<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 SEPT. 30, 1997
   

                              XANTHIC ENTERPRISES, INC.

                             
                          COMMISSION FILE NO. 33-17966-LA
                                
              A Colorado Corporation           EIN: 94-3030021
                                
                        8833 Sunset Blvd. Suite 200
                          West Hollywood, CA 90069
                                
                           Telephone: 310-289-4947
                                
          Securities registered under Section 12(g) of the Exchange Act:
                                
            Common Shares and Series A and Series B
                 Common Stock Purchase Warrants
                              
                                         
          
            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, 1996 was
            filed late. 
                   
            The number of common shares issued and
            outstanding as of December 31, 1996 was
            5,481,826.
            <PAGE>
                    
            This report form is not filed as a
            transitional format.
                    
            PART I - FINANCIAL INFORMATION
                                           
            ITEM 1. FINANCIAL STATEMENTS.
                    
                The Company's unaudited financial
                statements for the third quarter of 1997 are
                <PAGE>
                 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
                    
                         On November 2, 1991 the State of Oregon
                    issued a cease and desist order ordering the
                    Company to cease and desist issuing
                    unregistered securities in the State of
                    Oregon. The proceeding was based on the
                    distribution of  shares and warrants to
                    Oregon shareholders (registered by way of an
                    S-18 registration statement) pursuant to the
                    agreement for such distribution between the
                    Company and Automated Services,Inc.
                           
                         On April 4, 1992 the State of Oregon
                    issued a final order to cease and desist
                    violating any provision of Oregon Securities
                    Law. Xanthic was denied the use of any
                    statutory exemption provided in ORS 59.022
                    and ORS 59.035. Xanthic was assessed 
                    three civil penalties of $ 750.00 each for
                    violating ORS 59.055 and ORS 59.132(2).
                    Directors Mark Lilly and Glenn DeCicco 
                    were ordered to cease and desist violating
                    any provision of ORS Chapter 59. Neither the
                    Company nor the Directors appealed.
          
                         The Company has been advised that the
                    effect of the Oregon ruling was to invalidate
                    the issuance and distribution of the
                    registered shares and warrants to residents
                    of Oregon until such time as said securities
                    are registered pursuant to the provisions of
                    the Oregon Securities Law. According to the
                    records of the transfer agent, the number of
                    shareholders with Oregon addresses is 645.
                    According to these records the shareholders
                    with Oregon addresses own 108,331 common
                    shares of the Company. The 108,331 shares
                    represent approximately 1.9% of the issued

                    <PAGE> 
                    and outstanding shares of the Company. 

                    ITEM 2.  CHANGES IN SECURITIES
                    
                         There have been no changes in the
                    rights, preferences or privileges of any
                    security of the Company during the second
                    quarter of 1997 other than the action of the
                    State of Oregon may affect these matters.
                    
                    ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
                    
                         There has been no default on any 
                    security during the third quarter of 1997.
                    
                    ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF
                    SECURITY HOLDERS
                    
                         No matters have been submitted to a vote
                    of security holders during the third quarter
                    of 1997.
                    
                    ITEM 5.  OTHER INFORMATION
                    
                         N/A
                    
                    ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
                    
                         During the third quarter of 1997 the
                    Company filed one report on Form 8-K.

                    
                    FINANCIAL STATEMENTS.
                    
                         The Company's unaudited financial
                    statements for the period ending Sept. 30,
                    1997 follow this page.
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
      

         
      <PAGE>
                         XANTHIC ENTERPRISES, INC.
                       (A development stage company)
                             BALANCE SHEETS
      
      <TABLE>
      <CAPTION>
                              December 31,                Sept. 30,         
                                 1996                 1997        1996  
                               (Audited)                 (Unaudited)
                              <C>                     <C>          <C>
  ASSETS
      
      CURRENT ASSETS:
           
            Cash             $       -             $      -    $       -                      
                             _________             ________    _________

                             $       -             $      -    $       -
                             ==========            ========    ========= 
                 
      LIABILITIES AND 
       STOCKHOLDERS' 
        EQUITY (DEFICIT)               
      
      CURRENT LIABILITIES:
       Accounts payable         $13,859        $75,368          $13,683   
       Shareholder loan               -          2,000                - 
      
      TOTAL CURRENT
       LIABILITIES               13,859         77,368           13,683 
      
      STOCKHOLDERS' EQUITY
       Common Stock - $.0001 par,
       50,000,000 shares 
       authorized, 5,481,826 
        issued and outstanding       548            548             548 
      
        Paid in capital           11,651         11,651          11,651 
      
        Retained deficit         (26,058)       (89,567)        (25,882)
                                 ________        _______        ________
         TOTAL STOCKHOLDERS' 
          EQUITY (DEFICIT)       (13,859)       (77,368)        (13,663)

                                  $     -       $     -          $     -  
                                  =======       ========         =======
                          
         /TABLE
<PAGE>

<PAGE>

                        XANTHIC ENTERPRISES, INC.
                      (A development stage company)
                         STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
        
              For the     For the           For the         October 27, 1996
              Year        Three Months      Nine Months    (Date of inception) 
              Ending      Ending 9/30       Ending 9/30     to Sept. 30, 1997   
              12/31/96    1997     1996     1997     1996
              (Audited)   (Unaudited)       (Unaudited)       (Unaudited) 
<S>           <C>         <C>      <C>      <C>     <C>         <C> 
                                                              
REVENUES       $    -    $    -    $    -    $    -  $    -    $    -   
               ______    ______    ______    ______    _____    ______

OPERATING
EXPENSES:
 General and
 administrative   693     33,709      173     63,509     520    82,163
                _____     ______     _____    ______    ____    ______ 

LOSS FROM
 OPERATIONS      (693)   (33,709)    (173)   (63,509)    (520) (82,163)     

OTHER INCOME 
(EXPENSES)
 Interest exp.    (12)         -       (3)         -       (9)  (6,639)
 Aborted offering
     costs          -          -        -          -        -  (17,066)
 Debt relief        -          -        -          -        -   17,051
 Penalty            -          -        -          -        -     (750)
                _____       ____     ____       ____      ___   ______

 TOTAL OTHER
   INCOME  
   (EXPENSES)    (12)          -       (3)          -      (9)  (7,404)
                ____        ____     ____       _____    ____    _____

NET LOSS     $  (705)    (33,709)    (177)    (63,509)   (529) (89,567)
              ======      ======      ===      ======     ===   ======  

NET LOSS PER                     
 COMMON SHARE (.0001)      (.006)       0        (.01)  (.0001)   (.02)
              ======      ======      ===      ======    =====  ======

WEIGHTED
 AVERAGE 
 NUMBER OF
 SHARES
 OUTSTANDING 5,481,826  5,481,826 5,481,826  5,481,826 5,481,826 5,481,826


/TABLE
<PAGE>

<PAGE>


                        XANTHIC ENTERPRISES, INC.
                       (A development stage company)
          STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)


<TABLE>
 <CAPTION>
                                                        Accumulated
                                                        deficit during 
                     Common     Stock       Paid in     development           
                     Shares     Amount      Capital     stage         Total                      
                     <C>        <C>         <C>         <C>           <C>
                    
BALANCE,               
 DECEMBER 31, 1995  5,481,826   $ 548     $ 11,651    $ (25,353)     $ (13,154)
                    ---------    ----       ------       -------        -------
Net loss for year           -       -            -         (705)          (705)
                    ---------    ----       ------       -------        -------

BALANCE,
 DECEMBER 31, 1996  5,481,826   $ 548     $ 11,651     $ (26,058)    $ (13,859)
                    ---------    ----       ------       --------     --------                    

Net loss for period         -       -            -       (63,509)      (63,509)
                    ---------    ----       ------       --------      --------
               
BALANCE,
 SEPT 30, 1997      5,481,826  $  548     $ 11,651     $ (89,567)    $  (77,368)
                    =========    ====       ======       ========       ========




/TABLE
<PAGE>

<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     ending Sept. 30,       (Date of inception)
                    31,  1996         1997        1996       to Sept. 30, 1997  
                    (Audited)           (Unaudited)             (Unaudited)

                        <C>          <C>          <C>           <C>
CASH FLOWS FROM
 OPERATING ACTIVITIES
  Net income (loss)   $(705)         $(63,509)  $ (529)        $(89,567)     
 Adjustments to 
   reconcile net
   income to net
   cash provided 
   by (used in)
   operating activities:
    Common stock issued
     for services         -                  -        -              31      
    Changes in operating
     assets and liabilities:
    Accounts payable    705             61,509      529          75,368
                        ---             ------      ---          ------ 

NET CASH USED
 IN OPERATING
 ACTIVITIES               -            (2,000)        -         (14,168)
                        ---            -------      ---          ------
     
CASH FLOWS FROM
 FINANCING ACTIVITIES:
  Sale of
   common stock          -                  -         -          12,168
  Shareholder loan       -              2,000         -           2,000

NET CASH PROVIDED
 BY FINANCING
   ACTIVITIES            -              2,000         -          14,168

NET INCREASE
 (DECREASE) IN CASH      -                 -          -               -
 
CASH, BEGINNING         
 OF PERIOD               -                 -          -               -
                      ----         ----  ----      ----           ------

CASH, END
 OF PERIOD          $    -         $  -  $  -      $  -                -
                     =====          ===   ===       ===           ======

</TABLE>
                                   
                                   
                                   
              <PAGE>
                                     
                                           SIGNATURE
                    
                           In accordance with Section 13 or
                    15(d) of the Securities Exchange Act of
                    1934, this registrant caused this report to
                    be signed on its behalf by the undersigned,
                    thereunto duly authorized.
                    
                    
                    XANTHIC ENTERPRISES, INC.
                    
                    
                    Dated:        10/11/97        
                                  -------             
                    
                    
                    
                        By:   /s/ Mark A. Lilly
                              ---------------------------------         
                              Mark A. Lilly, President, Director
                              and Chief Financial Officer