SECURITIES AND EXCHANGE COMMISSION
                                 
                      Washington, D.C. 20549

                            FORM 10-Q

[X]     Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934

       For Quarter Ended:  December 31, 1996 Commission File No. 33-18143-D

                                OR

[ ]    Transition Report Pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934

       For the Transition Period From:                To:                      
                
       Commission File No.

                         CORVALLIS, INC.
                         ---------------
      (Exact name of registrant as specified in its charter)

                   Nevada                       87-0449399
                  --------                      -----------
      (State or other jurisdiction              (I.R.S. Employer  
    of incorporation or organization)           Identification No.)


           1486 South 11th East
           Salt Lake City, Utah                 84105
           --------------------                 -----
   (Address of principal executive offices)     (Zip Code)     

Registrant's telephone number, including area code:  (801) 487-3893
                                                     --------------

               Not applicable                                                  
               --------------               
Former name, former address and former fiscal year, if changed since last
report.


     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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  [   ]

             APPLICABLE ONLY TO CORPORATION ISSUERS:

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.  As of the date of filing
of this report, the Registrant had a total of 1,250,009 shares of common stock
issued and outstanding, after giving effect to a 1-for-25 reverse split
completed in August, 1994, and a 1-for-5 reverse split in August, 1995.

                  PART 1.  FINANCIAL INFORMATION
               ----------------------------------- 
                  ITEM 1.  FINANCIAL STATEMENTS
                                                                                
          In the opinion of the Registrant, the following unaudited financial
statements contain all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the financial position of the Company
as of December 31, 1996, and the results of its operations and changes in its
financial position for the six months ended December 31, 1996, and December
31, 1995, respectively, and from inception on September 28, 1987 through
December 31, 1996.  The results of its operations for such interim periods are
not necessarily indicative of the results to be expected for the entire year.

                                   ITEM 2.
                                   -------

             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS
        --------------------------------------------------
                                                            
MATERIAL CHANGES IN FINANCIAL CONDITION
---------------------------------------

     The Registrant has been essentially inactive since January, 1990.  The
Registrant's financial condition has not changed materially since the year
ended June 30, 1994.  However, during the fiscal year ended June 30, 1996, the
Registrant incurred $7,535 in legal, accounting and other expenses in
connection with the filing of periodic reports of the Registrant's efforts to
reactivate its operations and the Registrant's review of business
opportunities for possible involvement by the Registrant.  During the quarter
ended December 31, 1996, the Registrant incurred a total of $6,201 in such
expenses, as compared to a total of $416 in expenses for the quarter ended
December 31, 1995.  

     The Registrant's financial condition has not changed materially since the
year ended June 30, 1991, or since January, 1990.  Since January, 1990, the
Registrant has had essentially no assets and no revenue or losses from
operations.

    At present, the Company does not have adequate capital to conduct any
significant operations.  The Company intends to become engaged immediately in
the search for potential business opportunities for acquisition or involvement
by the Company.  Management believes that any business venture in which the
Company becomes involved will be made by issuing shares of the Company's
authorized but unissued common stock.  It is anticipated that the Company's
liquidity, capital resources and financial statements will be significantly
different subsequent to the consummation of any such transaction. 

MATERIAL CHANGES IN RESULTS OF OPERATIONS
-----------------------------------------

     As indicated above, the Company has had essentially no operations since
January 1990.  The Registrant had no operations, and no revenue during the
quarters ended December 31, 1996 and December 31, 1995.  The Registrant had a
loss of $7,322 for the six months ended December 31, 1996, as compared to a
loss of $1,390 for the six months ended December 31, 1995.  Such losses are
attributable to expenses incurred in connection with the Company's efforts to
update and maintain its accounting, legal matters and quarterly filings. 

     The Registrant had not filed any reports on Form 10-Q or Form 10-K from
September 1989 until the second quarter of 1994, when new management undertook
efforts to reactivate the Registrant and bring it current in its filing
requirements.   However, as indicated, the financial condition of the
Registrant has not changed materially since January 1990, except for the
contribution of some cash and services by officers, directors and certain
shareholders in exchange for stock, for the purpose of reactivating the
Company.  


                    PART 2.  OTHER INFORMATION
                   --------------------------
                                                                               
                          ITEM 1.  LEGAL PROCEEDINGS
                          --------------------------
                                                                               
     The Company is not a party to any legal proceedings and, to the best of
its knowledge, no such action by or against the registrant has been
threatened.
                                                                               
                       ITEM 2.  CHANGES IN SECURITIES
                        ------------------------------
                                                                               
     None.
                                                           
                          ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
                   ----------------------------------------
                                            
     Not applicable.
                                                                               
   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  -------------------------------------------------------------
                                                                               
      No matters were submitted to a vote of security holders during the
quarter ended December 31, 1996.

                          ITEM 5.  OTHER INFORMATION
                          --------------------------

      None.
                                                           
                  ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
                  ------------------------------------------
                                                                               
(a)   Exhibits.

      None.

(b)   Reports on Form 8-K.  During the quarter ended December 31, 1996, no
      reports on Form 8-K were filed by the Registrant.

                            SIGNATURES
                           ----------

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


CORVALLIS, INC.
(Registrant)


Date:  2/13/97                  By  /s/ Whitney O. Cluff
                                Whitney O. Cluff, President and
                                Chief Executive Officer

















                         CORVALLIS, INC.
                  (A Development Stage Company)

                       Financial Statements

               December 31, 1996 and June 30, 1996

















































                         C O N T E N T S


Independent Auditors' Report                                   3

Balance Sheets                                                 4

Statements of Operations                                       5

Statements of Stockholders' Equity (Deficit)                   6

Statements of Cash Flows                                       9

Notes to the Financial Statements                             11







                   INDEPENDENT AUDITORS' REPORT
                         ----------------------------

January 13, 1997



The Board of Directors
Corvallis, Inc.
Salt Lake City, Utah

The accompany balance sheet of Corvallis, Inc. (a development stage company)
as of December 31, 1996 and the related statements of operations,
stockholders' equity (deficit), and cash flows for the three months and six
months then ended and for the three months and six months ended December 31,
1995 and from inception on September 28, 1987 through December 31, 1996 were
not audited by us and, accordingly, we do not express an opinion on them.  The
accompanying balance sheet of Corvallis, Inc. as of June 30, 1996 was audited
by us and we expressed an unqualified opinion on it in our report dated August
14, 1996.



Jones, Jensen & Company<PAGE>
                         CORVALLIS, INC.
                  (A Development Stage Company)
                          Balance Sheets

                              ASSETS

                                            December 31,            June 30,
                                                1996                 1996
                                           --------------      --------------  
                                            (Unaudited)           (Audited)  

CURRENT ASSETS

  Cash                                     $       787         $       335
                                           --------------      --------------
     Total Current Assets                          787                 335
                                           --------------      --------------
     TOTAL ASSETS                          $       787         $       335
                                           ==============      ==============


          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                ----------------------------------------------

CURRENT LIABILITIES

   Accounts payable                        $       950         $    1,200
   Stockholders' payable (Note 6)                   24                -     
                                           ---------------     --------------
     Total Current Liabilities                     974              1,200
                                           ---------------     --------------
STOCKHOLDERS' EQUITY (DEFICIT)

  Common stock authorized 200,000,000
   shares at $0.001 par value: 1,330,009 
   and 1,250,009 shares issued and 
   outstanding, respectively                    1,330              1,250
  Additional paid-in capital                  189,725            181,805
  Deficit accumulated during the 
  development stage                          (191,242)          (183,920)
                                           ---------------    ---------------

     Total Stockholders' Equity (Deficit)        (187)              (865)
                                           ---------------    ---------------

     TOTAL LIABILITIES AND STOCKHOLDERS'
     EQUITY (DEFICIT)                      $      787         $      335
                                           ==============     ===============


                                 








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

                         CORVALLIS, INC.
                  (A Development Stage Company)
                     Statements of Operations
                           (Unaudited)
<TABLE>
<CAPTION>
                                                         
                                                                                      From     
                                                                                   Inception on
                                                                                   September 28,
                       For the Three             Months For the Six Months         1987 Through 
                     Ended December 31,               Ended December 31,           December 31,
                        1996          1995          1996          1995                 1996    
                     ----------    ----------    ----------   -----------           ----------
<S>                  <C>           <C>           <C>          <C>                   <C>
REVENUE              $   -         $   -         $   -        $   -                 $      -     

EXPENSES

  Consulting fees      2,000           -           2,000          -                      9,047
  Legal                2,000           -           2,000          -                      9,427
  Accounting             315           400         1,315         1,200                   9,248
  Other                1,716            16         1,837            30                   6,596
  Transfer fees          170           -             170           160                     170
                     ----------    ----------    ----------   ----------            -----------
     Total Expenses    6,201           416         7,322         1,390                  34,488

LOSS BEFORE
DISCONTINUED
OPERATIONS            (6,201)         (416)       (7,322)       (1,390)                (34,488)

LOSS ON 
DISCONTINUED
OPERATIONS               -             -             -             -                  (156,754)
                     ----------    ----------    ----------   ----------             ----------

NET LOSS             $(6,201)      $  (416)      $(7,322)     $ (1,390)             $ (191,242)
                     ==========    ==========    ==========   ==========            ===========

WEIGHTED
 AVERAGE
LOSS PER SHARE       $ (0.00)      $ (0.00)      $ (0.00)     $  (0.00)
                     ==========    ==========    ==========   ==========



</TABLE>
The accompanying notes are an integral part of these financial statements.






















                         CORVALLIS, INC.
                  (A Development Stage Company)
           Statements of Stockholders' Equity (Deficit)
                           (Unaudited)

                                                                  Deficit    
                                                                  Accumulated 
                                                   Additional     During the 
                          Common Stock              Paid-in        Development 
                     Shares         Amount         Capital        Stage    
                     ------------   ------------   ------------   ------------

Balance at inception     -          $   -          $      -          $   -
  
Issuance of common 
 stock at inception 
 at $.1875 per share 112,000             112          20,888             -
     
Issuance of common 
 stock in July 1988 
 at $1.25, less 
 deferred offering
 costs offset 
 against paid-in 
 capital             105,120             105          91,630             -     

Net loss from 
 inception to June 
 30, 1989                -               -                -           (19,673)
                    ------------    ------------   ------------   ------------
             
Balance, June 30, 
 1989                217,120             217          112,518         (19,673)

Issuance of common 
 stock for fixed 
 assets in August 
 1989                506,613             507           18,801             -
     

Issuance of common 
 stock in private 
 placement at 
 $.9375 in November 
 1989                 21,334              21           19,979             -
     

Net loss for the 
 year ended June 
 30, 1990                -               -                -          (132,670)
                     ------------   ------------   ------------   ------------
Balance, June 
 30, 1990            745,067             745          151,298        (152,343)

Net loss for the 
 year ended 
 June 30, 1991           -               -                -              (300)
                     ------------   -------------  ------------   ------------


Balance, 
 June 30, 1991       745,067             745          151,298        (152,643)

Net loss for 
 the year ended
 June 30, 1992           -               -                -              (300)
                     ------------   ------------  ------------    ------------

Balance, 
 June 30, 1992       745,067             745          151,298        (152,943)

Net loss for the 
 year ended
 June 30, 1993           -               -                -            (1,335)
                     ------------   ------------  -------------   ------------


Balance, 
 June 30, 1993       745,067             745          151,298        (154,278)
                     ------------   ------------  -------------   ------------

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








































                         CORVALLIS, INC.
                  (A Development Stage Company)
     Statements of Stockholders' Equity (Deficit) (Continued)
                           (Unaudited)
                                                                  Deficit    
                                                                  Accumulated 
                                                   Additional     During the 
                          Common Stock              Paid-in        Development 
                     Shares         Amount         Capital        Stage    
                     ------------   ------------   ------------   ------------

Balance, 
 June 30, 1993          745,067     $  745         $ 151,298      $(154,278)

Issuance of common 
 stock for 
 extinguishment of 
 stockholders'
 payable at $.0517       54,935         55            14,157             -     

Net loss for the 
 year ended June 
 30, 1994                   -           -              -            (14,252)
                    -----------   -----------  --------------   -------------
Balance, June 30, 
 1994                  800,002         800           165,455       (168,530)

Issuance of common 
 stock for
 extinguishment of 
 stockholders'
 payable at $.008 
 in March 1995          85,000          85             3,315           -     

Issuance of common 
 stock for
 extinguishment of 
 stockholders'
 payable at $.01 in 
 March 1995             60,000          60             2,940           -     

Issuance of common 
 stock for
 services rendered 
 at $.008
 in March 1995          75,000          75             2,925           -     

Net loss for the 
 year ended June 
 30, 1995                -              -                -          (7,855)

Balance, June 30, ---------------  ------------   -------------    ----------
 1995                1,020,002     $     1,020         $174,635     $(176,385)
                  --------------   ------------   -------------    ----------
The accompanying notes are an integral part of these financial statements.






                         CORVALLIS, INC.
                  (A Development Stage Company)
     Statements of Stockholders' Equity (Deficit) (Continued)
                           (Unaudited)



                                                                  Deficit    
                                                                  Accumulated 
                                                   Additional     During the 
                          Common Stock              Paid-in        Development 
                     Shares         Amount         Capital        Stage    
                     ------------   ------------   ------------   ------------
                            
Balance, June 30, 
1995                 1,020,002      $    1,020     $ 174,635      $(176,385)

Capital contributed 
 by extinguishment 
 of stockholders' 
 payable                   -              -            1,150            -     

Issuance of common 
 stock for 
 extinguishment of 
 stockholders' 
 payable at $0.05 
 per share in 
 September, 1995        20,000              20           980            -     
Issuance of common 
stock for
extinguishment of 
stockholders'
payable at $0.025 per 
share in
March, 1996            130,000             130          3,120            -     

Issuance of common 
 stock for services 
 rendered at $0.025
 per share in March, 
 1996                   80,000             80           1,920            -
     
Fractional shares 
 from reverse stock 
 split                       7             -             -               -    

Net loss for the year 
 ended June 30, 1996       -               -             -           (7,535)
                     ------------  ------------   ------------   ------------

Balance, June 30, 
 1996                1,250,009          1,250         181,805      (183,920)

Issuance of common 
 stock for services 
 rendered at $0.10
 per share in 
 October, 1996          30,000             30           2,970          -     


Issuance of Common 
 stock for
 extinguishment of 
 stockholders'
 payable at $0.10 
 per share in
 October 1996          50,000              50           4,950          -     

Net loss for the six 
 months ended 
 December 31, 1996         -             -               -          (7,322)
                     ------------   ------------   ------------   ------------
Balance, December 
 31, 1996              1,330,009    $   1,330      $   189,725    $ (191,242)
                     ============   ============   ============   ============
                                 
The accompanying notes are an integral part of these financial statements.









                                 
































                         CORVALLIS, INC.
                  (A Development Stage Company)
                     Statements of Cash Flows
                           (Unaudited)

<TABLE>
<CAPTION>

                                                                                        From     
                                                                                     Inception on
                                                                                    September 28,
                           For the Three             Months For the Six Months       1987 Through 
                         Ended December 31,               Ended December 31,         December 31,
                          1996          1995              1996          1995            1996    
                       ----------    ----------        ----------   -----------      ------------

<S>                    <C>           <C>               <C>          <C>             <C>
CASH FLOWS FROM
 OPERATING ACTIVITIES

  Net loss             $  (6,201)    $    (416)        $  (7,322)   $   (1,390)      $  (191,242)
  Issuance of common
   stock for fixed 
   assets                    -             -                  -            -              19,308
  Stock issued for 
  services
  expenses paid by 
  stockholders            3,000            -               3,000           -              28,687
  Accounts payable
   stockholder 
   converted to
   additional paid-in 
   capital     -               -           -                  -            -               1,150
  Increase (decrease) 
  in current 
  liabilities             2,024            -               4,774           -               5,974
                       ----------    -----------       ----------   -----------      ------------

     NET CASH PROVIDED 
     (USED) BY 
     OPERATING 
     ACTIVITIES          (1,177)          (416)              452       (1,390)         (136,123)
                       ----------    -----------       ----------   -----------      ------------

CASH FLOWS FROM
 INVESTING ACTIVITIES       -              -                  -       -                  -   
                       ----------    -----------       ----------   -----------      ------------
                       
CASH FLOWS FROM
 FINANCING ACTIVITIES

  Sale of common stock      -              -                   -          1,000          136,910
                       -----------   ------------      -----------  ------------     ------------

     NET CASH PROVIDED 
     (USED)
     BY FINANCING
     ACTIVITIES             -              -                   -          1,000          136,910
                       ----------    ------------      -----------  ------------     ------------

NET INCREASE (DECREASE) 
 IN CASH AND CASH 
 EQUIVALENTS             (1,177)         (416)                452          (390)             787


CASH AND CASH 
 EQUIVALENTS
 AT BEGINNING OF 
 PERIOD                   1,964           446                 335           420               -
                       ----------    ------------      -----------  ------------     ------------
     

CASH AND CASH 
 EQUIVALENTS
 AT END OF PERIOD      $    787      $     30          $      787   $        30      $      787
                       ==========  ==========    =========  ==========   ==========

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

</TABLE>























































                         CORVALLIS, INC.
                  (A Development Stage Company)
                     Statements of Cash Flows
                           (Unaudited)
<TABLE>
<CAPTION>

    
                                                                                        From     
                                                                                     Inception on
                                                                                    September 28,
                           For the Three             Months For the Six Months       1987 Through 
                         Ended December 31,               Ended December 31,         December 31,
                          1996          1995              1996          1995            1996    
                       ----------    ----------        ----------   -----------      ----------
<S>                   <C>           <C>               <C>          <C>               <C>
CASH PAID FOR

  Income Taxes         $    -        $   -             $    -         $   -            $    -     
  Interest             $    -        $   -             $    -         $   -            $    -     

NON CASH FINANCING ACTIVITIES

  Issuance of common 
   stock for equipment $    -        $   -             $    -         $   -            $  19,308

  Issuance of common 
   stock
   for stockholders' 
   payable             $  5,000      $   -             $  5,000    $   -            $  25,612

  Issuance of common 
    stock for services 
    rendered           $  3,000      $   -             $  3,000    $  -             $  8,000


















</TABLE>













                         CORVALLIS, INC.
                  (A Development Stage Company)
                Notes to the Financial Statements
               December 31, 1996 and June 30, 1996

NOTE 1 -     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

a.     Organization

The financial statements presented are those of Corvallis, Inc, a development
stage company.  The Company was incorporated in the State of Nevada on
September 28, 1987.  The Company was incorporated for the purpose of providing
a vehicle which could be used to raise capital and seek business opportunities
believed to hold a potential for profit.  The Company has not presently
identified a specific business area or direction that it will follow. 
Therefore, no principal operations have yet begun.

b.     Accounting Method

The Company's financial statements are prepared using the accrual method of
accounting.  The Company elected a June 30th fiscal year end.

c.     Net Loss Per Share

The computations of net loss per share of common stock are based on the
weighted average number of shares outstanding at the date of the financial
statements.

d.     Deferred Stock Offering Costs

In connection with the public offering of the Company's common stock (see Note
2), all costs were accumulated as deferred charges.  The deferred charges were
offset against proceeds received from the stock offering.

e.     Provision for Taxes

The Company accounts for income taxes using Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes."  Under Statement 109, the
liability method is used in accounting for income taxes.

At December 31, 1996, the Company had net operating loss carryforwards of
approximately $191,000 that may be offset against future taxable income
through 2012.  No provision for income taxes has been made due to these net
operating loss carryforwards.  The tax benefit of the net operating loss
carryforwards is offset by a valuation allowance of the same amount due to the
uncertainty that the carryforwards will be used before they expire.

Utilization of the net operating losses may be subject to a substantial annual
limitation due to the "change in ownership" provisions of the Internal Revenue
Code of 1986 and similar state provisions.  The annual limitation may result
in the expiration of net operating losses before utilization.

                       CORVALLIS, INC.
                  (A Development Stage Company)
                Notes to the Financial Statements
               December 31, 1996 and June 30, 1996

NOTE 1 -     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

f.     Statement of Cash Flows

For the purposes of the Statement of Cash Flows, the Company considers all
highly liquid investments with an original maturity of three months or less to
be cash equivalents.

g.     Office Space

A director of the Company provides office space in his home for the Company. 
The space is used primarily by the director for his personal affairs.  The
value to the Company is considered immaterial.  Accordingly, no benefit has
been recorded.

h.     Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. 
Actual results could differ from those estimates.

NOTE 2 -     PUBLIC OFFERING

In 1988 the Company completed a public offering which was registered on Form
S-18 in accordance with the Securities Act of 1933.  A total of 105,120 units
were sold having a gross subscription price of $131,400.  Deferred offering
costs totaling $39,665 were offset against additional paid-in capital.

NOTE 3 -     ASSET PURCHASE AGREEMENT

In September 1989, the Company completed the terms of an Asset Purchase
Agreement with DLB Enterprises, Inc. ("DLB"), a closely-held Nevada
corporation, providing for the acquisition by the Company of all of the
operating assets of Southwest, a Las Vegas-based enterprise which had been
engaged in the manufacture and installation of awnings for commercial,
industrial and residential use for approximately the past fourteen (14)
months.  Southwest was previously a joint enterprise owned and operating in
Las Vegas by DLB and WAM Industries, Inc. ("WAM"), a Salt Lake City-based
corporation which has been engaged in the awning business for several years.

                     CORVALLIS, INC.
                  (A Development Stage Company)
                Notes to the Financial Statements
               December 31, 1996 and June 30, 1996

NOTE 3 -     ASSET PURCHASE AGREEMENT (Continued)

Under the terms of the Asset Purchase Agreement, the Company acquired all of
the operating assets of Southwest, including equipment, inventory, customer
accounts, tradenames and trademarks and other assets in exchange for the
issuance to DLB of a total of 253,306 shares of the Company's restricted
common stock.  Concurrently, the Company also entered into a separate
agreement with WAM under the terms of which WAM agreed to act as contractor on
all large commercial jobs of the Company at a price of cost plus 10% and
generally agreed to contribute its expertise in the development of the
Company's business, in consideration of which the Company issued to WAM a
total of 108,560 shares of its restricted common stock.  In connection with
these transactions, the Company issued a total of 144,747 shares of restricted
common stock to Whitney O. Cluff and certain of his business associates who
were instrumental in facilitating the negotiation and consummation of the
transactions.  The assets were subsequently written off (see Note 4).

NOTE 4 -     DISCONTINUED OPERATIONS

The Company, on January 1, 1990, decided to discontinue its operations. 
Therefore, the Company entered into an agreement with WAM Industries in which
WAM took over the operations of the Company and paid its outstanding debts,
and in consideration WAM Industries was given all of its assets.  The assets
consisted of all cash, receivable and fixed assets.  The Company has not had
any operation since that date except for some incidental expenditures to keep
the Company on active status with the State and stock exchanges.

NOTE 5 -     GOING CONCERN

The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business.  However, the Company does not have significant cash or other
material assets, nor does it have an established source of revenues sufficient
to cover its operating costs and to allow it to continue as a going concern. 
It is the intent of the Company to seek a merger with an existing, operating
company.  Currently, the stockholders are committed to cover all operating and
other costs until sufficient revenues are generated.

NOTE 5 -     STOCKHOLDERS' PAYABLE

Some stockholders of the Company have paid expenses on behalf of the Company. 
The amount paid on behalf of the Company is non-interest bearing and will be
repaid to the stockholders when monies are available or will be converted to
equity.











                         CORVALLIS, INC.
                  (A Development Stage Company)
                Notes to the Financial Statements
               December 31, 1996 and June 30, 1996

NOTE 7 -REVERSE STOCK SPLITS

On July 21, 1994 during a special meeting of shareholders, a motion was
approved authorizing a reverse split of the issued and outstanding common
stock of the Company with one new share being issued for every twenty-five
(25) shares previously held.

On August 22, 1995 the shareholders of the Company approved a motion
authorizing an additional reverse split of the issued and outstanding common
stock of the Company on a 1-for-5 basis.  All references to shares outstanding
and net loss per share have been adjusted to reflect the effects of these
stock splits on a retroactive basis.