<PAGE>   1
   
                                 FORM 10-KSB/A
    

                     U.S. Securities and Exchange Commission
                             Washington, D.C. 20549
   
                                 FORM 10-KSB/A
    
(X) 15, ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]

                    For the fiscal year ended April 30, 1998

( ) 15, TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

            For the transition period from___________ to ____________
                        Commission file number 93-67656-S

                        LEADING-EDGE EARTH PRODUCTS, INC.
                        ---------------------------------
                 (Name of small business issuer in its charter)

                         Oregon                          93-1002429
                         ------                          ----------
        (State of incorporation or organization)    (I.R.S. Employer ID No.)

                    319 Nickerson St. #186, Seattle, WA 98109
                    ------------------------------------------
               (Address of principal executive offices) (Zip Code)
                     Issuer's telephone number 800-788-3599
        Securities registered under Section 12 (b) of the Exchange Act:

          Title of each Class         Name of each exchange on which registered
                none                                     none
                ----                                     ----
         Securities registered under Section 12 (g) of the Exchange Act:
                                      none
                                      ----
                                (Title of class)
     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 9d) 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 [X]

     Yes [ ]             No [ ]

    Check if there is no 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 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. [X]

State issuer's revenues for its most recent fiscal year: $53,448

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock as of August 21, 1998: $8,103,221

State number of shares outstanding of the Registrants common stock as of August
21, 1998: 27,942,140


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                        LEADING-EDGE EARTH PRODUCTS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

PART 1

ITEM 1.        DESCRIPTION OF BUSINESS.

INTRODUCTION AND OVERVIEW: Leading-Edge Earth Products, Inc., an Oregon Company
(the "Company"; also referred to as "LEEP"), is the result of a merger on
December 29, 1992, of Leading-Edge Earth Products, a Washington corporation, and
Crystal Asset Management, an Oregon corporation. The merger was accounted for as
a pooling of interest. The objective of the Company is to develop lightweight,
highly insulated, composite building panels to form entire wall, roof, floor,
and partition sections for residential and non-residential building
construction. The panels are designed to substitute for wood and other
traditional materials and building systems. The Company believes its products
will have major worldwide appeal for single-family and multi-family residential
construction, including third-world housing, as well as non-residential
construction. Highly insulated, stand-alone warehouse, office, restaurant,
retail and specialty buildings define the Company's initial target market.

The Company completed its Research & Development (R&D) phase in 1997 and is
currently focused on manufacturing, marketing and selling its resultant product
known as "LEEP STRUCTURAL CORE(TM)" or "LEEP CORE." Other than R&D, the Company
has had only nominal business activity. During 1996 and 1997 the Company
recognized some fee income and expenses related to the use of its technology
(see Management's Discussion and Analysis of Operations below). The Company
conducted research and development activities at a series of locations beginning
in Rainier, Washington (1992-1993); Shelton, Washington (1993-1994); and
Seattle, Washington (1994-1996). Commencing in 1995, the Company began seeking a
strategic alliance through which manufacturing processes and further materials
development could be financed and undertaken. This search resulted in an
agreement signed in December 1995 between the Company and a Pennsylvania-based
group, WLP, Associates, Ltd. (WLP). The agreement specified the formation of
independent affiliate companies, Agile Building Technology, Inc. (Agile), and
Agile Investment Corporation (AIC), both Pennsylvania-based companies. Agile was
designed to be the operating company, and AIC, a holding company. LEEP took a
35% equity position in Agile and a sliding scale ownership position, based on
the co-founders' funding performance, in AIC.

Upon Agile commencing operations, the Company's R&D staff was disbanded in
Seattle and the Company's only remaining employees, going into calendar 1996,
were a corporate communication assistant and its CEO, Grant C. Record. Mr.
Record moved to the Agile location in early January 1996, to represent the
Company and consult in Agile's development activities to support the Agile
License. Certain Board of Directors members and consultants assisted the Company
during the period with accounting, audit, public relations and other corporate
activities during the period.

The structure, ownership, financing and responsibilities were subsequently
changed again in February 1997 and October 1997 (see Management's Discussion and
Analysis, Item 6).

R&D IN PENNSYLVANIA: Between January 1996 and November 1996, Agile, with the
Company's support, developed two product groups to prototype levels for the
building 

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construction industry. One product group proved to be too slow to manufacture
and was dropped. The other group (interior and exterior insulated wall
coverings) supported Agile's continued existence and its development program.

During the third quarter of calendar 1996, Agile investors ceased to financially
support the Agile/LEEP development activities. New investors were identified and
cultivated in order for Agile and LEEP to keep developmental momentum. On
February 28, 1997, a new contract was signed which replaced the Agile/LEEP
December 1995 Agreement and gives Agile and LEEP autonomy to independently
develop their respective products and markets. According to the terms of the
February 28 Agreement, AIC was to be merged into Agile and LEEP retained its
passive 35% equity position in Agile. Approximately 5,000,000 LEEP shares out of
11,000,000 held by AIC were returned to the Company and retired, with the
balance continuing to be held and/or sold to support R&D activities. LEEP had
the right to invest $1,000,000 in Agile by December 31, 1997, which it did not
exercise. As of the filing of this report, the Company is negotiating to sell
its 35% passive investment in Agile.

In November 1996, the Company and a shareholder, L/A Investors, Inc. (L/A),
agreed to fund ongoing efforts in Pennsylvania to complete the LEEP STRUCTURAL
CORE R&D through the preliminary testing phase. Grant Record, the Company's CEO,
agreed to head up the development and to support himself financially over the
period. The Company agreed to accrue Mr. Record's salary on the books over the
period. There was no written contractual agreement between L/A and the Company,
as the parties could not determine the duration and financial impact of the
project. There was a general understanding that L/A would sell its position in
the development of the Company for additional shares of the Company's stock and
return some of L/A's invested cash on some basis to be determined after the
parties developed an appreciation for the magnitude of the task. Mr. Record
agreed to itemize and track the expenditures for the parties. At that time, the
product began to be known as LEEP STRUCTURAL CORE (TM) or LEEP CORE. Sufficient
development and testing was completed on LEEP CORE to attract the interest of
the City of Twin Falls, Idaho, to assist LEEP to explore establishing a
high-volume manufacturing operation in Idaho. Manufacturing sites in Twin Falls
County, Idaho, proved to be difficult to develop, and the Company found a more
attractive site to develop in Shoshone, Idaho, about 25 miles north of Twin
Falls (see "Management Discussion and Analysis" below). Overlapping and in
tandem with the Idaho manufacturing site planning and development activity, a
LEEP CORE pilot manufacturing operation was begun in Montgomery, Pennsylvania.
L/A provided much of the cash to cover the costs of establishing and operating
the Montgomery facility and conducting the Idaho activities. L/A formed a Nevada
corporation named, "LEEP Building Systems, Inc." (LBS). Accounting records of
all expenses associated with the Pennsylvania and Idaho operations were shifted
into LBS. The Company is negotiating to buy LBS with all rights and title to
everything L/A has started, owns and maintained in Idaho and Pennsylvania over
the period.

PRODUCT DEVELOPMENT CRITERIA: Wood, metal, and concrete products are the
predominant structural materials used in the building construction industry. The
Company believes that substitutes for traditional wood structural elements will
be used for the future generations of building components because of the
dwindling supply of timber occasioned by regulatory and environmental
considerations. The Company believes that the market will demand that future
building materials be lightweight, fire-resistant, water-resistant, sound
abating, rot-resistant and offer seismic and wind-resistant properties. The
Company believes that many future requirements cannot be met with current metal,
wood and concrete products. The 

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Company's LEEP STRUCTURAL CORE(TM) product is believed to address the above
performance criteria while at the same time addressing the ever-important
competitive cost requirements.

ENVIRONMENTAL CONSIDERATIONS: A major focus and program emphasis of the Company
is to develop and manufacture environmentally friendly products that are
nontoxic at every level from the manufacturing process through the end product,
and environmentally sound for long-term use. As a practical matter, other than
compliance with OSHA standards for manufacturing which is common to all U.S.
manufacturing companies, there are no major product related environmental
considerations known by the Company that are mandated by law at this time. The
Company believes its product performance specifications meet or exceed
environmental requirements for most applications. The Company calculates that
approximately 270 fir trees a day can be left standing for each full production
day for each LEEP production machine. The Company believes that no material or
process it uses is hazardous to people or to the environment. The Company's main
LEEP STRUCTURAL CORE(TM) is capable of insulation values ranging from 50% to
100% greater than standard building code requirements, thereby promoting
significant savings of fossil fuel used for heating and cooling. Enough LEEP
CORE can be shipped on a 40-foot long truck trailer to build two medium size
American houses, therefore the product's compactness and lightweight effect
large savings of fuel for transportation purposes.

When fully implemented, the Company believes its technology will enable
avoidance of the loss of substantial amounts of the planet's forest products,
and contribute to the above major savings in transportation costs and attendant
fossil fuel use. In addition, there will be savings in both summer and winter
fuel costs because the Company's main product offers thermal insulation
properties that are superior to those of conventional materials. Insurance rates
will likely be favorably affected as well because of the product's natural
calamity-resistant properties.

All of the company's environmental features and benefits would not make a
material difference in the building construction industry if the technology and
practical aspects of producing the product did not support use of large-scale
manufacturing facilities. A principle focus of the Company and its management
has been on developing products that lend themselves naturally to high-volume
production. The production machinery the Company plans to use is capable of
producing enough LEEP CORE product to support construction of 27 medium size
American houses each full production day, in each of the Company's large-scale
manufacturing facilities in the U.S.

ABOUT THE TECHNOLOGY: The Company uses composite technology. Composite
technology is based on the principle that when two or more pieces of material
(sheets or beams) are laminated together, the two or more pieces become a
unitized composite member. The resulting member's structural strength-to-weight
relationship is greatly improved, when compared with the weight and
corresponding strength of non-composite materials. This composite technology is
the basis for the Company's current and future anticipated patent and other
proprietary positions. Better strength/weight performance of products translates
to less material/less weight being required to construct buildings. This
composite technology can be applied so as to make products that weigh 200 pounds
vs. 1,900 pounds, in the case of solid concrete, brick or block comparisons; and
200 pounds vs. 900 pounds, in the case of wood product comparisons.
Specifically, LEEP CORE weighs less than wood or concrete and offers exceptional
strength to weight (ratio) structural performance. This means that lighter
weight


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LEEP CORE can support greater wall, roof and floor loads than solid materials of
the same weight.

RESEARCH AND DEVELOPMENT: In the year ending April 30, 1998, the Company
directly expended $26,923 performing research and development on its technology
and products. L/A Investors, Inc., invested more than $500,000 between October
1996 and the present to support the Company's R&D, pilot manufacturing and
positioning to begin large-scale manufacturing in Idaho. The Company's main
focus between November 1996 and the present has been LEEP STRUCTURAL CORE(TM)
panel development and pilot manufacturing. The Company is negotiating to
purchase from L/A all interests L/A has in the Pennsylvania and Idaho activities
and operations. It was agreed, for the company's protection, that all technology
rights would be maintained by the Company. The Company filed extensive
additional patent claims in its name relative to LEEP STRUCTURAL CORE
technology. The Company also developed major custom tooling, in its name, to
support production of specific items and configurations shown in the Company's
new patent application.

Subsequent to the Company's fiscal 1996 10-K report, the Company elected to stop
the earlier development activities on Magnesium Oxide and other slurry-based
surface-covering skin development in order to concentrate on the LEEP CORE
product. A variety of alternative slurry and other types of skin materials
recently came to market which are cost effective for the Company's needs.

MANUFACTURING METHODS AND OUTLOOK: Prototype panels were initially fabricated
using rudimentary manual presses and conventional metal bending equipment. Sheet
metal was hand-bent to the Company's proprietary design configuration. The front
and back metal parts (top and bottom), up to 20' long, were put in a manual
containment press; expanding foam chemical was hand-mixed and added to the
cavity and held for an adequate expansion and solidification time. The completed
metal panels were then removed and tested during the initial eight month
development and testing phase. Over this phase of development, the panel
configuration was evolved to meet higher and higher levels of performance
criteria up to the point that 5" thick panels met Commercial Floor Load and
Hurricane V Wind-load codes. To the Company's knowledge, 5" foam/metal panels
have never before attained such advanced structural performance levels.

Subsequent to the testing phase, the next phase of manufacturing was perfected
in early 1998. Based on earlier designs of custom, Company-proprietary "Shuttle
Presses," the fabrication of the first such press was put into operation during
the first quarter of 1998. Enough LEEP CORE product can be produced in the
Company's Pennsylvania plant to support construction of one small commercial
style building per week. Commercial sheet metal fabricators using
numeric-controlled metal presses are supplying the custom metal parts to support
the pilot-manufacturing phase. The Company leased a modern computer-controlled
foam generation system manufactured by Linden Systems Company. This equipment is
on consignment with LBS in Pennsylvania to enable LBS to supply the company with
high-tolerance, commercial grade LEEP CORE product from LBS at this early stage,
until the Company officially perfects this plan and arrangement to take over the
Pennsylvania manufacturing operation.

The Company's large-scale manufacturing plant configuration is planned to
consist of: two metal roll forming machines which continuously pre-form the top
and bottom parts; two 10,000-lb. metal coil handlers; an automatic insulating
chemical foam generator; a 127-foot long custom 

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laminator (which takes the place of the present individual containment presses);
a computer-controlled flying cut-off saw; and a 100-foot cool-down/stabilizing
chamber. With this configuration, the Company plans, under computer control, to
automatically cut the panels to custom length per work order instructions. The
Company plans that custom lengths will be automatically bonded together as they
come out of the stabilization chamber, to custom form specific large panel
sections with which to construct walls, roofs and floors. The company plans to
have this large-scale Automated Laminator Production System operational by the
end of the first quarter of 1999. The longer lead-time metal forming machine
tooling design has been funded and completed. The aim of the current design and
fabrication phase is to produce operating manufacturing equipment by early 1999,
and to install the equipment and be operational by the end of the first quarter
of 1999. Achieving the goals and schedules is dependent on the Company's receipt
of Industrial Revenue Bond and/or Public Offering Proceeds and/or Private
Placements funding and/or equipment lease-line financing totaling no less than
an aggregate of $7 million between September 1998 and June 1999.

Site selection, site use permit, a site environmental phase I study, and all
tasks leading to the Company's final building design and permit have been
completed. The Company is now waiting for the title release of its first choice
35-acre rail-side manufacturing building site from the Union Pacific Railroad.
The railroad has agreed to sell the property to the Company on attractive terms
in order to encourage the Company's commercial development of the property.
Formalities concerning the title transfer are expected to be completed during
October 1998. Completing this building site development and building
construction is dependent on the company's receipt of interim on-going operating
funds and funds to complete the land purchase and bank and/or private
construction loan and/or long term mortgage financing and/or IRB funding.
   
TESTING AND CODE APPROVALS: The Company's main product, LEEP STRUCTURAL
CORE(TM), has been tested extensively using ASTM specified test criteria for
wind force resistance of walls, and floor loading capabilities. The testing has
been done internal to the Company using applicable ASTM standards. No tests were
certified. Such certified testing is readily available and results can be
efficiently obtained at commercial labs and some universities, for reasonable
rates. The Company plans to use the University of Washington for additional
testing of its 4" LEEP CORE product. This testing sequence began in September
1998. Preliminary results of the first tests in the sequence showed extremely
encouraging results for point and full wall section load carrying capabilities.
Structural tests are scheduled at the University during October 1998 to
determine and certify a variety of force resistance capabilities for wall, roof
and floor applications to support engineering requirements for a variety of
building types and sizes.
    

MARKETS AND MARKETING: The Company believes that recent changes in the
construction industry create an increased desire by builders to buy
pre-manufactured, or fabricated, construction components. According to Automated
Builders Magazine (August 1996), panelized construction sales exceeded
wood-frame construction for the first time in history (39% vs.36%) in the United
States in calendar year 1995. This trend continued in 1996 and 1997, and the
trend is gaining yet more momentum in 1998, according to US Government Economic
Development Department publications, Automated Builder publications, and other
industry study groups..

The Company has identified four vertical markets which have heavy demands for
cost-effective product with advanced performance characteristics such as those
provided by LEEP CORE:
1.      1,000 to 15,000-sq. ft. building size range, including highly insulated,
        stand-alone commercial warehouses, office buildings, restaurants, and
        retail goods stores.
2.      Specialty buildings in the 500 to 2,000-sq. ft. size range requiring
        ultra-high insulation, ultra-light weight, water-proof integrity,
        insect-resistance, portability and/or assembly and 

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        disassembly characteristics, and high strength-to-weight performance;
        these include remote structures for antenna maintenance and other back
        country applications, freezer and cooler uses, and very-hot or very-cold
        climatic situations.
3.      Third World housing.
4.      North American housing.

The Company has three strategies to take advantage of the present industry trend
to use more pre-engineered/panelized building systems:

1.      The first strategy is to enter the easiest markets using the Company's
        current pilot production product to support construction of a U.S.
        network of demonstration buildings. The Company plans to use each of the
        demonstration buildings to support commission sales people, regional and
        national companies to demonstrate to prospective customers the
        extraordinary performance, features and benefits of LEEP CORE
        technology. The company intends to accumulate orders during the balance
        of 1998 and to begin volume delivery in early 1999.

2.      The second strategy is to identify the largest domestic market regions
        for the Company's products. Upon determining the locations of the first,
        second and third largest markets, the Company proposes to obtain
        financing and build manufacturing plants in these areas. Using the
        initial documentation and experience gained in establishing the Idaho
        operation, the Company intends to develop a computer-stored body of
        information (a "template") that can be used to build additional plants.
        Once the product acceptance and distribution methods are established,
        the Company expects to receive significant interest and order backlog.
        The company plans to position five manufacturing plants in rapid
        succession in North America, in order to obtain the earliest possible
        optimum market penetration, when the anticipated backlog develops.

3.      During the first quarter of LEEP CORE product introduction, the Company
        began to attract attention among the larger steel building
        manufacturers. At first they were concerned about LEEP CORE being a
        competitive threat. As it turned out, several of the larger steel
        building companies are interested in buying LEEP CORE product for
        special jobs. Several executives of the "big building" builders advised
        LEEP that there is no other product, technology or building system they
        have seen that appears to offer the performance and cost effectiveness
        that LEEP CORE offers. Many smaller buildings within LEEP's specialty
        size range of 500 to 15,000 sq. ft. are not cost-effective for
        conventional steel building system use. Builders of large steel
        buildings have many applications for small buildings, walls and other
        types of enclosures within or attached to large steel buildings. In most
        of these instances, the relatively inefficient cement block and
        wood-frame constructions have been the only methods of construction
        available. The Company intends to contract with selected large steel
        building companies to fulfill needs discussed above.

The Company believes that laws will be enacted in the United States over the
intermediate to longer term, that will strongly favor its products for their
strength, fire, wind and prospective seismic resistance features. At present,
the United States is one of the few remaining First-world countries that still
allow a large cross section of residential construction to continue without
well-defined wind, fire, and seismic resistance ratings. The Company believes
that there are significant public-interest implications associated with
America's lack of stringent wind, fire and seismic resistance standards being
enacted and enforced by U.S. regulators; especially given the great loss of life
and property sustained in the U.S. each year.

COMPETITION: There are a significant number of manufacturers in the U.S. who
produce residential building panels constructed of wood. The Company believes,
however, that there are 

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no practical building systems currently available to the building construction
industry which are cost-effective, integrally load-bearing and have
fire-resistance, waterproofing, insect- and rot-resistance, and thermal
insulating characteristics, competitive with the Company's LEEP CORE building
system.

Recently introduced wood-based pre-engineered building systems have come to be
"accepted technology" in this industry that has been slow to accept change. This
reluctance to change, historically, has made it difficult for a small company,
such as LEEP, to successfully enter the market with a new product. To further
illustrate this relatively new phenomenon, a significant sector of the
residential housing construction market has been penetrated by a group of
approximately 100 small manufacturers/builders over the last ten years. Using
wood-clad, stress-skin insulated panel technology (SIP), sales developed by this
group of companies are growing at a rate of 50% or more a year. This group of
companies' success establishes a precedent for acceptance of new technology
which serves adjacent and related vertical markets.

The non-residential building construction industry is highly competitive and is
dominated by companies that are typically large enterprises who actively promote
their building construction products to designers and property owners. Such
competition from established competitors could adversely affect the Company's
prospects. As discussed above, the Company is going to offset the potential
negative impact of the situation by cultivating the large metal building
companies as customers for small structures that are uneconomical and
troublesome for them to build, but profitable to LEEP.

The principal non-residential panels on the current market are those made using
sheet metal/foam technology, often called, "foam/metal curtain panels." Unlike
LEEP STRUCTURAL CORE(TM), these panels are not load-bearing. The market-dominant
traditional producers of curtain panels show no willingness or desire to develop
panels that are load-bearing and therefore competitive with the Company's
product. Although the Company's main product is also a foam/metal panel, LEEP
STRUCTURAL CORE(TM) is load-bearing and can be used to construct floors and
roofs as well as load-bearing walls. The Company expects the curtain panel
manufacturers and their clients to become customers for LEEP CORE. Historically,
the corporate strategy of these larger companies is to purchase suppliers and/or
competitors after significant sales volumes and market niches are established.
This traditional policy helps to ensure the larger companies that such suppliers
will not become competitive with them. The Company will reserve judgement as to
its course of action with respect to such large company overtures, while it
develops its market share and market niches with the knowledge that the big
companies will not become competitive for a protracted period of time.

PATENTS AND LICENSES: On July 24, 1994, the Company received notice from the
U.S. Patent & Trademark office that 47 claims the Company considers important,
were granted. The Mexican government allowed the same base patent, except
broader claims were allowed. The Company received the Mexican patent in November
1996. Exclusive rights to use the patented technology in the United States and
nonexclusive rights outside of the U.S. are assigned to the Company by the
inventor. Non-domestic rights are subject to the Company's paying for all costs
associated with developing foreign business and paying the costs of applicable
foreign patent work desired by the Company. The Company has not yet patented any
of its technology abroad, except in Mexico. All U.S. rights for subsequent
related technology (patented or not) are assigned to the Company by the
Company's founder and early management. The Company recently filed for patent
protection to cover additional inventions, including inventions related to 

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the LEEP STRUCTURAL CORE(TM) product. Earlier patent applications no longer
believed useful to the Company were abandoned during the fiscal year ending
April 30, 1997.

Trademark registration to protect LEEP STRUCTURAL CORE(TM) was filed on July 16,
1998 (see Financial Notes for "Subsequent Events").

LICENSOR TRANSACTIONS: An agreement dated February 28, 1997 provides for
autonomous and independent development and individual financing of the Company
and former joint venture affiliate, Agile, respectively. The agreement gave the
Company the right to invest up to $4,000,000 in Agile and take up to 49%
ownership. Specifically, this right was given if $1,000,000 was invested by
December 31, 1997. The Company did not invest $1,000,000 in Agile and as a
consequence does not have the right to invest in or own additional equity of
Agile. The Company maintains a passive 35% equity ownership position in Agile.
The Company is negotiating to sell that position.

CONTRACT EMPLOYEES. Mr. J. David Thorne, General Manager and Director of
Technology, who served Agile and the company during the development period,
played a major role in developing the Company's target LEEP STRUCTURAL CORE(TM)
product and technology. He has expertise in:

o       Machine design and fabrication

o       Polyisocyanurate (Mr. Thorne was a plant superintendent and technologist
        for one of the companies that pioneered the American Polyiso-foam/metal
        panel industry. He received his initial training with an early
        metal/foam developer in Sweden)

o       Quality control, plant planning, manufacturing systems and product
        testing systems

Two full-time employees and a call-list of semi-skilled temporary personnel
assist Mr. Thorne in manufacturing the Company's products in its Montgomery,
Pennsylvania pilot manufacturing plant.

OTHER ASSISTANCE: Treasurer and director James R. Medley, is acting in a near
full-time capacity as Financial Officer and Controller. Mr. Medley keeps the
books and records of the Company, and is responsible for coordinating the annual
audit and all SEC reporting, including 10-K, 10-Q and 8-K reports.

L. Eugene Laughlin, Executive Vice President, is in charge of planning and
administration. Mr. Laughlin is also charged with developing the Company's order
processing system. This system is intended to allow the client to submit a
concept or working drawing, receive an estimate, add or revise features,
complete the contract, and receive a delivery commitment; all on the Company's
secure Intranet. The Company's order system will schedule the production, track
its progress and report any variances to committed timing; track and report on
progress of recovery actions; notify all concerned of any delivery schedule
changes; and follow-up with customer satisfaction survey issues.

In addition to Mr. Medley, there are several consultants assisting the Company's
officers in the development of the Company's products, processes, plans,
equipment, and corporate capabilities, 

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who are assisting the Company on a part-time basis until anticipated funding
permits them to be hired full-time. These include:

1.      A candidate has been identified for the position of President. This
        person has owned a construction management firm for over 25 years,
        specializing in panel construction of insulated warehouses and a variety
        of other metal building structures throughout the Pacific Northwest. His
        hands-on experience is ideally suited to LEEP as a start-up firm. He has
        already contributed significantly by designing the building construction
        method and detail, and perfected the initial sample building design
        which best demonstrates LEEP CORE features and benefits. Presently, this
        officer serves the Company on a part-time and as-requested basis.
2.      James Rehrmann is assisting the Company in developing its public
        offering circulars and other aspects required for additional SEC
        registrations for sale of the Company's stock. Mr. Rehrmann is being
        considered for full-time employment as Vice President and Director of
        International Operations. He has 25-plus years experience in developing
        domestic and international markets for a wide variety of products and
        high technologies, most recently helping TIE, Inc. of Bellevue, WA, a
        technology transfer company, build commercial relationships in the U.S.,
        Japan and the UK. Mr. Rehrmann will use his varied experience to develop
        international markets for LEEP. He will also assist the President in
        developing domestic markets with a special assignment to direct the
        domestic Sales Representative Program.
3.      A candidate has been identified for the position of Vice President
        Operations and Human Resources. This person has 20 years of experience
        in automating and managing manufacturing operations, with the last two
        years in residential project management. Her experience started with a
        manufacturer of high-end paintbrushes, taking over a company with a
        large work force and a low level of automation. At the end of 14-year
        tenure, the company's sales had increased by ten-fold with only a
        three-fold increase in employment. To accomplish this level of success,
        she automated every practical phase of manufacturing, leaving only the
        most critical operations as manual tasks, where humans could do better
        jobs than machines. In her second assignment, acting in the capacity of
        Director of Operations and using the knowledge and skills she had
        developed in the prior 14 years, she took that company from a small job
        shop level operation to the largest powder coating facility on the West
        Coast. The Company expects this person to bring to LEEP the general
        management, automation and human resources management skills necessary
        to maximize LEEP's growth and keep the Company sensitive to the best
        uses of people and machines.

The Company has contracts for specific services with the following companies:

1.      Seattle-Northwest Securities, Seattle, WA and Boise, ID (Northwest).
        Northwest is the Company's agent who is responsible for applying for a
        $10 million Industrial Revenue Bond (IRB) within Idaho and selling the
        Bonds on a best-efforts basis (see attachment). The Company is currently
        seeking an insurance company that can provide a S&P "A" rated guarantee
        to enhance the attractiveness of its bond.
2.      Pinnacle Consulting Group (Pinnacle), Snohomish, WA. Pinnacle has agreed
        to become responsible for tracking the overall design and implementation
        detail of LEEP's automated plant. They are also responsible for fully
        documenting the production machinery, vendors, manufacturing facility
        detail and associated services of the Idaho plant. This documentation is
        planned to allow the Company to duplicate the Idaho model plant anywhere
        in the world. The Contract Agreement with Pinnacle is not yet completed.

                                       10
<PAGE>   11
ITEM 2. DESCRIPTION OF PROPERTY.

The Company plans to develop a facility in Shoshone, Idaho, for the purpose of
manufacturing its products (see Item 6). The new real property ownership has not
yet transferred. The Company owns metal inventory sufficient to manufacture
approximately 300, 12'-long panels. A metal supplier is stocking sufficient
special-order metal to support manufacture of an additional 3,000 panels, which,
in turn, will support construction of approximately 200 small (1,000-sq. ft.)
buildings or the equivalent number of larger buildings. This metal can be
released and shipped in three $25,000 increments.

ITEM 3. LEGAL PROCEEDING.

On July 27, 1995, the Company filed an action against Timothy J. Metz in the
Superior Court of the Sate of Washington for King County, Cause No. 95-2-19488.
Mr. Metz is a former officer of the Company. The Company alleges that Mr. Metz
breached his contract with the company. The Company seeks: monetary damages
against Mr. Metz; an injunction enjoining Metz from violating the
confidentiality provisions of the contract; and a declaratory judgment that Mr.
Metz is not entitled to anything under his contract. On August 23, 1995, Mr.
Metz filed his answer to the company's action, and in addition filed a
counterclaim against the company and added Grant Record as a third party
defendant. In his counterclaim, Mr. Metz seeks to establish co-ownership and
rights to certain patents involving building panels and means for joining such
panels. Mr. Metz also alleges he was wrongfully terminated, and seeks damages of
$395,000 in connection therewith. Additionally, Mr. Metz seeks unspecified
damages, which he seeks to have trebled, plus attorney fees. Mr. Metz sought to
remove the Company's action against him and his counterclaim and third party
complaint to the United States District Court for the Western District of
Washington. His removal petition is filed in United States District Court, Cause
No. C95-1302. The company resisted the removal petition, and requested that the
matter be heard in the same court. The United States District Court granted the
Company's motion to remand to the state court, and ordered that all proceedings
in the United States District Court pertaining to the patent litigation be
stayed until the state court case is resolved. Because of a personal tragedy,
Mr. Metz did not respond to the discovery requested of him by the Company until
recently. Based on the Company's knowledge of Mr. Metz's claims, the Company is
of the opinion that it has meritorious defenses. According to officers of the
company the technology covered by the patents Mr. Metz claims he has rights to
is not being used by the Company. Mr. Metz has proposed a settlement, which the
Company has under consideration. Unless settled on a basis acceptable to the
Company, the Company intends to defend vigorously the claims brought by Mr.
Metz.

The Company has made demands to Harvey and Gary Bryant (Bryant Investment
Company, Las Vegas, NV) to return 250,000 LEEP shares each, which resulted in a
settlement agreement whereby 400,000 shares are bound by a restriction. 100,000
shares were made eligible for sale.

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

On January 21, 1998, at the annual meeting of shareholders, the following
persons received 23,731,293 votes for and 15,337 votes against election to serve
as Directors of the Company until the next annual meeting.

                                       11
<PAGE>   12

Name

-       Grant C. Record

-       Donald C. Bazemore

-       James R. Medley

-       Way Lee

-       William R. Nordstrom

PART II

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

The Company's Common Stock is traded in the over-the-counter market and prices
are quoted on the NASDAQ Bulletin Board.

The following sets forth the high and low price information for each quarter
during the last two fiscal years, as provided by the NASDAQ Bulletin Board
quotations. The quotations provided reflect inter-dealer prices without retail
markup, markdown or commission and may not represent actual stock buyer costs.
<TABLE>
<CAPTION>
                                    High           Low
                                   ------          ----
<S>                                <C>           <C>
Year Ended April 30, 1997
First Quarter                      2-3/4          1-1/8
Second Quarter                       2           1-13/32
Third Quarter                     1-17/32         13/16
Fourth Quarter                     1-1/4          13/32
Year Ended April 30, 1998
First Quarter                      19/32          13/32
Second Quarter                      5/8            3/8
Third Quarter                      21/32           7/32
Fourth Quarter                     21/32           7/16
Year Ended April 30, 1999
First Quarter                       1/2            9/32
</TABLE>
   
    









                                       12
<PAGE>   13
   
The number of holders of record of the Company's Common Stock on August 21,
1998, is: 1,400.

The Company has never paid a cash dividend.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS.

PLAN OF OPERATION: The operations of the Company since inception were focused on
research and development (R&D) until late 1997 when the focus was switched to
manufacturing. The Company conducted R&D activities, directly, from 1992 to
1996. R&D was done and paid for by an affiliate, Agile Building Technology,
Inc., from January through October 1996. Two viable products, IN-SULATE and
EX-SULATE, came out of the 1996 development as the Agile affiliate's exclusive
products. Agile's and consequentially LEEP's funding for product development was
unexpectedly halted in October 1996. Subsequent to Agile's loss of developmental
funding, Agile sold its LEEP stock portfolio equities and other assets and
borrowed funds to continue product development and buy an operating laminator
production line. On February 28, 1997, Agile, LEEP and related parties signed an
agreement that, among other things, but most importantly, gave Agile and LEEP
future autonomy to finance and develop independently. On October 28, 1997, Agile
signed a $6,000,000 joint venture investment agreement to expand Agile's product
line and manufacturing capabilities. The investor group behind the funding is
HKC Investors of Vancouver, BC, Canada. The Company earlier announced (July
1997) HKC's interest in funding LEEP. Because HKC's interest was principally
focused on investing in an early revenue company and the Agile affiliate was
positioned to create sales revenue earlier than LEEP's plan, HKC formed an
investment company, Agile Group, Inc. (AGI) and invested in Agile. To date AGI
has invested approximately $2.7 million of the committed $6 million in the Agile
operating company, Agile Building Systems, Inc (ABS). ABS owns a small
Structural Insulated Panel (SIP) production line in Vermont which is currently
used by the Winter Panel Company to manufacture the Winter company's SIP
products and pilot quantities of IN-SULATE and EX-SULATE for Agile. Ownership of
this equipment is subject to a $1 million bankline. Agile also owns a laminator
and related equipment, subject to various security interests, located in a
leased building in Williamsport, Pennsylvania.

The Company has yet to generate revenues from the sale of building panels,
however, $300,000 has been earned in the form of License revenue and $195,250 is
due the Company from its affiliate, Agile Building Technology, Inc. ("Agile"),
for fees and services rendered. The Company has agreed with Agile that payments
on accrued revenues will be delayed until cash flow from operations, and/or
other cash sources permit. The Company has provided for a reserve of $268,095 to
cover the license revenue and accrued interest due from Agile. The Company
intends to collect the above uncollected account receivable and a note
receivable for $275,000 plus accrued interest, or to exchange the receivable and
note positions for cash or securities. The Company has three objectives for its
Agile holding: (1) obtain an equity position in Agile's future proposed public
trading stock; (2) eliminate the Agile note and trade receivable by collecting
them or converting them to an appreciating security asset; and (3) reclaim the
Company's 1.7 million shares now held by Agile, so these shares can be retired
from the Company's trading float and reduce shares outstanding. The Company
agreed in August 1998 with AGI to accept 1.1 million (minimum; maximum can be
more) shares of AGI and 1.7 million of its own free trading shares in exchange
for its equity position in the private holding company Agile Building 
Technology, Inc., and an aggregate of approximately $540,000 including account 
receivable and the $275,000 (plus interest) note receivable. The Agile Group 
Inc. intends that it will ultimately become a public trading company, and ABS 
will remain a private operating subsidiary and Agile Building Technology, Inc.,
will be retired as a corporate entity or become wholly 
    




                                       13
<PAGE>   14
   
held by AGI. The Company believes its future interest is best served by
exchanging its Agile Building Technology, Inc., shares for shares in the 
prospective public trading company, AGI, and retiring a large (1.7 million) 
share block of its own free trading shares from the trading float. The 
Company's realization of these objectives is dependent on Agile's receipt of 
short-term financing and long-term financing.

In October/November 1996, the Company's CEO identified an investor, L/A
Investors, Inc., to sponsor R&D activities in Pennsylvania. Based on the
Company's earlier developments and patented technology, a viable, patent
pending, structural panel and building system was developed between November
1996 and late 1997. The Company applied for patent protection for more than 40
additional claims on additional products and configurations that were developed
between October 1996 and September 1997. The new product is known as LEEP
STRUCTURAL CORE(TM) or LEEP CORE. L/A who sponsored the Company's 1996/1997 R&D
program, also developed a pilot manufacturing facility in Pennsylvania,
financially supported planning a major large-scale manufacturing plant and
preparing for the purchase of a rail-side location in Shoshone, Idaho, to
construct a plant to manufacture the LEEP STRUCTURAL CORE(TM) product. The
Company, subsequent to the end of the fiscal year ending April 30, 1998, is
negotiating to purchase all interests in the Pennsylvania and Idaho operations
from L/A Investors, Inc., the shareholder who provided financial support to
accomplish the company's objectives between October 1996 and the present.
Subsequent to April 30, 1998, L/A formed LEEP Building Systems, Inc. for the
purpose of its becoming the operating company to house all rights, title and
interests to L/A's investments since October 1996. The Company is now proposing
to buy LBS from L/A. Significant purchase of equipment and manufacturing
facilities by the Company and its affiliates and/or subsidiaries is expected
during fiscal 1999, as well as expansion of personnel to support the launch of
manufacturing operations for LEEP STRUCTURAL CORE(TM).
    

The Company's primary fiscal 1999 focus is to manufacture and market its LEEP
STRUCTURAL CORE(TM) product. The strategy of the Company is to form, finance,
control, and manage regional manufacturing plants worldwide. Assuming the
successful operation of the Idaho plant and sufficient funding, neither of which
can be assured with certainty, the Company plans to establish additional plants
in North America and abroad within the next five years. These plans are not
financed and financial commitments are not in place at this time for these
undertakings.

LBS is producing sufficient pilot LEEP STRUCTURAL CORE product in its
Montgomery, PA leased plant facility to support construction of approximately
one small size, non-residential building per ten-day period for each Shuttle
Containment Press. By the second quarter of 1999, pending adequate financing,
the Company expects to produce the LEEP STRUCTURAL CORE product in Idaho, on a
new 127-foot Laminator system. The Laminator will be capable of producing
approximately 100,000 square feet of LEEP STRUCTURAL CORE per 20-hour production
day. In the interim, LBS will use its Shuttle Containment (one-shot) Presses in
Pennsylvania to produce the LEEP STRUCTURAL CORE product. 23 metric tons (50,329
pounds) of custom sheet metal was purchased by the Company and shipped from
Korea to Pennsylvania to support manufacturing of LEEP STRUCTURAL CORE. The
Company intends to use LBS as its Pennsylvania and Idaho operating subsidiary if
purchase arrangements with L/A are completed.

The Company plans to locate in Shoshone, Idaho, because this location offers
substantial transportation, work force, logistic and economic advantages to
encourage an aggressive outlook for manufacturing there. The Company plans to
obtain LEEP CORE panels from LBS and ship them to Idaho for assembly to develop
the Western states and any other markets that present themselves. Given adequate
capitalization, considered to be approximately $7 million, from all sources,
covering all organizational, equipment and start-up costs, incrementally
received between now and June 1999, manufacturing-plant construction can be
completed in the Magic Valley area and be operational within the first quarter
1999. Grant Record, CEO of the Company, took up residence in Idaho in order to
administer the planning phase for the Magic Valley facility. Mr. Record, with
L/A's help, identified a 35-acre, downtown, rail-side plant site in Shoshone,
Idaho. The City of Shoshone has granted a use permit for the Company's planned
first 90,000-sq. ft. plant. Building permits are pending the Company's
completion of building plans, the Union Pacific Railroad's completion of a clear
title procedure, which is in progress, and consummation of the Company's actual
land purchase from Union Pacific.

                                       14
<PAGE>   15

ONGOING DEVELOPMENT: The Company is currently engaged in the design and test
phase of a series of test and demonstration buildings. The Company has
successfully designed and built a 32'long by 36'wide by 12'high demonstration
building using independent structural roof support members. A second
demonstration building has been designed which uses LEEP STRUCTURAL CORE(TM)
with embedded point-load support members to build larger buildings with
long-clear-span bar-joist style construction.

LIQUIDITY AND CAPITAL RESOURCES: In recent years the Company has been almost
entirely dependent on its CEO, Grant Record, arranging credit facilities, making
personal loans, procuring loans from other stockholders, and selling stock to
investors in order to meet the immediate cash needs of the Company. The Company
has no revenue from operations and does not have assets that can be liquidated
to cover cash requirements. Management, however, believes that the Company is in
the best position of its life to raise the required capital to meet its
published objectives. This is owing to the fact that the Company's R&D has been
completed and the Company has aggressively moved through its final developmental
phase and into production. The Company's LEEP CORE product is actively being
produced on a daily basis. The product's advanced performance characteristics
have been tested by internally conducted US Government approved American
Standard Testing Methods (ASTM) and validated by a leading US university. ASTM
specified tests are scheduled to certify the Company's LEEP STRUCTURAL CORE(TM)
product for use in American building construction to construct: 1) Load-bearing
walls; 2) Floors capable of supporting commercial building floor loads; and 3)
Commercial building roof loads. The Company's first large-scale production plant
is planned and, pending financing, can be implemented and operational during the
first half of 1999. The Company believes that the above facts ensure its ability
to accomplish the financings required to perfect its business plan and
accomplish its operational objectives herein described.

In the year ending April 30, 1996 the Company raised $23,541 from the sale of
stock, $202,700 in loans from stockholders, and exchanged $496,011 worth of
Company obligations for stock. In the year ended April 30, 1997 the Company
raised $25,000 from the exercise of stock options, borrowed $115,452 with demand
notes, and issued stock in exchange for $514,627 in Company obligations. In the
fiscal year just ended, the Company raised $20,000 from the sale of stock,
borrowed $51,562 from stockholders and $386,500 from a credit facility, which is
no longer available to the Company, and issued stock for $605,132 worth of
Company obligations.

The only non-recurring expenditures in recent years were associated with
valuation issues having to do with Agile and consulting contracts entered into
by the Company in the most recent fiscal year.

Since there is no expectation of cash flow from operations in the short term the
Company will need to continue borrowing and selling stock in order to continue
funding its corporate overhead which is expected to be between $250,000 and
$300,000 for the ensuing year.

The Company has plans to finance the Company's first automated plant by using a
series of different financial instruments that correspond in price and time to
the various projected maturity levels of the Company, listed in the following
table.



                                       15
<PAGE>   16
<TABLE>
  <S>           <C>                                                         
  $240,000       Series A Preferred Convertible Stock @ lowest cost
                 (Arrangements to complete this offering are not finalized.)
 ------------------------------------------------------------------------------
  $500,000       Series B preferred Convertible Stock is allocated to a
                 transaction with L/A Investors, Inc. for purchase of R&D, pilot
                 manufacturing facilities and corporate development work
                 performed on behalf of the Company.
                 (This transaction is not yet completed.)
 ------------------------------------------------------------------------------
  $750,000       Series C Preferred Convertible Stock @ third from lowest cost
                 (No commitments are in place as of the date of this report.)
 ------------------------------------------------------------------------------
  $10,000,000    Idaho State backed Industrial Revenue Bond (IRB) for construction of the
                 Company's new manufacturing and industrial rail-park for all manufacturing
                 equipment and the Company's first level of automation; funding is
                 anticipated in
                 the November 1998 time frame. 20-year term and 8 3/4 % interest/guarantee cost
                 are expected.
                 (No formal commitment is in place for this funding.)
 ------------------------------------------------------------------------------
  $10,000,000    Secondary Public Stock Offering
                 (The Company has prepared both SB-2 and Reg A offering circular
                 drafts, but has not yet begun underwriter negotiations.)
 ------------------------------------------------------------------------------
   $6,000,000    Shelf registered warrants ranging in price from $3 to $18, and spread over
                 the
                 three-year period starting from SEC approval date for above secondary
                 offering
                 (No registration for sale of these securities is filed with the SEC as of
                 the date
                 of this report.)
 </TABLE>

Proceeds from the Series A and C Preferred Stock issues are planned to provide
cash for near-term requirements, including, but not restricted to, site and
factory planning and preparation, progress deposits on long-lead-time machinery
and equipment, and initial raw materials inventory. Proceeds from the IRB will
be allocated as in the above table. Proceeds from the Secondary Public Stock
issue will provide working capital and funds necessary to develop secondary and
tertiary markets for the Company's products. The shelf-registered warrants are
planned to be issued to provide incentives to select vendors, agents and
supporters, and to provide additional working capital to assist the Company with
rapid expansion.

RESULTS OF OPERATIONS: Nearly all of the company's revenue for the fiscal year
just ended consists of $50,435 in interest due on notes receivable which has
been accrued. At the present time the Company does not have any license or
consulting revenue agreements. There was a substantial increase of $262,717 in
professional fees from the previous year as a result of contracts with
consultants agreed to by the Company. At the present time these contracts are
not expected to impose recurring expenses for the Company. Since the Company's
products are not ready for market and equity markets have been week the Company
reduced spending on corporate development by $193,923 from the previous year.
During the year the Company abandoned a technology agreement during the year
which severely reduced royalty expenses that the Company had been incurring. At
present the company is not incurring any royalty expenses.

For further analysis, see the Company's Statement of Cash Flows.

RISK AND UNCERTAINTIES: Matters discussed herein contain forward-looking
statements that involve risk and uncertainties. The Company's results may differ
significantly from results 

                                       16
<PAGE>   17

indicated by forward-looking statements. Factors that might cause some
differences, include, but are not limited to:
- Changes in general economic conditions, including but not limited to increases
in interest rates, and shifts in domestic building construction requirements;
- Changes in government regulations affecting customers of the Company;
- Risks generally involved in the construction business, including weather,
fixed price contracts and shortages of materials or price competitive labor;
- Competition; 
- The ability of the Company to successfully bring the products from their
development stage into full and profitable production;
- The Company's ability to raise sufficient debt and equity capital to perfect
its business plans;
- The occurrences of incidents which could subject the Company to liability or
fines.

ITEM 7. FINANCIAL STATEMENTS.

The Financial Statements appear in the Report following Part III.

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

There were no disagreements with Accountants on Accounting and Financial
Disclosure.

There are no other reportable events under Item 304 of Reg. 229.304.

PART III

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

The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>

Name                            Age     Position
----                            ---     --------
<S>                             <C>     <C>
Grant C. Record                 62      Chief Executive Officer, Secretary, Director
Donald C. Bazemore              64      Director, Chairman of the Board
James R. Medley                 58      Director, Treasurer
Way W. Lee                      73      Director
William C. Nordstrom            56      Director
L. Eugene Laughlin              63      Executive Vice President
</TABLE>


GRANT C. RECORD was the Founder, Executive Vice President, Secretary, and
Chairman of the Board of Directors of the Company from December 1992 until he
became President on June 28, 1995. He relinquished the office of President and
became Chief Executive Officer on March 5, 1997. During 1991 and 1992, Mr.
Record developed the Company's base technology and early patent positions. From
1983 to 1991, Mr. Record was Executive Vice President of Magnum Technology, a
developer of advanced magnetic disks for the magnetic disk drive industry. Prior
to Magnum, Mr. Record founded and developed the Data I/O Corporation, which
enabled the 

                                       17
<PAGE>   18

early Intel microprocessor technology to gain rapid worldwide
acceptance and use. Data I/O is yet the world leader in semi-conductor memory
and logic device programming, after twenty-five years.

DONALD C. BAZEMORE is Chairman of the Board. Mr. Bazemore has been a director of
the Company since 1995 and the primary architect for the Company since 1992. Mr.
Bazemore founded the DB Associates firm in 1970. DB Associates is one of the
oldest architectural firms in Seattle. Prior to DB Associates, Mr. Bazemore was
Director of Architecture for Leo A. Daly Associates in Seattle, where he was
responsible for several major Boeing Aircraft construction projects. Leo A. Daly
is a well-known internationally significant architecture and engineering firm.

JAMES R. MEDLEY is Treasurer of the Company. Mr. Medley was first elected
director in 1995. Mr. Medley is founder of Laux Medley Norris, Inc., Investment
Advisors in Seattle since 1976. Laux Medley Norris, until recently, did business
planning for large and small companies and is responsible for portfolios up to
$100,000,000 in value. Mr. Medley was King County Republican Central Committee
Chairman, 1979 to 1981, and King County Chairman of the Reagan/Bush campaign for
president in 1980.

WILLIAM C. NORDSTROM first became a director in 1998. Mr. Nordstrom serves as
Executive Vice President-Finance and Administration for Newriders, Inc., of
Newport Beach, CA, a publicly held company.

WAY W. LEE has been a director of the Company since December 1992. He served as
President of Fibertech Corporation from 1972 to 1985, and as President of
Crystal Asset Management, Inc., from 1985 to December 1992. He also was a
director of Crystal Asset Management, Inc., until its reverse merger with LEEP.
Mr. Lee is the President of Way W. Lee General Contractor and Acme Industries
Door and Millwork.

L. EUGENE LAUGHLIN became Executive Vice President of the Company in April 1998
after serving as a consultant for six months. Mr. Laughlin has extensive
experience in various marketing and sales management capacities with the Boeing
Commercial Airplane Company, Renton, WA. Prior to his Boeing employment, he
spent three years with the Ford Motor Company in Dearborn, MI in various
controllership assignments. He is a graduate of the University of Pennsylvania's
Wharton School of Business.

ITEM 10.       EXECUTIVE COMPENSATION.

The following table sets forth certain information concerning the compensation
paid by the Company to Grant C. Record, President and CEO until March 5, 1997,
when he relinquished the position of President, but retained the position of
Chief Executive Officer; and to David C.
Moran, former President:
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------
                           SUMMARY ANNUAL COMPENSATION TABLE
-------------------------------------------------------------------------------
                                                          Awards            Payouts
                                                          -----             -------
<S>                     <C>                             <C>                <C>
Grant C. Record         CEO since 1995                   $60,000              -0-
David C. Moran          President until October          $62,502            $52,502
                        1997
</TABLE>

                                       18
<PAGE>   19

NON-QUALIFIED STOCK OPTIONS. The Company has issued non-qualified stock options
to selected employees, officers, directors, consultants and advisors. As of
April 30, 1998, options to purchase 1,599,341 shares of Common Stock were
outstanding at an average exercise price of approximately $0.58 per share.
(Please see Notes to Financial Statements.)

As of April 30, 1998, there were options outstanding to purchase 200,000 shares
of Common Stock granted to Grant C. Record.

There were no options exercised during the year.

EMPLOYMENT AGREEMENTS. The Company has entered into six employment agreements
since 1992. One agreement was with former financial officer, Gary Nees. Mr. Nees
resigned during the fiscal year 1994/95 and his severance was amicable. The
company agreed to extend certain stock options for Mr. Nees (shown herein) for
five years. An employment agreement with Tim Metz, former President/CEO, is in
dispute. Kirk Metz, a former employee (deceased), is owed certain moneys from
past services rendered. The Company's current Management believes the contract
with Kirk Metz is abandoned during calendar year 1994. Approximately $49,992 is
accrued for Kirk Metz's estate (Kirk Metz died in early 1996). The fourth
employment agreement is with Grant C. Record, CEO. This contract is current and
active. The terms of Mr. Record's employment contract were disclosed in the SEC
registration filing. The fifth employment contract was a consulting contract for
employment of Lennie H. Zallar as Vice-President and CFO. This contract was
terminated during the year ending April 30, 1997. The sixth employment agreement
is with David C. Moran, President as dated January 7, 1997. This contract
appears on Form 8-K filed on March 27, 1997. Mr. Moran resigned from the employ
of the Company in November 1997. The Company owes Mr. Moran $10,000 for past
services rendered as of April 30, 1998.

CONSULTING EXECUTIVE AGREEMENTS. The Company is recruiting its start-up
executive team. Identified to date are candidates for (1) president, (2) vice
president and director of international operations, and (3) vice president of
operations and human relations. Description of duties and biographical sketches
are to be found above in "Item 1. Description." The executive candidates are
providing, variously, compensated and uncompensated time in the organizing of
the Company's large scale manufacturing start-up. Terms of the three contracts
include duration--expiration dates as of December 31, 1998, October 1, 1998, and
December 31, 1998, respectively--and compensation ranging from zero to $75 per
hour.

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

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of August 3, 1998, by (1) each person
who is known by the Company to own beneficially more than 5% of the Common
Stock, (2) each of the Company's primary investors and executive officers, and
(3) all directors and executives officers as a group. Each named beneficial
owner has sole voting and investment power with respect to the shares listed
unless otherwise indicated.


                                       19
<PAGE>   20
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------
 Title of Class   Name and Address of Beneficial Owner       Amount         % of Class
      (1)
--------------------------------------------------------------------------------------
<S>               <C>                                     <C>                 <C>  
Common Stock      Grant C. Record                         5,777,315 (2)       20.1%
                  616 Blue Lake Blvd., #139,
                  Twin Falls, ID 83301

Common Stock      Donald C. Bazemore                       339,939 (3)         1.2%
                  401 2nd Ave. So.
                  Seattle, WA 98104

Common Stock      James R. Medley                          270,125 (4)         0.9%
                  10002 Aurora Ave. No., #3345,
                  Seattle, WA 98133

Common Stock      Way W. Lee                               381,762 (3)         1.3%
                  5210 SE 26th
                  Portland, OR 97202

Common Stock      William R. Nordstrom                     427,100 (4)         1.5%
                  567 San Nicolas Drive, Suite 400,
                  Newport Beach, CA 92660

Common Stock      L. Eugene Laughlin                         181,250           0.6%
                  P.O. Box 778, 12128 317 Place NE
                  Duvall, WA 98019

Common Stock      Agile Building Technology, Inc.           1,302,168          4.5%
                  30 W. 3rd St., 3rd Floor,
                  Williamsport, PA 17701

Common Stock      Agile Investment Corporation, Inc.         135,000           0.5%
                  30 W. 3rd St., 3rd Floor,
                  Williamsport, PA 17701

Common Stock      All six executive officers and            7,377,491         25.7%
                  Directors as a group
</TABLE>

(1)  No special note(s).
(2) The amount beneficially owned includes 250,000 shares of Common Stock
issuable upon the exercise of options; many of the shares outstanding are held
by Mr. Record's trust, Record Charitable Remainder Trust. 
(3) The amount beneficially owned includes 150,000 shares of Common Stock
issuable upon the exercise of options.
(4) The amount beneficially owned includes 100,000 shares of Common Stock
issuable upon the exercise of options.

ITEM 12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

LICENSE AGREEMENT. On May 21, 1994, the Company and Grant C. Record entered into
a Purchase of Royalty Rights and Assignment of Technology Agreement, which,
among other things, canceled the Amended License Agreement dated June 10, 1993
as subsequently amended on August 5, 1993, and irrevocably assigned to the
Company from Mr. Record all rights to patent applications, and any reissues,
divisions and continuations thereof, as well as any technology, process and/or
materials developed by Mr. Record and/or Timothy W. Metz, the Company's former
President. This assignment covers the United States only, however, the


                                       20
<PAGE>   21
Company is assigned the right to develop foreign construction projects provided
the Company is responsible for the costs of all relevant foreign patent
protections it desires for the particular countries involved. Mr. Metz has no
rights to technology developed subsequent to Mr. Metz's termination in 1995. The
Company does not use any technology developed directly or indirectly by Mr.
Metz, before or after Mr. Metz's termination in 1995.

CONTRACT FOR PUBLICATION SERVICES. The Company, until the third calendar quarter
of 1998, maintained a contract with National Investors Counsel ("NIC") for NIC
to track and publish articles about the Company's status, accomplishments and
programs. The Company exchanged 175,000 shares of its Rule 144 restricted stock
for the services rendered by NIC during the fiscal year ending April 30, 1998.
The Company intends to negotiate a new contract with NIC.

STOCK OPTIONS. In July 1996, Donald C. Bazemore, Chairman of the Board of
Directors of the Company, exercised 150,000 non-qualified stock options. Payment
was made in the form of an $80,000 8% note payable to the Company. Existing
shares of the Company's stock held by the optionee secure the note. As long as
the optionee has sufficient shares of the Company's stock as collateral for the
note based on the market price of the stock, no interest will accrue and no
amount will be due under the note. The Company holds the collateral stock and
the shares issued against the note. No transfers are permitted until the note is
fully paid. The Company also entered into an agreement with Mr. Bazemore to
provide architectural and sales services to the Company. In the 1997/1998 fiscal
year, the company paid his company, DB Associates, $17,874. Mr. Bazemore also
performs architectural services for Agile, a Company affiliate. The
"Architectural Services Agreement," described in 5(a) of the notes to Financial
Statements, has not yet resulted in any fees paid because neither the company
nor its affiliates have sold any panels as required by the Agreement.

L/A INVESTORS, INC. (L/A). L/A is a Tortola, British Virgin Islands company
which was formed by a foreign LEEP shareholder during the last quarter of 1996
to assist the Company financially after the Agile investors discontinued
supporting the Company's and Agile's developments. L/A specifically:
1.      Loaned monies and invested in Agile directly to assist them in keeping
        their product development and operational momentum;
2.      Financially supported the Company to complete the development and
        initial test phase and technical validation of the Company's LEEP
        STRUCTURAL CORE product;
3.      Financed the development, equipment fabrication and set-up of pilot
        manufacturing operations in Montgomery, Pennsylvania, to manufacture the
        Company's LEEP STRUCTURAL CORE product;
4.      Financially supported the Company's efforts in selecting and
        establishing a building site in Idaho to begin large-scale manufacturing
        of LEEP STRUCTURAL CORE.

L/A holds less than 5% of the Company's stock and holds a 50% interest in the
stock of WLP Investors who in turn hold a 65% interest in Agile Building
Technology who in turn hold an ownership interest in the Agile operating
company, Agile Building Systems, Inc. The percentage interest all shareholders
hold of Agile Building Systems, Inc. is in negotiation, as the current contract
with HKC/Agile group is in default, and Agile's finances and operations are in a
severely distressed condition at this time. The parties are willing for the HKC
investors to hold their originally agreed-to 51% if they furnish or cause to be
furnished the required Agile funding.

                                       21
<PAGE>   22

ITEM 13.       EXHIBITS, AND REPORTS ON FORM 8-K.

(A) FINANCIAL STATEMENTS AND EXHIBITS

1.  FINANCIAL STATEMENTS:

-   Independent Auditors' Report

-   Balance Sheets as of April 30, 1998 and 1997

-   Statements of Operations for years ended April 30, 1998 and 1997, and from
December 23, 1991 (inception) through April 30, 1998

-   Statement of cash flows for years ended April 30, 1998 and 1997 and from
inception

-   Statements of Stockholders' Deficit for years ended April 30, 1998 and 1997,
and from December 23, 1991 (inception) through April 30, 1998

-   Notes to Financial Statements

2.  EXHIBITS

-   Exhibit 4, Instruments defining rights of holders

-   Exhibit 10.4, Agreement between Leading Edge Earth Products, Inc., and
Harrison Kramer Corporation, dated August 12, 1997 (attached to SEC Form 10-KSB
filed November 5, 1997)

-   Exhibit 10.5, Agreement between Leading Edge Earth Products, Inc.,
and Primex (formerly, Rothchild Group) S.A., dated July 1, 1997 (attached to
SEC Form 10-KSB filed November 5, 1997); superceded by Credit Facility
Termination Agreement between Leading Edge Earth Products, Inc., and Primex,
dated February 25, 1998 (attached to SEC Form 10-QSB filed February 25, 1998).
The net effect of the termination agreement was to allow the Company to
recapture 600,000 shares of its free trading stock (which it retired earlier in
the year). In addition, the Company was successful in obtaining significant
concessions relative to the intermediate-term tradability of approximately
500,000 of the company's shares which remain with Rothchild/Primex.

-   Exhibit 16.1, Letter from KPMG Peat Marwick to Leading Edge Earth Products,
Inc., dated June 27, 1997 (attached to SEC Form 10-KSB filed November 5, 1997)

-   Exhibit 16.2, Letter from KPMG Peat Marwick to Leading Edge Earth Products,
Inc., dated August 19, 1997 (attached to SEC Form 10-KSB filed November 5, 1997)

-   Exhibit 27, Financial Data Schedule

-   Exhibit 99, J. Ratkovich note (attached to SEC Form 10-KSB filed November 
5, 1997)

(B) REPORTS ON FORM 8-K

                                       22
<PAGE>   23
1. Letter of engagement from Grant C. Record, CEO, Leading Edge Earth Products,
Inc., to David Moran, dated January 7, 1997 -- please see Form 8-K filed on
March 27, 1997

2. Agreement between Leading-Edge Earth Products, Inc., Grant Record, Agile
Building Technology, Inc., WLP Associates, and Agile Investment Corporation,
dated February 28, 1997 -- please see Form 8-K filed on March 27, 1997




                                       23
<PAGE>   24

                          INDEPENDENT AUDITOR'S REPORT


The Board of Directors
Leading-Edge Earth Products, Inc.:


        I have audited the accompanying balance sheet of Leading-Edge Earth
Products, Inc. (a development stage enterprise) as of April 30, 1998, and the
related statements of operations, stockholders' deficit, and cash flows for the
years ended April 30, 1998 and 1997 and the period from December 23, 1991
(inception) to April 30, 1998. These financial statements are the responsibility
of the Company's management. My responsibility is to express an opinion on these
financial statements based on my audits.

        I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I 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 significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audits provide a reasonable basis for my opinion.

        In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Leading-Edge Earth
Products, Inc. (a development stage enterprise) as of April 30, 1998, and the
results of its operations and its cash flows for the years ended April 30, 1998
and 1997, and the period from December 23, 1991 (inception) to April 30, 1998 in
conformity with generally accepted accounting principles.

        The accompanying financial statements have been prepared assuming that
Leading-Edge Earth Products, Inc. (a development stage enterprise) will continue
as a going concern. There is substantial doubt about the Company's ability to
continue as a going concern as a result of recurrent losses and negative working
capital. Management's plans in regard to these matters are also described in
note 1 to the financial statements. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.



                             W. Alan Jorgensen, CPA


August 29, 1998
Seattle, WA




                                       24
<PAGE>   25

                        LEADING-EDGE EARTH PRODUCTS, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                              FINANCIAL STATEMENTS

                                 APRIL 30, 1998





                                       25
<PAGE>   26

                        LEADING-EDGE EARTH PRODUCTS, INC.
                        (A Development Stage Enterprise)

                           Balance Sheet as of 4/30/98


<TABLE>
<CAPTION>
<S>                                                       <C>        
ASSETS
CURRENT ASSETS
    Cash                                                            $     2,557
    Receivables from affiliate, net of reserve                           10,052
    Inventory                                                            30,724
    Prepaid expenses and deposits                                        24,783
                                                                    -----------
                 TOTAL CURRENT ASSETS                                    68,116
OTHER ASSETS
    Investment in affiliates                                             88,788
                                                                    -----------
                 TOTAL ASSETS                                           156,904
                                                                    -----------

LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
    Accounts payable                                                     69,508
    Accrued contract salary payable                                     380,343
    Accrued royalties and interest payable                               87,872
    Loans from shareholders                                             411,346
                                                                    -----------
                 TOTAL CURRENT LIABILITIES                              949,069
                                                                    -----------

CONTINGENT LIABILITIES                                                        -

SHAREHOLDERS' EQUITY (DEFICIT)
  Preferred shares
  (10 million shares authorized, none issued)                                 -
  Common stock, no par value
  (100 million shares authorized, 28,285,196 issued                   5,159,865
  and outstanding)
  Note receivable from shareholders                                    (483,784)
  Deficit accumulated during developmental stage                     (5,468,246)
                                                                    -----------
        SHAREHOLDERS' DEFICIT                                          (792,165)
                                                                    -----------
                 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY         $   156,904
                                                                    -----------
</TABLE>


                                       26
<PAGE>   27

                        LEADING-EDGE EARTH PRODUCTS, INC.
                        (A Development Stage Enterprise)

        Statement of Operations for years ending April 30, 1998 and 1997,
          and From December 23, 1991 (inception) through April 30, 1998
<TABLE>
<CAPTION>
                                                                                      Dec. 23, 1991
                                                        ---Year ended---                 through
                                                   April 30,        April 30,            April 30,
                                                      1998             1997                1998
                                                  -------------      ------------     --------------
<S>                                              <C>                <C>                 <C>

INCOME
       License and consulting revenues            $          -       $    225,125       $    497,000
       Interest                                         50,435             27,592             86,154
       Other                                             3,013              1,642             18,977
                                                  ------------       ------------       ------------
            TOTAL INCOME                                53,448            254,359            602,131

RESEARCH AND DEVELOPMENT EXPENSES                       26,923             84,519            962,271

GENERAL AND ADMINISTRATIVE EXPENSES
       Contract salaries and incentives                125,240            162,685          1,477,583
       Travel and entertainment                         22,628             32,968            198,488
       Legal and professional                          439,637            176,920          1,397,458
       Promotional and corporate development            72,400            266,323            534,468
       Other general and administrative                 51,791             73,026            444,726
       costs
                                                  ------------       ------------       ------------
            TOTAL GENERAL AND ADMINISTRATIVE          711,696            711,922          4,052,723
            

INTEREST AND OTHER EXPENSE
       Interest                                         94,386             30,307            234,287
       Adjustment for unpaid revenues from              45,345            222,750            268,095
       affiliate
       Royalties and royalty buyout expense                  -             43,000            553,000
                                                  ------------       ------------       ------------
            TOTAL INTEREST AND OTHER EXPENSE           139,731            296,057          1,055,382
                                                  ------------       ------------       ------------

                  TOTAL EXPENSES                       878,350          1,092,498          6,070,376
                                                  ------------       ------------       ------------

                        NET LOSS                  $   (824,902)      $   (838,139)      $ (5,468,246)
                                                  ------------       ------------       ------------
            Net loss per share                          $(0.03)            $(0.03)            $(0.30)
            Weighted average shares                 27,583,544         28,863,150         18,509,949
            outstanding
</TABLE>


                                       27
<PAGE>   28

                        LEADING-EDGE EARTH PRODUCTS, INC.
                        (A Development Stage Enterprise)

        Statement of Cash Flows for years ending April 30, 1998 and 1997,
          and From December 23, 1991 (inception) through April 30, 1998
<TABLE>
<CAPTION>
                                                                                        Dec. 23, 1991
                                                          ---Year Ended---                 Through
                                                      April 30,         April 30,         April 30,
                                                        1998              1997               1998
                                                    -------------     ------------      -------------
<S>                                                  <C>              <C>               <C> 
CASH FLOWS FROM OPERATING ACTIVITIES

Net loss                                            $  (824,902)      $  (838,139)      $(5,422,253)
ADJUSTMENTS TO RECONCILE NET LOSS
   TO CASH USED IN OPERATING ACTIVITIES
Nonqualified stock options and grants                   666,610           257,128         2,707,825
Depreciation and amortization                               861             1,148            16,185
Write-off of long-term assets                            23,814            36,534           170,903
Accrued royalty obligation                              (37,000)           37,000           200,000

CHANGES IN OPERATING ASSETS AND LIABILITIES
Receivables                                              (5,982)           64,055           (10,052)
Inventory                                               (30,724)            4,778           (30,724)
Prepaid expenses and deposits                           (18,283)           31,901           (24,783)
Accounts payable                                       (127,834)          175,944           463,534
Accrued salary obligations                               45,615           106,975           394,967
Accrued interest payable                                 28,211            29,243           289,907
                                                    -----------       -----------       -----------
    Total adjustments to Operating Loss                 545,288           744,706         1,469,937
                                                    -----------       -----------       -----------
CASH USED IN OPERATING ACTIVITIES                      (279,614)          (93,433)       (3,952,316)
                                                    -----------       -----------       -----------

INVESTING ACTIVITIES
Investment in affiliate                                 (88,788)                            (88,788)
Equipment purchases, disposals                                             11,000          (159,064)
Purchase intangible                                                       (25,822)          (26,822)
Payments on notes receivable from shareholders                                                6,500
                                                    -----------       -----------       -----------
CASH USED BY INVESTING ACTIVITIES                       (88,788)          (14,822)         (268,174)
                                                    -----------       -----------       -----------

FINANCING ACTIVITIES
Sale of common stock                                     20,000                             390,000
Exercise of stock options                                                  25,000            67,537
Exercise of Class A warrants                                                                  3,300
Contributed capital                                                                         100,910
Proceeds from notes payable                             386,500            74,630           658,630
Proceeds - loans from shareholders                       51,562            40,822           671,717
Payments from shareholder loan                          (30,000)          (32,000)         (254,379)
Payments on notes payable                               (63,000)                            (76,500)
                                                    -----------       -----------       -----------
CASH PROVIDED BY FINANCING ACTIVITIES                   365,062           108,452         1,561,215
                                                    -----------       -----------       -----------

Change in cash                                           (3,340)              197        (2,659,275)
Cash at beginning of period                               5,897             5,700
                                                    -----------       -----------       -----------
CASH AT END OF PERIOD                               $     2,557       $     5,897       $(2,659,275)
                                                    -----------       -----------       -----------
</TABLE>


                                       28
<PAGE>   29

                        LEADING-EDGE EARTH PRODUCTS, INC.
                        (A Development Stage Enterprise)

        Statement of Cash Flows for years ending April 30, 1998 and 1997,
          and From December 23, 1991 (inception) through April 30, 1998

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
                                                                                             Dec. 23, 1991
                                                                    ---Year Ended---           Through
                                                                 April 30,      April 30,     April 30,
                                                                   1998           1997           1998
                                                               -------------  ------------   -------------
<S>                                                            <C>              <C>           <C> 
Fixed assets acquired under contract                                                          $   4,976
Fixed assets acquired with a note payable                                                        13,725
Notes receivable in exchange for common stock                                   $ 355,000       607,599
                                                                  
Offset of notes receivable from shareholder
  with related loans from shareholders                                                          117,315
Cancellation of notes payable in exchange for common stock                                      457,725

Payables for services for common stock                           $ 144,029        217,424       637,693
                                                    
Cancellation of accounts payable in return of
  plant and equipment                                                                            22,500
Common stock issued for payment of accrued
  royalties and interest payable                                    62,973         29,000       120,984
Grant of stock options in payment for accrued salary                                            120,000

Shares in exchange for note payable                                398,130         40,000       438,130
Increase in shareholder loan for accounts payable                   65,209         87,127       152,336

Note exchange for option exercise, 500,000 shares issued                            3,500



ADDITIONAL INFORMATION

Cash interest paid                                                  1,759               -         1,759
Cash taxes paid                                                         -               -             -

</TABLE>

            Note: no cash was paid for interest in fiscal year 1997;
                   no cash was paid for taxes in either year.



                                       29
<PAGE>   30

                        LEADING-EDGE EARTH PRODUCTS, INC.
                        (A Development Stage Enterprise)

                       Statements of Stockholders' Deficit
<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Deficit        Total
                                                                                                        Accumulated  Stockholders'
                                                         Price          Common Stock          Notes      during the     Equity
                                                          Per    ------------------------  Receivable   Development  (Accumulated
                                              Date       Share     Shares        Amount   Stockholders     Stage        Deficit)
---------------------------------------------------------------------------------------------------------------------------------

<S>                                          <C>        <C>      <C>            <C>         <C>          <C>         <C>         
Balances at inception                        12/23/91            11,936,830     $  5,000    $    -       $       -   $     5,000 
                                                                                                               
Cash contributions and unreimbursed
 expenditures incurred on behalf of 
 the Company                                1/92-4/92                     -       37,039         -               -        37,039
 
Net loss for fiscal 1992                                                  -            -         -         (34,725)      (34,725)

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

Balances at April 30, 1992                                       11,936,830       42,039         -         (34,725)        7,314

Cash contributions and unreimbursed 
 expenditures incurred on behalf  of
 the Company                                5/92-4/93                     -      63,871         -                -        63,871
 
Common stock issued for payment of note 
 payable                                      4/30/93     0.35      168,725      58,725         -                -        58,725
 
Common stock issued for payment of salary     4/30/93     0.12       40,000       4,654         -                -         4,654
 
Excess of market price over exercise price                  
 on options granted during the year                                       -     332,710         -                -       332,710
Net loss for fiscal 1993                                                  -           -         -         (504,175)     (504,175)
 

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

Balances at April 30, 1993                                       12,145,555     501,999         -         (538,900)      (36,901)
 
Common stock issued for cash                  6/22/93     0.54      665,000     360,000         -                -       360,000
 
Common stock issued for payment of services   6/22/93     0.54       99,000      53,594         -                -        53,594
 
Common stock issued for  payment of
 stockholder loan and accrued interest        7/27/93     0.61      125,400      76,000         -                -        76,000
 
 
Exercise of stock options                     4/30/94     0.07      100,000       6,500    (6,500)               -             -
 
Excess of market price over exercise price                                -     825,129         -                -       825,129
 on options granted during the year 
Net loss for fiscal 1994                                                  -           -         -       (1,559,781)   (1,559,781)

                                                                 ----------------------------------------------------------------
Balances at April 30, 1994 carried forward                       13,134,955  $1,823,222   $(6,500)     $(2,098,681)  $  (281,959)

</TABLE>




                                       30
<PAGE>   31

                        LEADING-EDGE EARTH PRODUCTS, INC.
                        (A Development Stage Enterprise)

                       Statements of Stockholders' Deficit
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Deficit        Total
                                                                                                        Accumulated  Stockholders'
                                                         Price          Common Stock          Notes      during the     Equity
                                                          Per    ------------------------  Receivable   Development  (Accumulated
                                              Date       Share     Shares        Amount   Stockholders     Stage        Deficit)
---------------------------------------------------------------------------------------------------------------------------------

<S>                                          <C>        <C>      <C>          <C>          <C>           <C>           <C>         

Balances at April 30, 1994 brought 
 forward                                                         13,134,955   1,823,222    $ (6,500)     $(2,098,681)  $ (281,959)
Common stock issued for payment of
 professional fees and royalty obligations    5/31/94     0.50    1,054,863     526,500           -                -      526,500
  
Exercise of options for cash                  6/30/94     0.09      207,400      18,996           -                -       18,996
 
Cash payment of note receivable               
 from stockholder                             7/31/94                     -           -       6,500                -        6,500
Exercise of options for cancellation           
 of note payable                               8/4/94     0.12      197,680      23,000           -                -       23,000
Grant of stock options in payment  
 of accrued salaries                         10/31/94                     -     120,000           -                -      120,000
 
Exercise of options for notes     
 receivable                                11/94-2/95     0.13    1,859,172     246,099    (246,099)               -            -
 
Common stock issued for payment of      
 accounts payable                            12/31/94     0.84       45,796       8,240           -                -       38,240

Exercise of Class A  warrants for cash        1/31/95     2.00        1,650       3,300           -                -        3,300
Exercise of Class A warrants payment          
 of note payable                              1/31/95     2.00       50,000     100,000           -                -      100,000

Net loss for fiscal 1995                                                  -           -           -       (1,303,988)  (1,303,988)
                                                                 ----------------------------------------------------------------
Balances at April 30, 1995                                       16,551,516   2,899,357    (246,099)      (3,402,669)    (749,411)
 
Common stock issued for payment of        
 accounts payable                             9/28/95     0.63       20,800      13,000           -                -       13,000

Common stock issued for cash                  11/6/95     0.80       12,500      10,000           -                -       10,000
 
Common stock issued in exchange for
 investments in affiliates                    12/4/95            11,884,615           -           -                -            -
 
Common stock issued for payment of       
 accounts payable                            12/10/95     0.50      150,000      75,000           -                -       75,000

Exercise of options for cash                 12/27/95     0.12      202,320      23,541           -                -       23,541
 
Common stock issued for payment of        
 accounts payable                             1/12/96     0.75      100,000      75,000           -                -       75,000
 
Offset of notes receivable from
 stockholders with related loans 
 from stockholders                            2/28/96                     -           -     117,315                -       117,315
 
Common stock issued for payment of        
 accounts payable                             3/11/96     0.75      100,000      75,000           -                -        75,000
 
Common stock issued for payment of
 accounts payable and accrued
 interest and royalties                       4/29/96     1.03      250,000     258,011           -                -       258,011
 
 
Excess of market price over exercise 
 price on options granted during the year     4/30/96                     -      41,500           -                -        41,500
 
Net loss for fiscal 1996                                                  -           -           -         (402,536)     (402,536)
                                                                 -----------------------------------------------------------------

Balances at April 30, 1996 carried forward                       29,271,751  $3,470,409   $(128,784)     $(3,805,205)    $(463,580)
</TABLE>



                                       31
<PAGE>   32

                        LEADING-EDGE EARTH PRODUCTS, INC.
                        (A Development Stage Enterprise)

                       Statements of Stockholders' Deficit

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Deficit        Total
                                                                                                        Accumulated  Stockholders'
                                                         Price          Common Stock          Notes      during the     Equity
                                                          Per    -----------------------   Receivable   Development  (Accumulated
                                              Date       Share     Shares       Amount    Stockholders     Stage        Deficit)
----------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>        <C>      <C>         <C>          <C>            <C>           <C>         
Balances at April 30, 1996 brought 
  forward                                                        29,271,751  $3,470,409   $(128,784)     $(3,805,205)  $  (463,580)
Common stock issued in payment for 
 accrued salaries                             6/15/96     0.69       21,200      14,624           -                -        14,624
 
Common stock issued for payment of
 services                                     7/10/96     1.00       75,000      75,000           -                -        75,000
 
Options exercised in exchange for
 note receivable                              7/20/96     0.53      150,000      80,000     (80,000)               -             -
 
Removal of stop stock transfer for cash       8/10/96                     -       3,500           -                -         3,500
 
Common stock issued for note receivable       8/15/96     1.00      275,000     275,000    (275,000)               -             -
Common stock issued for payment of
 note payable and accrued interest            8/22/96     0.69      100,000      69,000           -                -        69,000
 
Exercise of options for cash                  10/3/96     0.50       50,000      25,000           -                -        25,000
 
Common stock issued for payment of
 services                                    12/10/96     1.00       75,000      75,000           -                -        75,000

Common stock issued for payment of 
 services                                     3/10/97     0.70       75,000      52,800           -                -        52,800
 
Common stock returned by subsidiary           3/25/97            (4,216,601)          -           -                -             -
 
Net loss for fiscal 1997                                                  -           -           -         (838,139)     (838,139)
                                                                 -----------------------------------------------------------------
Balances at April 30, 1997 carried forward                       25,876,350  $4,140,333   $(483,784)     $(4,643,344)    $(986,795)

</TABLE>


                                       32
<PAGE>   33

                        LEADING-EDGE EARTH PRODUCTS, INC.
                        (A Development Stage Enterprise)

                       Statements of Stockholders' Deficit


<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                    Deficit          Total
                                                                                                  Accumulated    Stockholders'
                                                   Price          Common Stock         Notes       during the       Equity
                                                    Per     ----------------------   Receivable   Development    (Accumulated
                                        Date       Share     Shares     Amount      Stockholders     Stage          Deficit)
------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>         <C>       <C>       <C>           <C>            <C>           <C>         

Balances at April 30, 1997 brought
 forward                                                  25,876,350  $  4,140,333  $   (483,784)  $(4,643,344)  $   (986,795)
Common stock issued for
 accounts payable for services        5/15/97      0.40       62,500        25,000             -              -        25,000
Common stock issued
 for services                         5/30/97      0.43       75,000        32,400             -              -        32,400
Options on common for 
 accounts payable for services        6/6/97       0.00            -         5,000             -              -         5,000
 
Common stock
 exchanged for note payable           6/6/97       0.43      178,279        76,660             -              -        76,660

Common stock exchanged for
 loan from shareholder                6/6/97       0.43       37,272        16,027             -              -        16,027

Common stock issued for services      6/6/97       0.43      113,690        35,250             -              -        35,250
Common stock issued
 for account payable for services     6/6/97       0.60       81,977        48,887             -              -        48,887


Common stock issued for
 account payable for services         6/6/97       0.43       28,819        12,392             -              -        12,392

Common stock issued for
account payable for services          6/6/97       0.52      200,000       104,000             -              -       104,000

Common stock issued for
 account payable for services         6/6/97       0.52      200,000       104,000             -              -       104,000

Common stock issued for
account payable for services          6/6/97       0.52      200,000       104,000             -              -       104,000

Common stock issued for cash          6/26/97      0.18      114,133        20,000             -              -        20,000

Common stock issued
 for note payable                     8/21/97      0.62      316,800       196,416             -              -       196,416
Common stock issued
 for note payable                     10/15/97     0.25      424,000       106,000             -              -       106,000
Common stock issued
 for services                         11/1/97      0.40      100,000        40,000             -              -        40,000
Common stock issued
 for accounts payable                 12/1/97      0.40        6,250         2,500             -              -         2,500

Common stock issued
 for accounts payable                 1/29/98      0.27       94,126        25,000             -              -        25,000

Common stock
 exchanged for note payable           3/10/98      0.38      176,000        66,000             -              -        66,000

Net loss for fiscal 1998                                           -             -             -       (824,902)     (824,902)

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

Balances at April 30, 1998                                28,285,196  $  5,159,865  $   (483,784)  $ (5,468,246) $   (792,165)
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       33
<PAGE>   34
                        LEADING-EDGE EARTH PRODUCTS, INC.

                                 APRIL 30, 1998

                          NOTES TO FINANCIAL STATEMENTS

NOTE 1: ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND POOLING OF INTERESTS. Leading-Edge Earth Products, Inc.
believes its products have applications for single-family, multifamily
residential and low-rise commercial construction. The Company is considered to
be in the development stage. Significant revenues have not yet been generated
from research and development activities or planned operations. The Company's
business activities have been financed primarily through the issuance of equity
securities, outside loans, and loans from shareholders.

On December 29, 1992 the Company entered into a business combination that was
accounted for as a pooling of interest wherein Leading-Edge Earth Products,
Inc., merged with an inactive public company, Crystal Asset Management, which
had been incorporated in Oregon in 1968. In March of 1993, the Company began
again to trade its stock publicly as Leading-Edge Earth Products, Inc.

GOING CONCERN. The Company's ability to continue as a going concern is dependent
upon its success in transforming its building panel technology into a profitable
operation. At April 30, 1998 Management was in the process of negotiating new
agreements directed toward production joint ventures, independent financings,
building sites for a new manufacturing plant location and acquisition of an
ongoing panel pilot manufacturing organization.

The successful funding and development of joint ventures and or subsidiaries as
profitable manufacturing entities is critical to the Company's ability to
continue as a going concern. The accompanying financial statements have been
prepared on the basis that the Company will be able to continue in existence as
a going concern. These statements do not include any adjustments that might
result from the outcome of this uncertainty.

RECLASSIFICATIONS. Certain reclassifications have been made to the financial
information previously reported in order to conform to the 1998 presentation.
These classifications have no effect on loss from operations and net loss as
previously reported.

USE OF 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 

                                       34
<PAGE>   35

revenues and expenses during the reporting period. Actual results could differ
from those estimates.

CASH AND CASH EQUIVALENTS. The Company considers, and the financial statements
reflect, all highly liquid short-term investments with original maturity of
three months or less as cash.

RECEIVABLES. As a result of an agreement with Agile and WLP in fiscal 1997, the
Company does not expect to collect license and consulting revenues and interest
due from Agile until after Agile is in production and is in a position to make
payments on amounts owing to the Company. Consequently the Company adjusted
revenues and established a reserve totaling $268,095 and $222,750 for amounts
due from Agile at April 30, 1998 and 1997. See note (4) below for further
discussion of Agile.

INVENTORY. Inventory consisting of steel for fabrication was purchased for
$30,724 during fiscal 1998 and has been reflected in the financial statements at
acquisition cost. As of April 30, 1998, all material purchased was accounted for
as raw material inventory.

INVESTMENT IN AFFILIATE. During fiscal 1998, the Company agreed to enter into a
joint venture agreement with L/A Investors involving certain production
facilities. All aspects of this arrangement were not finalized as of April 30,
1998. However, during fiscal 1998 cash was advanced by the Company for
investment in LEEP Building Systems, Inc. ("LBS") and L/A Investors has made
contributions toward LBS during fiscal 1998. To the extent cash was advanced by
the Company this arrangement has been accounted for as "investment in
affiliate". L/A Investors has recognized the investment by the Company by
issuing a note payable to the Company.

PROPERTY AND EQUIPMENT. In fiscal 1998 Management determined that the rights to
use certain technology (Magnesium Oxide Technology), which had been acquired
in fiscal 1997, no longer met the business needs of the Company. The original
cost of this asset was $25,822. This amount less amortization is included in
Other General and Administrative costs for fiscal 1998.

INCOME TAXES. Deferred Income tax assets and liabilities are computed for
differences between the financial statement and tax basis of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances have
been established to reduce tax assets to the amount expected to be realized.
Income tax expense is the tax payable or refundable for the period plus or minus
the change during the period in net deferred tax assets and liabilities.

NET LOSS PER COMMON SHARE. Net Loss per common share is computed based on the
weighted-average number of common shares and common share equivalents
outstanding. When dilutive, stock options are included as common share
equivalents using the treasury stock method.

                                       35
<PAGE>   36

There was no difference between basic and fully diluted earnings per share for
all periods presented.

STOCK-BASED COMPENSATION. In October 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 123 (SFAS 123)
which addresses the accounting for stock-based compensation arrangements. SFAS
123 permits a company to choose either a new fair-value-based method or the
current APB Opinion 25 intrinsic-value-based method of accounting for
stock-option-based compensation arrangements. The Company has adopted SFAS 123
for the year ending April 30, 1997 and thereafter. Management will continue to
record stock-based compensation using current APB Opinion 25
intrinsic-value-based method and, therefore, believes adoption of SFAS 123 will
not impact the Company's financial position and results of operations.

During fiscal 1998 options to purchase 600,000 shares of restricted rule 144
stock were valued at $102,981. The Black and Scholes method for valuing stock
options was used with the following assumptions:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
For year ended                                4/30/98               4/30/97
---------------------------------------------------------------------------------------
<S>                                         <C>              <C>          <C>
Grant date                                   March 28,      January 7,     April 23,
                                               1998            1997           1997

Number of shares under options granted        600,000        300,000        100,000
Stock price at date of issue                   $0.47          $0.97          $0.53
Exercise price                                $0.375          $0.75          $0.50
Expected life                                 3 years        3 years        5 years
Volatility measurement                         47.7%          37.8%          37.0%
Dividends                                      none            none           none
</TABLE>

For the year ended April 30, 1998 options to purchase 725,960 shares of
restricted rule 144 stock expired without being exercised, at no cost to the
Company and are not valued. The pro forma effect of valuing the options for
financial reporting purposes would be to increase the net loss for fiscal 1997
by $102,981 to $985,736. For fiscal 1997, the pro forma effect of using the
Black and Scholes model for valuing options for financial reporting purposes
would have been to increase the net loss for fiscal 1997 by $123,670 to
$961,809. Assumptions for the Black and Scholes model for fiscal 1997 pro forma
calculations were consistent with those used for fiscal 1998. The effect on loss
per share for both 1998 and 1997 would have been negligible.

INVESTMENTS IN SUBSIDIARIES. The Company has a 35% interest in Agile. This
investment is accounted for using the equity method. Agile is a development
stage enterprise established in December 1995 to manufacture building panels
using technology 

                                       36
<PAGE>   37

developed jointly with the Company and/or independently. Agile has incurred
operating losses since its inception in 1995 through the period ended April 30,
1998.

The Company has recorded no value related to this investment due to the
indeterminable values related to the Company's common stock and technology given
or the common stock of Agile received in the investment transaction. The Company
has not recognized its proportionate share of Agile's net losses as the Company
has no obligation to fund any such losses.

NOTE 2: RELATED PARTY TRANSACTIONS

ARCHITECTURAL SERVICES AGREEMENT. The Company has entered into an agreement with
the owner of DB Associates, a stockholder and member of the Board of Directors,
to provide architectural and sales services. In addition to normal hourly rates
for architectural services, DB Associates will be paid for sales and marketing
efforts at the rate of $1.00 per panel for each panel sold to persons or
companies for which DB Associates performs architectural work.

DB Associates will alternatively receive $0.25 per panel for providing
architectural review for compliance with the Company's standards on projects
with which DB Associates is not directly involved as architect.

JOINT VENTURE. At April 30, 1998, the Company and L/A Investors were in the
process of finalizing a joint venture agreement. In fiscal 1998, during the
initial stages of this joint venture, the Company contributed cash and
technology and L/A Investors contributed cash and manufacturing equipment.
Principals of L/A Investors are significant shareholders of the Company's common
stock. See note regarding investment in affiliate above.

 STOCK OPTIONS. Non-qualified options to purchase 200,000 shares of common stock
at $0.40 per share were granted during fiscal 1998 in exchange for legal
services. Additionally, non-qualified compensatory options to purchase a total
of 600,000 shares of common stock for $0.375 per share were granted to
Management and Members of the Board of Directors during fiscal 1998. These
options expire September 3, 2004.

Certain non-qualified compensatory options to purchase 320,000 shares of common
stock were granted in fiscal 1995. These options expired in October 1997 without
being exercised.

NOTES RECEIVABLE FROM STOCKHOLDERS. The Company has from time to time issued
common shares in return for notes receivable from stockholders. In many
instances these stockholders were also officers and directors. These notes
receivable have been accounted for a reduction of stockholders' equity.

                                       37
<PAGE>   38

LOANS FROM STOCKHOLDERS. At April 30, 1998, the Company owed $411,346, in
unsecured, demand notes payable to stockholders with interest accruing at 8% or
10% per annum.

NOTE 3: PREFERRED AND COMMON STOCK

PREFERRED. The Articles of Incorporation authorize issuance of up to 10,000,000
shares of preferred stock. As of April 30, 1998, no preferred shares have been
issued. The Board of Directors has the authority, without further stockholder
action, to determine the preferences, limitations, and relative rights of the
preferred stock, subject to the requirements on the Oregon Business Corporation
Act.

COMMON STOCK. Only a portion of the Company's common stock outstanding at April
30, 1998 is freely tradable. The freely tradable shares include the 1,193,683
shares originally held by certain founding stockholders, 995,000 shares
registered on March 4, 1994 and subsequently sold, and those shares issued after
December 29, 1992 where the holding period and trading volume restrictions are
satisfied. The shares issued pursuant to the agreement of merger dated December
29, 1992 and any shares issued subsequent thereto, are "restricted securities"
under the Securities Act of 1933 and, therefore, are subject to limitations on
transferability.

All warrants to purchase shares of common stock have been called or have
expired.

NOTE 4: INCOME TAXES

Deferred tax assets primarily consist of net operating loss carry forwards.
There are no significant deferred tax liabilities. A valuation allowance has
been established to reduce the deferred tax assets to zero as a result of the
Company's recurring losses. Differences between the cumulative net loss for
financial reporting purposes and that available for income tax purposes arise
primarily as a result of nondeductible expenditures paid by the issuance of
securities and capitalized start up costs.

Net operating loss carry forwards for federal income tax purposes which are
available to offset future taxable income, if any, expire as follows:
<TABLE>
                      <S>                          <C> 
                      2009                         $     7,000
                      2010                              31,000
                      2011                           1,091,000
                      2012                           1,627,000
                      2013                           1,399,000
</TABLE>

NOTE 5: FAIR VALUE OF FINANCIAL INSTRUMENTS

 The Company's financial instruments include cash, receivables, accounts
payable, notes payable and loans from stockholders. Except for notes receivable
from stockholders and 

                                       38
<PAGE>   39

loans from stockholders, the Company believes that the fair value of these
financial instruments approximates their carrying amounts based on current
market indicators, such as prevailing market rates. It is not practicable to
estimate the fair value of notes receivable from stockholders and loans from
stockholders, due primarily to the uncertainty surrounding the timing of cash
flows.

NOTE 6: INVESTMENT SERVICES AGREEMENT

 On June 13, 1994, the Company entered into a consulting agreement with an
investment company. The Company agreed to pay the investment company a
consulting fee of 5% of all moneys raised on the Company's behalf. As part of
the agreement, the Company also issued 500,000 of restricted common shares to
the owners of the investment company upon signing of the agreement. Pursuant to
the agreement, an additional 500,000 restricted common shares were to be issued
after the sale of 800,000 shares of Company stock. The sale of shares
contemplated did not occur. This agreement expired in December 1994 and the
Company has requested return of the 500,000 shares due to nonperformance by the
investment company. Settlement was reached subsequent to April 30, 1997 whereby
400,000 shares remained outstanding, but highly restricted, and 100,000 shares
were released for sale.

NOTE 7: COMMITMENTS AND CONTINGENCIES

On July 27, 1995, the Company filed a complaint for Declaratory Judgment and
Injunction with the Superior Court of Washington in Seattle, Washington,
enjoining a former officer of the Company, Tim Metz (Mr. Metz), not to use any
patented or trade secret information covered by his employment agreement. At the
same time, suit was brought against Mr. Metz in conjunction with severance
details as it relates to his employment contract and method of compensation. Mr.
Metz filed suit in the same time frame claiming certain rights to technology and
damages in excess of $395,000. Because of a personal tragedy, Mr. Metz did not
respond to the discovery requested of him by the Company until recently. Based
on the Company's knowledge of Mr. Metz's claims, the Company is of the opinion
that it has meritorious defenses. According to officers of the Company the
technology covered by the patents Mr. Metz claims he has rights to is not being
used by the Company. Mr. Metz has proposed a settlement, which the Company has
under consideration. Unless settled on a basis acceptable to the Company, the
Company intends to defend vigorously the claims brought by Mr. Metz.

NOTE 8: SUBSEQUENT EVENTS

In July 1998, the Company took possession of an Interfacing Foam Generation
System that had been manufactured to the Company's specification for its
proposed manufacturing process. This equipment cost $83,000. Financing the
equipment has been arranged and will require the Company to make monthly
payments of approximately $2,100. The payment responsibility has been assigned
to LBS pending the Company's acquisition of LBS.

                                       39
<PAGE>   40

Subsequent to April 30, 1998, finished goods inventory were shipped from the
manufacturing facility in Williamsport PA to Twin Falls, ID, where it is being
used in construction of buildings to demonstrate the uses, features and benefits
of the Company's product.

                                       40
<PAGE>   41
SIGNATURES

In accordance with Section 13 or 15(d) or 15(d) of the Exchange Act, the
registrant causes this report to be signed on its behalf by the undersigned or,
their in duly authorized representatives, and in the capacities, and on the date
indicated.

                        LEADING-EDGE EARTH PRODUCTS, INC.



                   By: Grant C. Record, its CEO and Secretary

                              Date: August 26, 1998
<TABLE>
<CAPTION>

Signature                            Title                         Date
---------                            -----                         ----
<S>                          <C>                                  <C>


Grant C. Record              Secretary and Director               8/26/98



Donald A. Bazemore           Chairman of the Board                8/26/98
                                  of Directors


James R. Medley              Treasurer and Director               8/26/98



Way W. Lee                          Director                      8/26/98



William R. Nordstrom                Director                      8/26/98

</TABLE>


                                      41