<PAGE>



                       U.S. SECURITIES AND EXCHANGE COMMISSION

                                WASHINGTON, D.C. 20549



                                      FORM 10-Q



               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994

                           COMMISSION FILE NO. 33-17966-LA




                              XANTHIC ENTERPRISES, INC.

         A Colorado Corporation                             EIN: 94-3030021

                          9028 Sunset Blvd., Penthouse Suite
                                Los Angeles, CA 90069

                               Telephone: 310-289-4947



            Securities registered under Section 12(g) of the Exchange Act:

                       Common Shares and Series A and Series B
                            Common Stock Purchase Warrants

<PAGE>

    The registrant has filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months or such shorter period for
which such reports were required.

    The Company's Form 10-K for the fiscal year ended December 31, 1993 was
filed late.

    The number of common shares issued and outstanding as of June 30, 1994 was
5,481,826.

    This report form is not filed as a transitional format.


                            PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

    The Company's unaudited financial statements for the third quarter of 1994
are at the end of this report.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION.

    (1)  LIQUIDITY. The Company has no cash assets and no liquidity.

    (2)  CAPITAL RESOURCES. The Company has no capital resources.

    (3)  RESULTS OF OPERATIONS. The Company has not operated during the past
fiscal year and there are no results of operations.


                                          1


<PAGE>

                             PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

    On November 2, 1991 the State of Oregon issued a cease and desist order 
ordering the Company to cease and desist issuing unregistered securities in 
the State of Oregon. The proceeding was based on the distribution of  shares 
and warrants to Oregon shareholders (registered by way of an S-18 
registration statement) pursuant to the agreement for such distribution 
between the Company and Automated Services, Inc.

    On April 2, 1992 the State of Oregon issued a final order to cease and 
desist violating any provision of Oregon Securities Law. Xanthic was denied 
the use of any statutory exemption provided in ORS 59.022 and ORS 59.035. 
Xanthic, Mark Lilly and Glenn DeCicco were assessed civil penalties of 
$ 750.00 each for violating ORS 59.055 and ORS 59.132(2). Directors Mark Lilly 
and Glenn DeCicco were ordered to cease and desist violating any provision of 
ORS Chapter 59. Neither the Company nor the Directors appealed.

    The Company has been advised that the effect of the Oregon ruling was to
invalidate the issuance and distribution of the registered shares and warrants
to residents of Oregon until such time as said securities are registered
pursuant to the provisions of the Oregon Securities Law. The number of shares
affected by the ruling is estimated to be 188,000 shares owned by approximately
650 residents of Oregon. The 188,000 shares represent approximately 3.4% of the
issued and outstanding shares of the Company.


ITEM 2.  CHANGES IN SECURITIES

    There have been no changes in the rights, preferences or privileges of any
security of the Company during the second quarter of 1994 other than as the
action of the State of Oregon may affect said matters.


                                          2


<PAGE>


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

    There has been no default on any security during the third quarter of 1994.

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

    No matters have been submitted to a vote of security holders during the
third quarter of 1994.


ITEM 5.  OTHER INFORMATION

    N/A


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

    During the third quarter of 1994 the Company filed no reports on Form 8-K.


FINANCIAL STATEMENTS.

    The Company's unaudited financial statements for the period ending
September 30, 1994 follow this page.


                                          3
<PAGE>

                            XANTHIC ENTERPRISES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                 BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                       September 30,
                                                 December 31,   ---------------------------
                                                     1993           1994           1993
                                                 ------------   ------------   ------------
                                                  (Audited)             (Unaudited)
<S>                                              <C>            <C>            <C>
    ASSETS

CURRENT ASSETS:

  Cash                                            $        -     $        -     $        -
                                                  ----------     ----------     ----------

                                                  $        -     $        -     $        -
                                                  ----------     ----------     ----------
                                                  ----------     ----------     ----------

  LIABILITIES AND STOCKHOLDERS'
   EQUITY (DEFICIT)

CURRENT LIABILITIES:
  Accounts payable                                $   10,121     $   11,343     $    9,657

STOCKHOLDERS' EQUITY

Common stock - $.0001 par,
  50,000,000 shares authorized, 5,481,826
  issued and outstanding                                 548            548            548

Paid in capital                                       11,651         11,651         11,651

Retained deficit                                     (23,320)       (23,542)       (21,856)
                                                  ----------     ----------     ----------

    TOTAL STOCKHOLDERS' EQUITY (DEFICIT)             (10,121)       (11,343)        (9,657)
                                                  ----------     ----------     ----------

                                                  $        -     $        -     $        -
                                                  ----------     ----------     ----------
                                                  ----------     ----------     ----------
</TABLE>


                                        4

<PAGE>

                            XANTHIC ENTERPRISES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>

                                                           For the Three Months        For the Nine Months
                                    For the                ending September 30,       ending September 30,       October 27, 1986
                                   year ending          -------------------------  -------------------------  (date of inception) to
                                December 31, 1993         1994            1993        1994           1993        September 30, 1994
                                -----------------       ----------     ----------  ----------     ----------  ----------------------
                                    (Audited)                  (Unaudited)                (Unaudited)              (Unaudited)
<S>                                      <C>                     <C>            <C>         <C>            <C>

REVENUES                            $        -          $        -     $        -  $        -     $        -       $        -
                                    ----------          ----------     ----------  ----------     ----------       ----------

OPERATING EXPENSES:
  General and administrative             1,212                 301            303         904            909           16,463
                                    ----------          ----------     ----------  ----------     ----------       ----------

Loss from operations                    (1,212)               (301)          (303)       (904)          (909)         (16,463)

OTHER EXPENSES
  Interest expense                        (644)               (106)          (161)       (318)          (483)          (6,314)
  Aborted offering costs                     -                   -              -           -              -          (17,066)
  Debt relief                                -                   -              -           -              -           17,051
  Penalty                                    -                   -              -           -              -             (750)
                                    ----------          ----------     ----------  ----------     ----------       ----------

         TOTAL OTHER INCOME
          (EXPENSES)                      (644)               (106)          (161)       (318)          (483)          (7,079)
                                    ----------          ----------     ----------  ----------     ----------       ----------


NET LOSS                              $ (1,856)         $     (407)    $     (464) $   (1,222)    $   (1,392)         (23,542)
                                    ----------          ----------     ----------  ----------     ----------       ----------
                                    ----------          ----------     ----------  ----------     ----------       ----------

NET LOSS PER COMMON SHARE           $   (.0003)         $   (.0001)    $   (.0001) $   (.0002)    $   (.0003)      $    (.004)
                                    ----------          ----------     ----------  ----------     ----------       ----------
                                    ----------          ----------     ----------  ----------     ----------       ----------

WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING               5,481,826           5,481,826      5,481,826   5,481,826      5,481,826        5,481,826
                                    ----------          ----------     ----------  ----------     ----------       ----------
                                    ----------          ----------     ----------  ----------     ----------       ----------
</TABLE>


                                        5

<PAGE>

                           XANTHIC ENTERPRISES, INC.
                         (A DEVELOPMENT STAGE COMPANY)
             STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>

                                                                                              Accumulated
                                                        Common Stock                         deficit during
                                                     ------------------          Paid in      development
                                                    Shares         Amount        Capital         stage          Total
                                                  ----------     ----------     ----------   --------------   ----------
<S>                                               <C>            <C>            <C>          <C>              <C>

BALANCE, DECEMBER 31, 1992                         5,481,826     $      548     $   11,651     $  (20,464)    $   (8,263)
                                                  ----------     ----------     ----------     ----------     ----------

Net loss for year                                          -              -              -         (1,856)        (1,856)
                                                  ----------     ----------     ----------     ----------     ----------

BALANCE, DECEMBER 31, 1993                         5,481,826     $      548        $11,651     $  (22,320)    $  (10,121)
                                                  ----------     ----------     ----------     ----------     ----------

Net loss for period                                        -              -              -         (1,222)        (1,222)
                                                  ----------     ----------     ----------     ----------     ----------

BALANCE, SEPTEMBER 30, 1994                        5,481,826     $      548        $11,651     $  (23,542)    $  (11,343)
                                                  ----------     ----------     ----------     ----------     ----------
                                                  ----------     ----------     ----------     ----------     ----------
</TABLE>


                                        6

<PAGE>

                            XANTHIC ENTERPRISES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>

                                                           For the year            For the Nine months
                                                        ending December 31,        ending September 30,       October 27, 1986
                                                        -------------------     -------------------------   (Date of inception) to
                                                               1993                1994           1993       September 30, 1994
                                                            ----------          ----------     ----------   ----------------------
                                                             (Audited)                 (Unaudited)               (Unaudited)

<S>                                                         <C>                 <C>            <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                                         $   (1,856)         $   (1,222)    $   (1,392)       $(23,542)
  Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:
         Common stock issued for services                            -                   -              -              31
         Changes in operating assets and liabilities:                
            Accounts payable                                     1,856               1,222          1,392          11,343
                                                            ----------          ----------     ----------        --------

NET CASH USED IN OPERATING ACTIVITIES                                -                   -              -         (12,168)
                                                            ----------          ----------     ----------        --------

CASH FLOWS FROM FINANCING ACTIVITIES                                 -                   -              -          12,168
   Sale of common stock                                     ----------          ----------     ----------        --------

NET CASH PROVIDED BY FINANCING ACTIVITIES                            -                   -              -          12,168
                                                            ----------          ----------     ----------        --------

NET INCREASE (DECREASE) IN CASH                                      -                   -              -               -

CASH, BEGINNING OF PERIOD                                            -                   -              -               -
                                                            ----------          ----------     ----------        --------

CASH, END OF PERIOD                                         $        -          $        -     $        -               -
                                                            ----------          ----------     ----------        --------
                                                            ----------          ----------     ----------        --------
</TABLE>


                                        7


<PAGE>

                                      SIGNATURE


    In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, this registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


XANTHIC ENTERPRISES, INC.



Dated:   4/2/97
      ----------------------------



By:      /s/ Mark A. Lilly
     -------------------------------------------------------------------
         Mark A. Lilly, President, Director and Chief Financial Officer


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