreements, as amended, between Atarius U.S., Inc. and Anatoli
                  Z. Kvaktounov and Oleg Yermakov(1)
<PAGE>

         10.8     Five-Year Common Stock Purchase Warrant granted to Peter L.
                  Hauser IRA, #310200-9, Equity IRA Company on May 26, 1992, for
                  the purchase of 27,500 shares of Common Stock of the Company
                  at an exercise price of $2.00 per share, with certain demand
                  and piggyback registration rights(1)

         10.9     Five-Year Common Stock Purchase Warrant granted to Equity
                  Securities P.S.T. for the Benefit of Nathan Newman on May 26,
                  1992, for the purchase of 27,500 shares of Common Stock of the
                  Company at an exercise price of $2.00 per share, with certain
                  demand and piggyback registration rights(1)

         10.10    Replacement Promissory Note dated January 11, 1993 from Robert
                  L. Porter to the Company in the principal amount of $10,000(1)

         10.11    Replacement Promissory Note dated January 11, 1993 from Erich
                  C. Steinbergs to the Company in the principal amount of
                  $10,000(1)

         10.12    Form of Assignment of Financial Advisory Agreement from the
                  Company to FAI Limited Partnership, effective January 31,
                  1993(1)

         10.13    Exclusive Distributor Agreement dated June 1, 1992 between
                  EG&G Astrophysics Research Corporation and the Company(1)

         10.14    Nonexclusive Distributor Agreement dated June 1, 1992 between
                  EG&G Astrophysics Research Corporation and the Company, as
                  amended(1)

         10.15    Developed Technology Resource, Inc. 1993 Outside Directors
                  Stock Option Plan(2)

         10.16    Application - Foundation Agreement on Establishment of Closed
                  Joint Stock Company "ICP Int." among the Company, the
                  Institute of Chemical Physics of the Russian Academy of
                  Sciences and A.M. Shapiro, and English text of ICP Charter and
                  Agreement(1)

         10.20    Partnership Agreement dated January 16, 1992 among the
                  Company, Armen P. Sarvazyan and Stanislav Yemelyanov
                  concerning the formation of Medical Biophysics International,
                  as amended by Partnership Agreement Amendment dated August 20,
                  1992(1)

         10.21    Letter of Understanding dated June 18, 1992 between the
                  Company and Armen P. Sarvazyan concerning Medical Biophysics
                  International, and May 22, 1992 letter from the Company to Dr.
                  Armen P. Sarvazyan, Ph.D.(1)

         10.22    Assignment of rights to Intracavity Ultrasonic Device for
                  Elasticity Imaging from Armen P. Sarvazyan, Stanislav
                  Emelianov and Andrei R. Skovoroda to Medical Biophysics
                  International(1)

         10.23    Assignment of rights to Method and Apparatus for Elasticity
                  Imaging from Armen P. Sarvazyan and Stanislav Emelianov to
                  Medical Biophysics International(1)

         10.24    Assignment of rights to Method and Device for Mechanical
                  Tomography of Tissue from Armen P. Sarvazyan to Medial
                  Biophysics International(1)

         10.26    Agreement between the Board of the Designers of Kazakhstan and
                  the Company(1)

         10.27    Office Lease dated October 1, 1993 between the Company
                  (Lessee) and Minnesota Master Limited Partnership (Lessor)(2)
<PAGE>

         10.28    Registration of DTR Moscow office as Registered Office #105(1)

         10.29    Amendment No. 2 to lease for office space between Developed
                  Technology Resource, Inc. and Cargill, Incorporated dated
                  August 15, 1994(3)

         10.32    Memorandum from A. Shapiro to the Company concerning the
                  transfer of technologies or exclusive license to ICP-INT(1)

         10.38    Consulting Agreement dated March 31, 1993 between the Company
                  and Donald V. Murray(1)

         10.39    Confidentiality Agreement and Letter of Understanding between
                  the Company and NordicTrack(1)

         10.42    Form of Underwriter's Warrants dated April 23, 1993 between
                  the Company and Equity Securities Trading Co., Inc.(2)

         10.43    Form of Directors and Officers Indemnification Agreement
                  issued to each of the Company's officers and directors on
                  October 15, 1993 by action of the Board of Directors(2)

         10.44    Developed Technology Resource, Inc. 1997 Outside Directors
                  Stock Option Plan(7)

         10.45    Amendment to Asset Sale Agreement (Exhibit 10.1) (7)

         11.1     Statement of computation of per share earnings (7)

         21.1              Subsidiaries of the Company(2)

         23.1              Consent of Deloitte & Touche LLP(7)

         23.2              Consent of Lurie, Besikof, Lapidus & Co., LLP (7)

         27                Financial Data Schedule (7)

--------------------------------------------------------------------------------

(1)    Incorporated by reference to the same exhibit number included in the
       Company's registration statement on Form SB-2, as Amended, filed with the
       Commission as file number 33-58626C.

(2)    Incorporated by reference to the same exhibit number included in the
       Company's Annual Report on Form 10-KSB filed with the Commission for the
       fiscal year ended October 31, 1993.

(3)    Incorporated by reference to the same exhibit number included in the
       Company's Annual Report on Form 10-KSB filed with the Commission for the
       fiscal year ended October 31, 1994.

(4)    Incorporated by reference to the same exhibit number included in the
       Company's Quarterly Report on Form 10-QSB for the second fiscal quarter
       ended April 30, 1995.

(5)    Incorporated by reference to the same exhibit included in the Company's
       Form 8-A/A filed with the Commission on December 12, 1995.

(6)    Incorporated by reference to the same exhibit number included in the
       Company's Annual Report on Form 10-KSB filed with the Commission for the
       fiscal year ended October 31, 1995.
 .
(7)    Filed herewith.



<PAGE>


                                   SIGNATURES
         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                            DEVELOPED TECHNOLOGY RESOURCE, INC.

Date:    March 20, 1998            By /s/ John P. Hupp
                                            Name:   John P. Hupp
                                            Title:     President


Date:    March 20, 1998            By /s/ LeAnn H. Davis, CPA
                                            Name:   LeAnn H. Davis, CPA
                                            Title:    Chief Financial Officer
                                                     (Principal Financial & 
                                                      Accounting Officer)