<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 JUNE 30, 1989

                           COMMISSION FILE NO. 33-17966-LA




                              XANTHIC ENTERPRISES, INC.

          A Colorado Corporation                             EIN: 94-3030021

                                1182 Market St. # 540
                               San Francisco, CA 94102

                               Telephone: 415-420-5859


            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, 1988 was
filed late.

    The number of common shares issued and outstanding as of March 31, 1989 was
5,160,500.

    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 second quarter of 1989
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.

                             PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

         There are no legal proceedings in which the Company is engaged.


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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 1989.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         There has been no default on any security during the second quarter of
1989.

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

         No matters have been submitted to a vote of security holders during
the second quarter of 1989.


ITEM 5.  OTHER INFORMATION

    N/A


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

    During the second quarter of 1989 the Company filed no reports on Form 8-K.


FINANCIAL STATEMENTS.

    The Company's unaudited financial statements for the period ending June 30,
1989 follow this page.

                                          2

<PAGE>

                           XANTHIC ENTERPRISES, INC.
                         (A development stage company)
                                 BALANCE SHEETS
               
                                                               June 30,  
                                            December 31,    -------------
                                                1988         1989       1988
                                           -------------- ---------  --------
                                              (Audited)        (Unaudited)
     ASSETS
CURRENT ASSETS:
 Cash                                        $     48     $      -   $    687
 Other Assets                                       -            -        603
                                             --------     --------   --------
                                             $     48            -   $  1,290
                                             --------     --------   --------
 LIABILITIES AND STOCKHOLDERS'
  EQUITY (DEFICIT)

CURRENT LIABILITIES:
 Accounts payable                            $  1,156     $      -   $    848
 Note payable                                  17,051            -     17,051
                                             --------     --------   --------
                                               18,207            -     17,899
                                             --------     --------   --------
STOCKHOLDERS' EQUITY (DEFICIT)

Common stock - $.0001 par,
 50,000,000 shares authorized, 5,160,500
 and 5,481,826 issued and outstanding             516          548        516

Paid in Capital                                 4,152       11,651      4,152

Retained deficit                              (22,827)     (12,199)   (21,277)
                                             --------     --------   --------
     TOTAL STOCKHOLDERS' EQUITY (DEFICIT)     (18,159)           -    (16,609)
                                             --------     --------   --------
                                             $     48     $      -   $  1,290
                                             --------     --------   --------
                                             --------     --------   --------


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<PAGE>
                               XANTHIC ENTERPRISES, INC.
                             (A development stage company)
                                STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>

                                                  For the Three Months  For the six Months
                                       For the        ending June 30,     ending June 30,     October 27, 1986
                                     year ending     ------------------  -----------------   (date of inception)
                                  December 31, 1988    1989       1988       1989     1988      to June 30, 1989
                                  -----------------  --------   --------   --------  -------   ------------------
                                      (Audited)          (Unaudited)         (Unaudited)        (Unaudited)
<S>                               <C>                <C>           <C>           <C>            <C>             <C>

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

OPERATING EXPENSES
  General and administrative             3,101                31            776         6,423          1,551          10,684
                                    -----------       ----------   ------------   -----------    -----------     -----------
Loss from operations                    (3,101)              (31)          (776)       (6,423)        (1,551)        (10,684)

OTHER INCOME (EXPENSES)
  Interest expense                       (1,500)               -              -             -         (1,500)         (1,500)
  Aborted offering costs                (17,066)               -              -             -        (17,066)        (17,066)
  Debt relief                                 -                -              -        17,051              -          17,051
                                    -----------       ----------    -----------   -----------    -----------     -----------

       TOTAL OTHER INCOME
        (EXPENSES)                      (18,566)               -              -        17,051        (18,566)         (1,515)
                                    -----------       ----------    -----------   -----------    -----------     -----------

NET INCOME (LOSS)                   $   (21,667)       $     (31)   $         -   $    17,051    $   (18,566)    $    (1,515)
                                    -----------       ----------    -----------   -----------    -----------     -----------
                                    -----------       ----------    -----------   -----------    -----------     -----------

NET INCOME (LOSS) PER
 COMMON SHARE                       $     (.004)       $       0    $    (.0001)  $      .002    $     (.004)    $     (.002)
                                    -----------       ----------    -----------   -----------    -----------     -----------
                                    -----------       ----------    -----------   -----------    -----------     -----------

WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING                5,160,500        5,481,826      5,160,500     5,481,826      5,160,500       5,481,826
                                    -----------       ----------    -----------   -----------    -----------     -----------
                                    -----------       ----------    -----------   -----------    -----------     -----------
</TABLE>

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<PAGE>

                               XANTHIC ENTERPRISES, INC.
                             (A development stage company)
                 STATEMENT OF CHANGES IN SHAREHOLDERS' 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, 1987           1,010,000      $    101      $ 2,212       $  (1,160)         $   1,153

Issued 4,150,500 shares of
 common stock                        4,150,500           415        1,510               -              1,925

Additional paid-in Capital                   -             -          430               -                430

Net loss for year                            -             -            -         (21,667)           (21,667)
                                     ---------      --------      -------       ----------         ----------

BALANCE, DECEMBER 31, 1988           5,160,500      $    516      $ 4,152       $ (22,827)         $ (18,159)

Sold 7,500 shares of
 common stock                            7,500             1        7,499               -              7,500 

Issued shares of common stock          313,826            31            -               -                 31
Net income for period                        -             -            -          10,628             10,628
                                     ---------      --------      -------       ----------         ----------

BALANCE, JUNE 30, 1989               5,481,826      $    548      $11,651       $ (12,199)         $        -
                                     ---------      --------      -------       ----------         ----------
                                     ---------      --------      -------       ----------         ----------
</TABLE>

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<PAGE>

                                           XANTHIC ENTERPRISES, INC.
                                         (A development stage company)
                                            STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>

                                                     For the year                     For the six months        October 27, 1986   
                                                  ending December 31,                 ending June 30,          (Date of inception) 
                                                  -------------------                 ------------------        to June 30, 1989   
                                                         1988                          1989        1988        ------------------- 
                                                         ----                          ----        ----            
                                                      (Audited)                           (Unaudited)               (Unaudited)
                                                                                                              
<S>                                                  <C>                           <C>         <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES        
   Net income (loss)                                   $(21,667)                   $10,628         $(20,117)         $(12,199)
   Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:
         Debt relief                                          -                    (17,051)               -                 -
         Common stock issued for services                     -                         31                -                31
         Changes in operating assets and liabilities:
               Accounts payable                           1,156                      1,156              848                 -
               Other assets                              (1,020)                         -           (1,623)                -
               Deferred costs                            17,066                          -           17,066                 -
                                                       ---------                   -------         ---------         ---------

NET CASH PROVIDED BY FINANCING ACTIVITIES                (4,465)                    (7,548)          (3,826)          (12,168)

CASH FLOWS FROM FINANCING ACTIVITIES
         Sale of common stock                             1,925                      7,500            1,925            12,168
         Note payable                                     1,500                          -            1,500                 -
                                                       ---------                   -------         ---------         ---------

NET CASH PROVIDED BY FINANCING ACTIVITIES                 3,425                      7,500            3,425            12,168
                                                       ---------                   -------         ---------         ---------

NET INCREASE (DECREASE) IN CASH                          (1,040)                       (48)            (401)                -

CASH, BEGINNING OF PERIOD                                 1,088                         48            1,088                 -

CASH, END OF PERIOD                                    $     48                    $     -          $   687          $      -
                                                       ---------                   -------         ---------         ---------
                                                       ---------                   -------         ---------         ---------
</TABLE>

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                                      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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