UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                   FORM 10-KSB

(x )     ANNUAL  REPORT  PURSUANT  TO  SECTION  13  OR  15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 (FEE REQUIRED)
         For the fiscal year ended             January 31, 1997
                                   ---------------------------------------------

(  )     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
         For the transition period from                  to
                                        -----------------  ---------------------

         Commission File number                  32-12095-NY
                                ------------------------------------------------
                              CAROUSEL CAPITAL, INC
               (Exact name of registrant as specified in charter)

                        Nevada                                13-3436101
State or other jurisdiction of incorporation          (I.R.S. Employer I.D. No.)
 or organization

P. O. Box 17260 Salt Lake City, Utah                                84117
(Address of principal executive offices)                          (Zip Code)

Issuer's telephone number, including area code          (1-801-273-1203)

Securities registered pursuant to section 12 (b) of the Act:

Title of each class                    Name of each exchange on which registered
       None                                              None

Securities registered pursuant to section 12 (g ) of the Act:
             Common Stock, par value $0.001
                     (Title of Class)

Check whether the Issuer (1 ) 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.

                  (1) Yes [X ]   No [ ]       (2)  Yes [X]    No [  ]

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

State issuer's revenues for its most recent fiscal year:  $       -0-

State the aggregate  market value of the voting stock held by  nonaffiliates  of
the registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold,  or the average bid and asked  prices of such
stock, as of a specified date within the past 60 days.

                                        1

<PAGE>




At January 31,  1997,  the  aggregate  market  value of the voting stock held by
nonaffiliates is undeterminable and is considered to be 0.

     (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

                                 Not applicable

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

As of January 31, 1997,  the  registrant  had  1,022,200  shares of common stock
issued and outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the part
of the form 10- KSB (e.g.,  part I, part II,  etc.) into which the  document  is
incorporated:  (1) Any annual report to security holders; (2) any proxy or other
information statement;  and (3) Any prospectus filed pursuant to rule 424 (b) or
(c) under the Securities Act of 1933: None

                                        2

<PAGE>





                                                 TABLE OF CONTENTS

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


PART I
                                                                            Page

ITEM 1.  DESCRIPTION OF BUSINESS                                              4

ITEM 2.  DESCRIPTION OF PROPERTIES                                            4

ITEM 3.  LEGAL PROCEEDINGS                                                    4

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

PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS             5

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION            5

ITEM 7.  FINANCIAL STATEMENTS                                                 6

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE                                             6

PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT                   6

ITEM 10. EXECUTIVE COMPENSATION                                               9

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT       9

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                       10

PART IV

ITEM 13. EXHIBITS                                                             11

                                        3

<PAGE>



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


                         ITEM 1. DESCRIPTION OF BUSINESS

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


History and Organization

The Company was  incorporated  under the laws of the State of Nevada on February
25, 1986 with authorized capital stock of 500,000,000 shares at $0.001 par value
and on March 28, 1995 the  authorized  capital stock was decreased to 50,000,000
shares at $0.001 par value.

During  April 1987 the Company  completed a public  offering  and sale of 10,000
shares of it's common  capital stock and as part of that sale the company issued
A and B warrants to be exercised by April 9, 1991.  The warrants  expired before
being exercised.  During August 1996 the Company issued 1,000,000 shares of it's
common  capital stock for $20,000.  $19,000 was paid for an option on land.  The
option expired in October 1996 as was written off as a loss.

The company  completed a reverse  stock split on November  28, 1995 at 1,000 for
one.

Since its inception the Company has been in the  development  stage and has been
engaged in seeking business  opportunities  and during that time the Company has
used all its assets in that effort.


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


                        ITEM 2. DESCRIPTION OF PROPERTIES

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


The Company's does not maintain any office nor does it own any property


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


                            ITEM 3. LEGAL PROCEEDINGS

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


None.


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


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

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


No matters were  submitted to a vote of  shareholders  of the Company during the
fiscal year ended January 31, 1997.





                                        4

<PAGE>



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


        ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

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


During the past five years there has been no established  trading market for the
company's  common capital stock.  Since its inception,  the Company has not paid
any dividends on its common stock,  and the Company does not anticipate  that it
will pay dividends in the foreseeable  future.  At January 31, 1997, the Company
had 69 shareholders.

During the last reporting period the registrant sold shares of it's common stock
as outlined below;

(a) On August 19,  1996 the  registrant  sold  1,000,000  shares of it's  common
    capital stock for $20,000 cash. 
(b) (1) The principal underwriter was "San Pedro
        Securities" Box 87, Punta Gorda Town, Belize, Central
             America.
    (2) The parties  purchasing the securities consisted of eight individuals or
        business entities located in Belize, Central America
(c)  The securities were sold for cash at $0.02 per share with no commissions or
     discounts.
(d)  An  exemption  from registration is claimed under Regulation S, Category 2,
     Rule 903, and  the  securities were issued showing Regulation S on the face
     of the certificate.
(e)  The securities contained no rights of conversion or exercise.

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


        ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

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


Overview

The Company was  incorporated  under the laws of the State of Nevada on February
25, 1986 with authorized capital stock of 500,000,000 shares at $0.001 par value
and on March 28, 1995 the  authorized  capital stock was decreased to 50,000,000
shares at $0.001 par value.

During  April 1987 the Company  completed a public  offering  and sale of 10,000
shares of it's common  capital stock and as part of that sale the company issued
A and B warrants to be exercised by April 9, 1991.  The warrants  expired before
being  exercised.  During August 1996 the Company sold 1,000,000  shares of it's
common  capital  stock for  $20,000.  $19.000  was paid on an option to purchase
land. The option expired in October 1996 and was written of as a loss.

The company completed a reverse stock split on November 28, 1995 at 1,000 shares
for one.

Since its inception the Company has been in the  development  stage and has been
engaged in seeking business  opportunities  and during that time the Company has
used all its assets in that effort.

Since discontinuing operations,  the Company has had no business operations. The
Company intends to take advantage of any reasonable  business proposal presented
which management  believes will provide the Company and its stockholders  with a
viable business opportunity. The board of directors will make the final approval
in  determining  whether to complete  any  acquisition,  and unless  required by
applicable  law,  the  articles  of  incorporation  or  bylaws  or by  contract,
stockholders' approval will not be sought.

                                        5

<PAGE>



The  investigation  of  specific  business  opportunities  and the  negotiation,
drafting, and execution of relevant agreements,  disclosure documents, and other
instruments  will require  substantial  management  time and  attention and will
require  the  Company to incur  substantial  costs for  payment of  accountants,
attorneys,  and others.  If a decision is made not to participate in or complete
the  acquisition  of a specific  business  opportunity,  the costs incurred in a
related investigation will not be recoverable.  Further, even if an agreement is
reached  for the  participation  in a specific  business  opportunity  by way of
investment or otherwise,  the failure to consummate the  particular  transaction
may result in the loss to the Company of all related costs incurred. In the past
the board of directors has approved a resolution  authorizing  the Registrant to
issue  shares of its  common  stock as  consideration  for  monies  advanced  or
services rendered on behalf of the Company.


Currently,  management is not able to determine the time or resources  that will
be necessary  to complete  the  participation  in or  acquisition  of any future
business prospect.

Liquidity and Capital Resources

As of January 31, 1997, the Company had no assets to pay its liabilities.

Results of Operations

Since the Company ceased  operations in 1990, its only activity to date involves
the investigation of potential business opportunities.


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


                          ITEM 7. FINANCIAL STATEMENTS

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


The  financial  statements  of the Company are included  following the signature
page to this form 10-KSB.


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


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

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


The Company has had no disagreements  with its certified public accountants with
respect to accounting practices or procedures of financial disclosure.


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


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

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



                                        6

<PAGE>



The  following  table sets forth as of January  31,  1997,  the name,  age,  and
position of each  executive  officer and director and the term of office of each
director of the Company.

Name             Age     Position                  Director and/or Officer Since

Laura Olson      41      President and Director    February 26, 1997
Brad Smith       37      Secretary and Director    February 26, 1997

Each  director  of the  Company  serves  for a term of one  year and  until  his
successor  is elected  at the  Company's  annual  shareholders'  meeting  and is
qualified,  subject to  removal  by the  Company's  shareholders.  Each  officer
serves,  at the pleasure of the board of  directors,  for a term of one year and
until his  successor is elected at the annual  meeting of the board of directors
and is qualified.

Set  forth  below is  certain  biographical  information  regarding  each of the
Company's executive officers and directors.

Laura Olson                  She was born in Salt Lake City, Utah.  Graduated
                             from Granite High School in 1973.  Attended Salt
                             Lake Community college for one year in Fashion
                             Merchandising.  Worked for Plywood Wholesalers
                             from 1974 to 1977.  Self employed since 1977.

Brad Smith                   He was born in Salt Lake City, Utah.  Graduated
                             from the University of Utah in 1986 with a
                             Bachelor of Arts in English.  Self employed
                             insurance agent from 1982 to 1993.  Serves as
                             board member for several corporations and is
                             currently self employed..

Except as indicated below, to the knowledge of management,  during the past five
years, no present or former director,  executive  officer or person nominated to
become a director or an executive officer of the Company:

(1) filed a petition under the federal  bankruptcy laws or any state  insolvency
law, nor had a receiver,  fiscal agent or similar  officer  appointed by a court
for the business or property of such person,  or any partnership in which he was
a general partner at or within two years before the time of such filing;

(2) was  convicted  in a  criminal  proceeding  or named  subject  of a  pending
criminal proceeding (excluding traffic violations and other minor offenses);

(3) was the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated,  of any court of competent  jurisdiction,  permanently  or
temporarily enjoining him from or otherwise limiting, the following activities:

              (I) acting as a futures commission  merchant,  introducing broker,
              commodity trading advisor,  commodity pool operator, floor broker,
              leverage  transaction  merchant,  associated  person of any of the
              

                                        7

<PAGE>



              foregoing,  or as an investment  advisor,  underwriter,  broker or
              dealer  in  securities,  or  as  an affiliate person,  director or
              employee of any investment company,  or  engaging in or continuing
              any conduct or practice in connection with such activity;

              (ii)  engaging in any type of business practice; or

              (iii) engaging in any activity in connection  with the purchase or
              sale of any  security  or  commodity  or in  connection  with  any
              violation  of  federal  or  state   securities   laws  or  federal
              commodities laws;

(4)  was the  subject  of any  order,  judgment,  or  decree,  not  subsequently
reversed,  suspended,  or vacated,  of any federal or state  authority  barring,
suspending or otherwise  limiting for more than 60 days the right of such person
to engage in any activity  described  above under this Item, or to be associated
with persons engaged in any such activity;

(5) was found by a court of competent  jurisdiction  in a civil action or by the
Securities  and  Exchange  Commission  to have  violated  any  federal  or state
securities  law,  and the  judgment  in such  civil  action  or  finding  by the
Securities  and  Exchange   Commission  has  not  been  subsequently   reversed,
suspended, or vacated.

(6) was found by a court of competent  jurisdiction  in a civil action or by the
Commodity  Futures Trading  Commission to have violated any federal  commodities
law, and the judgement in such civil action or finding by the Commodity  Futures
Trading Commission has not been subsequently reversed, suspended or vacated.

                Compliance with Section 16(a) of the Exchange Act

Since the Company ceased operations in 1990, the Company knows of no person, who
at any time  during  the  subsequent  fiscal  years,  was a  director,  officer,
beneficial  owner of more than ten percent of any class of equity  securities of
the  registrant  registered  pursuant to Section 12 ("Reporting  Person"),  that
failed to file on a timely basis any reports  required to be furnished  pursuant
to  Section  16 (a).  Based  upon a  review  of Forms 3 and 4  furnished  to the
registrant  under Rule 16a-3(d)  during its most recent fiscal year,  other than
disclosed below, the registrant knows of no Reporting Person that failed to file
the required reports during the most recent fiscal year or prior years.

The following  table sets forth as of January 31, 1997, the name and position of
each Reporting Person that failed to file on a timely basis any reports required
pursuant to Section 16(a) during the most recent fiscal year or prior years.

Name                   Position                           Report to be Filed

Laura Olson            President and Director             Form 3
Brad Smith             Secretary and Director             Form 3






                                        8

<PAGE>



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


                         ITEM 10. EXECUTIVE COMPENSATION

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


Cash Compensation

There was no cash  compensation paid to any director or executive officer of the
Company during the fiscal years ended January 31, 1997, 1996, and 1995.

Bonuses and Deferred Compensation

None.

Compensation Pursuant to Plans

None.

Pension Table
None.

Other Compensation
None

Compensation of Directors
None.

Termination of Employment and Change of Control Arrangement

There  are no  compensatory  plans or  arrangements,  including  payments  to be
received from the Company, with respect to any person named in Cash Compensation
set out above  which  would in any way  result in  payments  to any such  person
because of his resignation,  retirement,  or other  termination of such person's
employment with the Company or its subsidiaries, or any change in control of the
Company,  or a change in the person's  responsibilities  following a changing in
control of the Company.


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


    ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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


The following  table sets forth as of January 31, 1997, the name and address and
the number of shares of the Company's  Common Stock, par value $0.001 per share,
held of record or beneficially  by each person who held of record,  or was known
by the Company to own  beneficially,  more than 5% of the issued and outstanding
shares of the Company's  Common Stock,  and the name and  shareholdings  of each
director and of all officers and directors as a group.


                                        9

<PAGE>




                                Nature of           Number of
Name of Person or Group         Ownership (1)       Shares Owned       Percent
-----------------------         --------------      ------------       -------

Officers and Directors and
  Principal Shareholders:

Laura Olson                      Direct                       -             -
Brad Smith                       Direct                       -             -

All Officers and Directors
  as a Group (3 persons)         Direct                       -             -

           (1) All shares owned directly are  owned  beneficially and of
               record, and such shareholder has sole voting, investment,
               and dispositive power, unless otherwise noted.


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


             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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



Transactions with Management and Others

Except as indicated below, and for the periods indicated, there were no material
transactions,  or series of similar  transactions,  since the  beginning  of the
Company's last fiscal year, or any currently proposed transactions, or series of
similar  transactions,  to which the Company was or is to be party, in which the
amount involved exceeds $60,000, and in which any director or executive officer,
or any  security  holder  who  is  known  by the  Company  to own of  record  or
beneficially  more than 5% of any class of the Company's  common  stock,  or any
member of the immediate family of any of the foregoing persons, has an interest.

Certain Business Relationships

The   transactions   described  below  were  not  the  result  of  arm's  length
negotiations,  but in the opinion of management,  the terms of such transactions
were fair to the Company  and no less  favorable  than could have been  obtained
from unrelated parties.

At a special  meeting of the board of directors  held on July 1, 1993, the board
approved a resolution authorizing the Company to issue shares of common stock of
the Company as consideration to officers, directors, and affiliates for services
rendered and  reimbursement of expenses incurred on behalf of the Company due to
the  Company's  reduced  operational  status  and lack of  funds  to cover  such
expenses. Pursuant to a resolution of the board of directors dated July 1, 1993,
the board authorized the issuance of 6,200,000 shares of common stock as payment
for services and expenses rendered on behalf of the Company.

Indebtedness of Management

There were not material transactions,  or series of similar transactions,  since

                                       10

<PAGE>



the  beginning of the  Company's  last fiscal year,  or any  currently  proposed
transactions,  or series of similar transactions, to which the Company was or is
to be a party,  in which the amount  involved  exceeds  $60,000 and in which any
director  or  executive  officer,  or any  security  holder  who is known to the
Company  to own of  record  or  beneficially  more  than 5% of any  class of the
Company's  common  stock,  or any member of the  immediate  family of any of the
foregoing persons, has an interest.

Transactions with Promoters

The  Company  was  organized  more than five  years ago  therefore  transactions
between the Company and its promoters or founders are not deemed to be material.

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


                    ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

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


(a) (1)  Financial Statements. The following  financial  statements are included
         in this report:

Title of Document                                                           Page

Report of Andersen, Andersen & Strong, Certified Public Accountants          13

Balance Sheet as of January 31, 1997                                         14

Statements of Operations for years ended January 31, 1997 and 1996           15

Statements of Stockholders' Equity for the years ended January 31, 1997
   and 1996 and from inception                                               16

Statements of Cash Flows for the years ended January 31, 1997 and 1996       18

Notes to Financial Statements                                                19

(a)(2)  Financial  Statement  Schedules.    The  following  financial  statement
        schedules are included as part of this report:

None.

(a)(3)  Exhibits.  The following exhibits are included as part of this report by
        reference:

None.









                                       11

<PAGE>



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


                                   SIGNATURES

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


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


                                          CAROUSEL CAPITAL, INC.

Date: March 26,1997                       By /s/Laura Olson
                                             Laura Olson, President and Director

Date: March 26, 1997                      By /s/Brad Smith
                                             Brad Smith, Secretary and Director

                                       12

<PAGE>











Board of Directors
Carousel Capital, Inc.
Salt Lake City, Utah


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


We have audited the  accompanying  balance sheets of Carousel  Capital,  Inc. (a
development  stage  company) at January 31,  1997,  and January 31, 1996 and the
statements of  operations,  stockholders'  equity,  and cash flows for the years
ended January 31, 1997, 1996, and 1995 and the period February 25, 1986 (date of
inception)   to  January  31,  1997.   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 audits.

We  conducted  our  audits  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 financial statement  presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of Carousel  Capital,  Inc. at
January 31, 1997, and January 31, 1996 and the results of its operations and its
cash flows for the years ended January 31, 1997,  1996,  and 1995 and the period
February 25, 1986 (date of  inception)  to January 31, 1997 in  conformity  with
generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial  statements,  the Company has been in the development  stage since its
inception  and has  suffered  recurring  losses from  operations,  which  raises
substantial   doubt  about  it's  ability  to  continue  as  a  going   concern.
Management's  plans in  regard to these  matters  are  described  in Note 4. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.



Salt Lake City, Utah                         /s/Andersen Andersen & Strong
March 24, 1997

                                       13

<PAGE>



                             CAROUSEL CAPITAL, INC.
                          (A Development Stage Company)
                                 BALANCE SHEETS
                     January 31, 1997, and January 31, 1996

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


                                                  January 31,        January 31,
                                                     1997                1996
                                                 -----------        -----------


ASSETS

CURRENT ASSETS

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

          Total current assets              $         -           $       -
                                             ==============        ============


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

   Accounts payable                             $     4,300          $    2,050
                                                 ----------           ---------

          Total current Liabilities                   4,300               2,050
                                                 ----------           ---------


STOCKHOLDERS' EQUITY

   Common stock, 50,000,000 shares
     authorized, at $0.001 par value;
     1,022,200 shares issued and
     outstanding at January 31, 1997;
     22,200 shares at January 31, 1996

                                                      1,022                  22

   Capital in excess of par value                   108,739              89,739

   Deficit accumulated during the
       development stage                           (114,061)            (91,811)
                                                   --------             -------

          Total Stockholder's deficiency             (4,300)             (2,050)
                                                 ----------            --------

                                            $         -           $       -
                                             ==============        ============



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

                                       14

<PAGE>



                             CAROUSEL CAPITAL, INC.
                          (A Development Stage Company)
                            STATEMENTS OF OPERATIONS
                   For the Years Ended January 31, 1997, 1996
               and 1995 and the Period February 25, 1986 (Date of
                         Inception) to January 31, 1997

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


                                                               February 25, 1986
                        January      January      January    (Date of Inception)
                          1997         1996         1995       to January, 1997
                         ------      --------     --------     ----------------

REVENUES               $      -      $    -       $    -          $     9,783

EXPENSES               $   22,250    $  2,050          -              123,844
                        ---------     -------      -------         ----------

NET LOSS               $  (22,250)   $ (2,050)         -          $  (114,061)
                        =========     =======      =======         ==========

NET LOSS PER COMMON
   SHARE               $     (.02)   $    -       $    -
                        =========     =======      =======
























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







                                       15

<PAGE>



                             CAROUSEL CAPITAL, INC.
                          (A Development Stage Company)
                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                Period from February 25, 1986 (Date of Inception)
                               to January 31, 1997

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

<TABLE>
<CAPTION>

                                                                                            Capital in
                                                             Common Stock                    Excess of            Accumulated
                                                     Shares               Amount             Par Value          Deficit


<S>                                                 <C>                   <C>                   <C>                  <C>        
Balance February 25, 1986 (Date of
   Inception)                                          -              $     -               $     -              $     -

Issuance of common stock for cash
   September 17, 1986                                6,000                    6                 5,994                  -

Issuance of common stock for cash
      less costs - April 9, 1987                    10,000                   10                77,551                  -

Net income for the year ended
   January 31, 1988                                    -                    -                     -                 (8,461)
                                                ----------             --------             ---------              -------

Balance January 31, 1988                            16,000                   16                83,545               (8,461)
                                                    ------                 ----              --------              -------

Net loss for the year ended
   January 31, 1989                                    -                   -                      -                (23,123)

Net income for the year ended
   January 31, 1990                                    -                   -                      -                     99


Net loss for the year ended
   January 31, 1991                                    -                   -                      -                (52,076)
                                                  --------              ------               --------               ------


Balance January 31, 1991                            16,000                  16                 83,545              (83,561)
                                                    ------                 ---               --------              -------


Balance January 31, 1993                            16,000                  16                 83,545              (83,561)
                                                    ------                 ---               --------              -------

Issuance of common stock for
   expenses and services -
   July 1, 1993                                      6,200                   6                  6,194                  -

Net loss for the year ended
   January 31, 1994                                    -                   -                      -                 (6,200)
                                                ----------              ------               --------              -------

Balance January 31, 1994                            22,200                  22                 89,739              (89,761)
                                                    ------                ----               --------              -------

</TABLE>



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

                                       16

<PAGE>



                             CAROUSEL CAPITAL, INC.
                          (A Development Stage Company)
            STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Continued)
                Period from February 25, 1986 (Date of Inception)
                               to January 31, 1997

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

<TABLE>
<CAPTION>

                                                                                           Capital in
                                                            Common Stock                    Excess of            Accumulated
                                                     Shares              Amount             Par Value              Deficit


<S>                                                  <C>                   <C>              <C>                    <C>       
Balance January 31, 1995                             22,200                $  22            $   89,739             $ (89,761)



Net loss for the year ended
   January 31, 1996                                     -                    -                     -                  (2,050)
                                         ------------------        -------------        --------------             ---------


Balance January 31, 1996                             22,200                   22                89,739             $ (91,811)


Issuance of common stock for
     cash - August 28, 1996                       1,000,000                1,000                19,000

Net loss for the year ended
   January 31, 1997                                     -                    -                     -                 (22,250)
                                         ------------------        -------------        --------------         -------------


Balance January 31, 1997                          1,022,200      $        1,0 22           $   108,739            $ (114,061)
                                          =================       ==============            ==========             =========

</TABLE>























    The accompanying notes are an integral part of these financial statements

                                       17

<PAGE>



 .

                             CAROUSEL CAPITAL, INC.
                          (A Development Stage Company)
                             STATEMENT OF CASH FLOWS
                               For the Years Ended
              January 31, 1997, 1996, and 1995 and the Period from
            February 25, 1986 (Date of Inception) to January 31, 1997

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                                                                                             February 25, 1986
                                                                   January    January         January       (Date of Inception)
                                                                     1997       1996            1995          to January 1997
                                                                   -------    --------        --------        ---------------


CASH FLOWS FROM
   OPERATING ACTIVITIES:

<S>                                                            <C>           <C>            <C>                 <C>         
   Net loss                                                    $  (22,250)   $ (2,050)      $    -              $  (114,061)

   Adjustments to reconcile net loss to
       net cash provided by operating
       activities:

       Capital stock issued for:

          Expenses and services                                       -            -             -                    6,200

       Increase in accounts payables                                2,250        2,050           -                    4,300
                                                              -----------     --------      ---------          ------------

          Net Cash Used by Operations                             (20,000)         -             -                 (103,561)
                                                                ---------     --------      ---------          ------------

CASH FLOWS FROM INVESTING
   ACTIVITIES:                                                        -            -             -                      -
                                                             --------------   --------      ---------          ------------

CASH FLOWS FROM FINANCING
   ACTIVITIES:

   Proceeds from issuance of common
       stock                                                       20,000          -             -                  103,561
                                                               ----------    ---------      ---------            ----------

   Net Increase (Decrease) in Cash
                                                                      -            -             -                      -
   Cash Beginning of Period                                           -            -             -                      -
                                                             -------------- ----------      ----------          -----------

   Cash End of Period                                       $         -      $     -      $      -             $        -
                                                             =============== =========      ==========          ===========
</TABLE>


SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES

Issuance of 6,200 common shares for expenses - 1993                     $  6,200


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

                                       18

<PAGE>



                             CAROUSEL CAPITAL, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS

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



1.  ORGANIZATION

The Company was  incorporated  under the laws of the state of Nevada on February
25,  1986 with  authorized  capital  stock of  500,000,000  shares at $0.001 par
value.  On  March  28,  1995 the  authorized  capital  stock  was  decreased  to
50,000,000 shares at $0.001 par value.

During  April 1987 the Company  completed a public  offering  and sale of 10,000
shares of it's common  capital stock and as part of that sale the Company issued
A and B warrants to be exercised by April 9, 1991.  The warrants  expired before
being exercised.

The Company completed a reverse stock split on November 28, 1995 at 1,000 shares
for one.  This report has been  prepared  showing  after stock split shares from
inception.

Since  inception  the  Company  has been in the  development  stage and has been
engaged in seeking business opportunities.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Methods

The  Company  recognizes  income and  expenses  based on the  accrual  method of
accounting.

Dividend Policy

The Company has not yet adopted a policy regarding payment of dividends.

Income Taxes

At January 31, 1997, the Company had a net operating loss carry forward totaling
$114,061. The tax benefit from the loss carry forward has been fully offset by a
valuation  reserve,  because the use of the future tax benefit is undeterminable
since the Company has no operations.

Earnings (Loss) Per Share

Earnings  (loss) per share  amounts are computed  based on the weighted  average
number of shares actually outstanding after the reverse stock split.




                                       19

<PAGE>


                             CAROUSEL CAPITAL, INC.
                          (A Development Stage Company)
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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



3.  RELATED PARTY TRANSACTIONS

The  officers  and  directors  of the  Company are  involved  in other  business
activities and they may, in the future,  become involved in additional  business
ventures  which  also  may  require  their  attention.  If a  specific  business
opportunity  becomes  available,  such  persons may face a conflict in selecting
between  the  Company  and their  other  business  interests.  The  Company  has
formulated no policy for the resolution of such conflicts.

4.  GOING CONCERN

The  Company  intends to acquire  interests  in various  business  opportunities
which, in the opinion of management, will provide a profit to the Company.

Continuation  of the  Company as a going  concern is  dependent  upon  obtaining
additional  working  capital and the  management  of the Company has developed a
strategy,  which it believes will accomplish this objective  through  additional
equity  funding  which will enable the Company to continue  operations  into the
future.

Management  recognizes  that, if it is unable to raise additional  capital,  the
Company cannot conduct operations in the future.

                                       20