July 3, 1996
(Except Note 12 as to which the date is July 29, 1996)
Independent Auditors' Report
The Board of Directors
Systems Technology Associates, Inc.
Sterling, Virginia
We have audited the accompanying balance sheets of
Systems Technology Associates, Inc. as of May 31,
1996 and 1995, and the related statements of income,
stockholders' equity (deficit), and cash flows for the
years ended May 31, 1996, 1995 and 1994. These
financial statements are the responsibility of the
Corporation's management. Our responsibility is to
express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the
accounting principles used and significant estimates
made by management, as well as evaluating the
overall financial statement presentation. We believe
that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Systems Technology Associates,
Inc. as of May 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended
in conformity with generally accepted accounting
principles.
The accompanying financial statements have been
prepared assuming that the Corporation will continue
as a going concern. As discussed in Note 2 to the
financial statements, prior to 1994, the Corporation
suffered substantial recurring losses from operations
which resulted in a large net capital deficiency. The
capital deficiency has not been eliminated, and total
stockholders' equity remains insufficient in comparison
to outstanding debt, which raises substantial doubt
about the Corporation's ability to continue as a going
concern. Management's plans regarding those matters
also are described in Note 2. The financial statements
do not include any adjustments that might result from
the outcome of this uncertainty.
Certified Public Accountants
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-1-1995
<PERIOD-END> MAY-31-1996
<CASH> 24,859
<SECURITIES> 0
<RECEIVABLES> 89,252
<ALLOWANCES> 17,245
<INVENTORY> 43,3093
<CURRENT-ASSETS> 199,793
<PP&E> 14,294
<DEPRECIATION> 440,232
<TOTAL-ASSETS> 214,087
<CURRENT-LIABILITIES> 89,171
<BONDS> 0
0
100,000
<COMMON> 1,712,635
<OTHER-SE> (1,988,176)
<TOTAL-LIABILITY-AND-EQUITY> 214,087
<SALES> 902,520
<TOTAL-REVENUES> 937,876
<CGS> 676,474
<TOTAL-COSTS> 676,474
<OTHER-EXPENSES> 493,619
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,902
<INCOME-PRETAX> (232,217)
<INCOME-TAX> 0
<INCOME-CONTINUING> (267,573)
<DISCONTINUED> 0
<EXTRAORDINARY> 2,000
<CHANGES> 0
<NET-INCOME> (230,217)
<EPS-PRIMARY> (0.070)
<EPS-DILUTED> (0.070)
</TABLE>
