AMERISHOP CORP, 10-K405, 1996-09-30

AMERISHOP CORP
10-K405, 1996-09-30
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<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)

[x] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended June 30, 1996.

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from to
------------- ----------------

Commission file number 33-8333-D
---------
AMERISHOP CORP. (f/k/a AmeriMark Corp.)
- ---------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)

Delaware 38-2684858
- ---------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

3033 Orchard Vista Dr., S.E., Ste.308
Grand Rapids, Michigan 49546-7080
- ---------------------------------- ----------------------------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code - (616) 949-0775
-------------------

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

Name of each exchange on
Title of each class which registered
- ------------------- ------------------------

None None

Securities registered pursuant to Section 12(g) of the Act:

None
- ---------------------------------------------------------------------------
(Title of Class)

<PAGE> 2

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the form 10-K or any amendment to the
Form 10-K. [X]

-ii-

<PAGE> 3

The aggregate market value of voting stock of the Registrant held by
nonaffiliates as of September 5, 1996 was $480,216 based upon the average of
the bid and ask price as of that date.

The number of shares outstanding of each of the Registrant's classes of common
stock as of September 5, 1996 was 2,894,765 shares of $.00001 par value common
stock.

DOCUMENTS INCORPORATED BY REFERENCE

<TABLE>
<CAPTION>
Part of Form 10-K
Into Which Portions of
Document Documents are Incorporated
-------- --------------------------
<S> <C>
Registrant's Form 8-K Part II Item 9
Date of Report 5/30/96
and Form 8-KAmending Same
filed June 11, 1996

Registrant's Form S-18 Part IV Item 14
Reg. No. 33-8333-D

Registrant's Form 8-K Part IV Item 14
Date of Report 6/5/89
and Form 8 Amending Same
filed June 20, 1989

Registrant's Form 10-K Part IV Item 14
Annual Report for year
ended June 30, 1988

Registrant's Form 10-K Part IV Item 14
Annual Report for year
ended June 30, 1991

Registrant's Form 10-K Part IV Item 14
Annual Report for year
ended June 30, 1992

Registrant's Form 10-K Part IV Item 14
Annual Report for year
ended June 30, 1993
and Amendment 10-K/A
No. 1 filed April 26, 1994
</TABLE>

-iii-
<PAGE> 4

AMERISHOP CORP.

FORM 10-K

Year Ended June 30, 1996

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I.

Item 1. Business 1

Item 2. Properties 6

Item 3. Legal Proceedings 6

Item 4. Submission of Matters to a Vote of
Security Holders 6

PART II

Item 5. Market for Registrant's Common Stock
and Related Shareholder Matters 6

Item 6. Selected Financial Data 7

Item 7. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8

Item 8. Financial Statements and Supplementary
Data 13

Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure 13
</TABLE>

-iv-
<PAGE> 5

PART III.

<TABLE>
<S> <C> <C>
Item 10. Directors, Executive Officers,
Promoters and Control Persons 14

Item 11. Executive Compensation 15

Item 12. Security Ownership of Certain Beneficial
Owners and Management 17

Item 13. Certain Relationships
and Related Transactions 19

PART IV.

Item 14. Exhibits, Financial Statements,
Schedules and Reports on
Form 8-K - INDEX 20

SIGNATURES

Chief Executive Officer, Chief Financial and
and Accounting Officer 23

Directors 23

INDEPENDENT AUDITORS' REPORT

FINANCIAL STATEMENTS

SCHEDULES

EXHIBITS
</TABLE>

-v-
<PAGE> 6
PART I

ITEM 1. BUSINESS

History and Organization

The Company was organized under the laws of the State of Delaware on
August 1, 1986 under the name Michigan Ventures, Inc. The Company was organized
for the purpose of creating a corporate vehicle to seek, investigate and, if
such investigation warranted, acquire an interest in business opportunities
presented to it by persons or firms who or which desired to employ the
Company's funds in their business or to seek the perceived advantages of a
publicly-held corporation. On October 27, 1987, the Company acquired the
businesses previously operated by Network Direct, Inc., a privately held Kansas
corporation ("NDI") for 14,967,180 shares of the Company's Common Stock and
America's Buyers, Inc., a privately held Michigan Corporation ("ABI") for
11,225,385 shares of the Company's Common Stock. The acquisitions were
effected by the Company creating two new subsidiaries into which the acquired
companies were merged. In November, 1987 , the Company changed its name to
AmeriMark Corp.
AmeriShop, Inc. was formed on February 8, 1988 as a subsidiary of the
Company to pursue marketing of a mass market, low price, high volume telephone
buying service membership. Effective January 1, 1990, AmeriShop, Inc. was
merged into ABI and ABI simultaneously changed its name to AmeriShop Inc.
("AmeriShop").
On April 1, 1991, the Company sold Network Direct, Inc. in exchange for
8,967,180 shares of the Company stock. Then on July 6, 1992, the Company
effected a 1 for 10 reverse split of its outstanding capital stock resulting in
total issued and outstanding Common Stock on that date of 2,393,827 shares.
In July, 1992 AmeriMark Corp. merged with its subsidiary AmeriShop, Inc.
and changed its name to AmeriShop Corp.

1
<PAGE> 7
Description of Business

Company Overview

AmeriShop Corp. is a marketer of computerized merchandising systems
providing a database of approximately 250,000 current brand name consumer
products representing over 600 manufacturers. The database is a proprietary
software system designed, maintained and operated exclusively by the Company
providing the user/consumer the ability to price compare and purchase
merchandise from the manufacturers or distributors which carry their products
on the database. Access to the database is done via a toll-free telephone call
to an AmeriShop personal shopping assistant.
The uniqueness of the Company's computerized merchandising system gives the
Company the ability to market its services to the premium incentive industry, to
individual or group users, and through direct response catalogs such as airline
in-flight catalogs, and credit card merchandise flyers. The principal client
base for the Company's merchandising capabilities are virtually any corporation
or organization interested in motivating or "incentifying" their employees,
sales force, or customers to perform better or purchase more. The Company has
entered into, and continues to add on a monthly basis, purchase agreements to
provide its various merchandising services throughout the continental United
States and Latin America.
The premium incentive industry sells merchandise and travel services to
client companies who in turn use them as awards for outstanding achievement or
participation in or use of some other service or product. A typical incentive
program has at its base a set of rules which outlines a specific goal, i.e., to
increase sales. By properly structuring these rules, a company can motivate its
work force to go above and beyond what they might normally do. In the case of
salespeople, they will tend to sell more of a specific product, if by selling
that product, they are offered an award. For incentive programs with many
participants, the awards tend to be shown in a 4-color catalog consisting of
approximately 1,200 items.

<PAGE> 8
AmeriShop is unique in that not only does it have a 4-color catalog with
1,200 items, but it also offers companies participating in an incentive program
the option to choose items from our database of 250,000 items. With the wide
diversity of participants, especially in larger programs, Management believes
offering them such a large choice gives AmeriShop a competitive edge in
attracting new clients.
AmeriShop provides a variety of functions in a typical Incentive Program.
After the AmeriShop salesperson has "sold" the program, a "kit" of material is
produced by AmeriShop. This kit consists of a 4-color catalog that contains a
wide variety of items at various prices, an order form and program rules. The
program rules outline what goals need to be met in order for the program
participant to receive award points. As the participant receives award points
throughout the program, progress statements are sent out indicating the
cumulative total of the participants' awards points. Along with this
"statement," a company will typically take the opportunity to promote a new
product in order to help "stimulate" sales. The accumulated award points are
turned in at the end of the program for merchandise chosen out of the catalog
or, at the participant's option, AmeriShop's database. This is done by the
participant filling out the Award Order form provided in the program kit. The
form is then sent to AmeriShop for processing. AmeriShop will verify that the
participant truly has the stated amount of points needed for the merchandise
selected. Internally at AmeriShop, the ordering processing center notifies the
appropriate manufacturer of the selected merchandise, making the necessary
order. The manufacturer will tell AmeriShop the approximate time to deliver
and that information is passed along to the participant by AmeriShop in the
form of an Order Verification letter. Once the merchandise has been shipped,
AmeriShop invoices the client based on an agreed upon dollar value per award
point redeemed. The manufacturer invoices AmeriShop at a previously agreed
price which is lower than that charged to the client.
The Company has approximately 80 corporate premium incentive clients as of
September 5, 1996.
The Company also utilizes its product database to market and fulfill
consumer shopping club memberships. By subscribing to AmeriShop's services and
paying the current fee, a person can call a toll-free number to obtain pricing
information and/or purchase merchandise from the Company at prices not
generally available to the public. Such sales are generally at a price
slightly above that paid by the Company.
The Company's shopping service business has been primarily a fulfillment
of third party private label programs. AmeriShop receives varying service fees
from the marketing companies depending

<PAGE> 9

upon how the shopping service is sold to the consumer. The shopping service is
often combined with other services by the marketing company. As of September
5, 1996, the Company services about 9 private label programs in addition to its
own programs with a total membership base of approximately 71,000 members.
The products on the data base are maintained with a product description,
customer price including delivery and suggested retail price with corresponding
award point equivalents for the premium incentive program. Additionally, the
data base maintains a customer file which contains customer/member ID number,
purchase history and credit card number, if available.
The Company is continually adding new products to its data base. The
manufacturers/vendors must agree to individually drop ship products. In some
cases, the Company has a written contract for merchandise fulfillment from the
manufacturer. However, in many circumstances, the relationship is an oral
agreement based upon the manufacturer's agreed upon price and ability to drop
ship.
Once a merchandise order has been placed with the vendor, the Company's
Order Processing Department sends the customer an order acknowledgment form
notifying them that their order has been placed. All products are shipped
directly to the member and come with full manufacturers' warranties. However,
if there is a problem with goods arriving damaged, the Company's Customer
Service Department will act in the consumer's behalf, contacting the
manufacturer or shipper to determine responsibility for the damaged goods and
rectifying the situation to the customer's satisfaction.
The Company utilizes an IBM System 36 computer that can handle
approximately five (5) times the number of transactions it is presently
handling with additional memory and storage upgrades. Processing systems are
continually upgraded internally to improve efficiency. The telephone system
can handle over 200 operators and associated toll-free telephone lines with 55
lines currently in operation. The Company is currently undergoing a systems
analysis and is anticipating upgrading to a P.C. based client/server in the
next fiscal year.

NDI

As noted above, NDI was sold effective April 1, 1991.
NDI markets telephone buying service memberships through a direct sales
force selling individual memberships primarily on a one-on-one basis. NDI does
not have the ability to service its own buying service memberships. Since
July, 1987, NDI has had an exclusive contract with

<PAGE> 10

AmeriShop which was renewed on April 1, 1991 for a period of five years. The
service contract gives NDI members access to the Company's database for price
comparisons and product purchases. NDI is excluded from utilizing other
shopping service companies, however, AmeriShop is not excluded from providing
its services to other sales organizations. The service agreement was amended
July 1, 1995 for three years. NDI paid the Company $175,000 to terminate the
agreement early. The new agreement calls for a 15% reduction in service fees
paid to the Company for the first 4,000 new members added each year and a 50%
reduction in fees for new members in excess of 4,000 per year.
The majority of memberships are sold on an installment basis, through
financing sources utilized by NDI, with an additional annual renewal fee. NDI
normally collects a small down payment with the balance of this initial fee
paid monthly.

Seasonality and Backlog

The Company typically realizes approximately 85% of its total membership
sales during the nine months September to May. This corresponds to the
seasonality of the NDI business which represented 86% of the current year's
cash membership sales.
The Company also reflects revenue on certain membership agreements over
the 12-month life of the membership. At June 30, 1996, the balance of deferred
revenue which will be recognized into income during the year ending June 1997
was approximately $461,000 [see note 1 to financial statements included at Item
14].
As of June 30, 1996, unfilled merchandise orders in the Company's backlog
totaled $424,659.

Employees

As of September 5, 1996, the Company had 25 full-time employees, of which
4 were engaged in management and administrative functions, 3 in sales, 13 in
clerical functions and 5 phone operators. In addition, the Company has 2
part-time clerical workers and 4 part-time phone operators. At any given time,
3 to 6 phone operators are on duty.

Competition

The premium incentive industry is highly competitive with a few large
companies (Maritz, Inc., Carlson Marketing Group, Inc., BI Performance
Services, ITA Group) and thousands of medium to small companies. The Company
believes that it can effectively compete in this industry because of its
ability to charge a lower price than its large competitors and provide greater
administration services than its smaller competitors.

<PAGE> 11

The marketing and operation of telephone buying services as offered by
AmeriShop is highly competitive. No specific figures are available, but the
Company estimates that it has approximately four direct competitors in that
area. The Company is not aware of any other entity marketing individual
permanent telephone buying service memberships as NDI does. In addition to
directly competitive operations, however, the Company's competition could be
considered to include mail order catalog discount operations, televised
shopping services and catalog showrooms. Many of these competitors are larger
and better financed than the Company.

ITEM 2. PROPERTIES

The Company leases approximately 7,600 square feet of office space in
Grand Rapids, Michigan for a term expiring August 31, 2001. In addition, the
Company owns computer, telephone, and office equipment with a net combined book
value of $29,520 as of June 30, 1996. The Company considers its leased and
owned facilities and equipment to be modern and adequate for the conduct of its
business.

ITEM 3. LEGAL PROCEEDINGS

The Company is not presently involved in any litigation other than
ordinary, routine litigation incidental to its operations.

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

None.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
SHAREHOLDER MATTERS

The Company commenced its initial public offering on November 12, 1986 and
sold 3,725,385 units which included one share of Common stock and warrants.
The initial price to the public was $.10 per share. The stock is traded on a
limited basis.
The following table sets forth, for the periods indicated, the range of
bid quotations as reported by National Quotation Bureau, Inc. while the stock
was included in the "pink sheets." These quotations may reflect inter-dealer
prices without retail mark-up, mark-down or commission allowances and

<PAGE> 12

may not represent actual transactions.

<TABLE>
<CAPTION>
High Low
---- ----
<S> <C> <C>
Fiscal 1995
First Quarter. . . . . . . . . . . . 1.25 .13
Second Quarter . . . . . . . . . . . .75 .25
Third Quarter. . . . . . . . . . . . .50 .13
Fourth Quarter . . . . . . . . . . . .25 .06

Fiscal 1996
First Quarter. . . . . . . . . . . . .125 .125
Second Quarter . . . . . . . . . . . .50 .125
Third Quarter. . . . . . . . . . . . .25 .125
Fourth Quarter . . . . . . . . . . . .375 .25
</TABLE>

As of June 30, 1996, the Company's Common Stock was held by approximately
179 holders of record.
Subsequent to the initial public offering, additional shares were issued
in private offerings and a reverse split of 10 to 1 was effected on July 6,
1992 resulting in 2,393,827 shares issued and outstanding on that date.

DIVIDEND POLICY

The Company has no dividend paying history and does not expect to pay any
dividends on its Common Stock for the foreseeable future.

ITEM 6. SELECTED FINANCIAL DATA

Statement of Operations Data
For the years ended June 30, 1996, 1995, 1994, 1993, and 1992

<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total Revenues 5,543,810 5,283,575 5,723,525 5,492,449 4,239,073

Loss
from Operations (173,190) (269,661) (700,273) (915,747) (459,206)

Net Loss (680,571) (698,285) (993,047) (1,069,087) (407,667)

Net Loss
Per Share (.25) (.28) (.39) (.43) (.17)

</TABLE>

<PAGE> 13

<TABLE>
<CAPTION>
Balance Sheet as of June 30
---------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total Assets 836,098 649,447 717,101 476,454 383,001

Notes Payable and
Capital Lease
Obligations, less
current portions 11,573 1,922,425 2,235,517 1,749,274 222,177

Shareholders' equity
(deficiency in assets) (5,302,800) (4,835,325) (4,137,040) (3,143,993) (2,094,406)
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

This analysis should be read in conjunction with the Consolidated
Financial Statements and accompanying Notes thereto, contained herein.

General

The Company was originally incorporated as Michigan Ventures, Inc., a
Delaware corporation, on August 1, 1986. On October 27, 1987, the Company
acquired the businesses of America's Buyers, Inc. ("ABI") and Network Direct,
Inc. ("NDI"). On November 26, 1987 the name of the Company was officially
changed to AmeriMark Corp. by majority vote of the shareholders. In July 1992,
the Company changed its name to AmeriShop Corp.

Liquidity and Capital Resources

The Company has a working capital deficit of $5,262,414 at June 30, 1996.
A major portion of this deficit relates to convertible debentures, short term
notes payable and accrued interest totaling $4,476,159 due to an investment
fund partnership. Management is currently working with the investment group to
extend this debt and/or covert it into equity. Effective July 1, 1996 the
investment group has waived for one year any additional future interest to be
paid or accrued on the convertible debentures, short term notes payable, and
accrued interest.

If the debt can be deferred or converted, the Company is left with a
$786,255 working capital

<PAGE> 14

deficit as of June 30, 1996, of which $461,364, represents deferred membership
revenue. The deferred revenue will be liquidated through amortization into
income over the next twelve months and therefore will not require the use of
cash resources. Management is seeking additional equity financing to offset
the remaining working capital deficit of $324,891. On July 12,1996, the
company received a short-term loan from Network Direct Inc. (NDI) for $100,000
at 12% interest. The note is due December 1, 1996. In addition, the company
has obtained accounts receivable financing from Publishers Credit Service, Inc.
(PCS ) and in August, 1996 received an initial loan of approximately $204,000.
The Company has an arrangement with an investment fund partnership, as
noted above, which has provided $2.0 million in long-term debenture financing.
These funds were received by the Company in various amounts from July, 1992
through August, 1993. The Company is in default of its loan covenants
regarding current ratio and positive cash flow from operations. It is also in
default of its monthly interest installments since May 1, 1994. Additionally,
the Company is in default of its monthly principal installments since August 1,
1995. The covenants and the default from nonpayment of interest and principal
have been waived through January 1, 1997.
The debentures require principal redemption of $20,000 per month
commencing on August 1, 1995 until maturity on July 1, 1999. The remaining
principal balance plus any unpaid interest or other expenses are due and
payable in one lump sum on July 1, 1999. Management anticipates that the
Company must either obtain additional financing to meet these principal payment
obligations or the debentures must be converted to equity in order to eliminate
the obligations.
The Company received an additional $200,000 in short-term loans during
fiscal 1996. As of June 30, 1996, the balance of these loans totaled
$1,628,445. The $1,428,445 of the notes were due on July 1, 1995 and the
remaining $200,000 were due March 31, 1996.
The Company had a deficiency in shareholders' equity of $5,302,800 as of
June 30, 1996 and its continuation is dependent upon meeting its obligations as
they become due and attaining profitable operations. Management believes that
it can obtain profitable operations in the future through its merchandise
premium incentive programs which it continues to actively market and through
budget reductions established for 1997. The Company has continued to increase
its level of incentive merchandise sales as well as its overall gross profit on
these sales as documented below in the discussion of Results of Operations.
The Company has used cash for operating activities of approximately
$152,000 for fiscal year 1996. Management believes that it will improve these
results and possibly reach break-even in fiscal 1997 if anticipated sales are
realized. Fiscal 1997 budgeted operating expenses have been reduced by

<PAGE> 15
approximately 10% from 1996. Fiscal 1996 premium incentive sales increased
22% from 1995 to over $2.8 million, and management anticipates similar
improvement in fiscal 1997 based upon programs currently in process and new
programs that it believes can be obtained during the coming months.
For the long term, the Company, internally through its own sales effort,
continues to add new premium incentive business which will improve its results
of operations. However, the Company requires additional in-house sales
representatives or a strategic acquisition to generate substantial growth in
this business. In this regard, Management is beginning a search to find an
acquisition of an incentive company in the five to fifteen million dollar
range. The ideal company would enhance AmeriShop's existing incentive sales
force and also have the added benefit of utilizing its unique drop-ship
distribution system.
The Company currently has three sales persons in-house and about 10
independent agents. Management believes that it must increase its in-house
sales force to provide more control over its sales efforts since independent
agents utilize other suppliers in addition to AmeriShop. Also, sales costs,
primarily commissions, are substantially lower with in-house agents, providing
the Company with higher gross profit margins.
In its shopping service membership business, the Company continues to rely
on the fulfillment of third party programs. This is due to the substantial
capital needed to fund the up-front marketing costs of a membership program. On
July 1, 1995, the Company re-negotiated a new three year membership fulfillment
agreement with Network Direct, Inc. (NDI). This extension solidifies the
Company's long-standing relationship with NDI to continue membership
fulfillment for their customers. Furthermore, the Company received a $175,000
up front, one-time cash fee from NDI. This fee was consideration for
re-negotiating the new agreement 11 months prior to the expiration of the
current term of the NDI/AmeriShop agreement (April 1, 1996) with the new
agreement extended to July 1, 1998. The new agreement calls for a 15%
reduction in service fees paid to the Company for the first 4,000 new members
added each year and a 50% reduction in fees for new members in excess of 4,000
per year.
NDI had a strong membership year providing the Company $646,000 in
membership fees in fiscal 1996. NDI's goals for fiscal 1997 is to exceed
fiscal 1996's memberships which should also aid the Company's cash flow and
profits.
The Company had signed a new two year test marketing membership agreement
with the Safecard ("Safecard") Services, Inc. division of Ideon Group, Inc.
(NYSE:IQ) to market the

<PAGE> 16

Company's Shopping Service membership program. Unfortunately, the Company was
not able to take advantage of this alliance as Safecard was acquired in May,
1996 by CUC International, a direct competitor of the Company and ceased
performance under the agreement. However, Management will continue to pursue
similar strategic marketing alliances as a low capital risk means of increasing
its shopping club membership sales.
Additionally, the Company has created and is actively developing a
marketing format under www.amerishop.com to sell merchandise and its discount
shopping service on the Internet. By late fall of 1996, the Amerishop web site
should be fully operational with its total merchandise database loaded into the
World Wide Web. Given the unique nature of the Internet, it is difficult to
predict at this early stage what type of success the Company will have in this
revolutionary new marketing medium. However, once the Company's proprietary
merchandise database is loaded into the World Wide Web, the Company becomes a
content provider for the Internet. Management feels there may be opportunities
to form marketing alliances with other companies that need additional content
to market their goods and services on the Internet and will search for such
opportunities to increase revenues from licensing its database.
The Company is at the stage where it needs to restructure its balance
sheet, primarily converting into equity its short term debt with the investment
fund. As discussed above, the investment fund financing is currently carried on
the balance sheet as debt that had been accruing interest month-to-month, but
effective July 1, 1996 any additional future interest is waived for one year.
The Company had taken budgetary steps to attain profitability and positive cash
flow in fiscal 1996 and shows a loss from operations of $173,190,versus
$269,661 in fiscal 1995, an improvement of 36% over the previous year.
The subsequent improvement in the balance sheet would position the Company
to actively pursue a new common stock issuance in either a public or private
offering. Management believes it needs to obtain a minimum of $5,000,000 in
net proceeds to adequately enhance its shareholders' equity position, hire
additional sales representatives and cover operating expense shortfalls until
sales are sufficient to generate profits.
Management believes it can attain profitable results in the next 12 to 18
months. Management's goal over the next three years is to continue to shift
the merchandise sales mix from the fiscal 1996 mix of 30% member and 70%
incentive to 10% member and 90% incentive. To substantially increase sales,
the Company must continue to add salaried representatives to its sales force or
acquire another incentive company. As mentioned earlier, the Company is
actively seeking an

<PAGE> 17

acquisition which will allow its investment fund partner to convert its debt
into equity and position the company to raise new equity through a secondary
offering and obtain a NASDAQ listing, creating a liquid market for its stock.

Results of Operations - Year Ended June 30, 1996

For the year ended June 30, 1996, the Company experienced a loss of
$680,571 compared to a loss of $698,285 in the prior year; an improvement of
$17,714 (2.5%). Loss from operations (exclusive of other income, interest
income and interest expense) was $173,190 and $269,661 for 1996 and 1995,
respectively; an improvement of $96,471 (36%). However, of the 1995 operating
loss of $269,661, approximately $40,000 is attributable to personnel reductions
taken in June 1995. The improved operating results were primarily due to
increased gross profit from merchandise, promotional programs and an increase
in membership fee revenues.
Membership fee revenues increased by 2% over the prior year. The Company
did not actively market any new retail shopping service members in 1996 and its
existing base has been slowly declining over the last few years. The Company
continues to service Network Direct, Inc. (NDI) members and gross new member
and renewal receipts totaled approximately $646,000 in fiscal 1996 compared to
$635,000 in fiscal 1995. NDI membership receipts represented 86% and 84% of
total membership receipts for 1996 and 1995, respectively.
Overall, merchandise sales increased in total by 6% over the prior year to
$4.15 million. Direct merchandise sales increased $20,000 while merchandise
sales to shopping service members declined $328,000. However, merchandise
incentives sales increased by $540,000 to $2.8 million in 1996 a 24% increase
over 1995. The Company has been focusing its efforts on increasing its
merchandise incentive sales which provide higher gross profit margins (20%-30%
after commissions) than member merchandise sales (approximately 2%).
Merchandise incentives sales represented 67% and 58% of total merchandise sales
in 1996 and 1995, respectively.
Selling, general and administrative expenses decreased by $112,320 (or
6%) over the prior year which resulted from budget cuts.

Results of Operations - Year Ended June 30, 1995

For the year ended June 30, 1995, the Company experienced a loss of
$698,285 compared to a loss of $993,047 in the prior year; an improvement of
$294,762 (30%). Loss from operations (exclusive of other income, interest
income and interest expense) was $269,661 and $700,273 for 1995

<PAGE> 18

and 1994, respectively; an improvement of $430,612 (61%). However, of the 1995
operating loss of $269,661, approximately $40,000 is attributable to personnel
reductions taken in June 1995. The improved operating results were primarily
due to increased gross profit from merchandise, promotional programs and an
increase in membership fee revenues.
Membership fee revenues increased by 17% over the prior year due to
increased volume from third party membership programs. The Company did not
actively market any new retail shopping service members in 1995 and its
existing base has been slowly declining over the last few years. The Company
continues to service Network Direct, Inc. (NDI) members and gross new member
and renewal receipts totaled approximately $635,000 in fiscal 1995 compared to
$597,000 in fiscal 1994. NDI membership receipts represented 84% and 82% of
total membership receipts for 1995 and 1994, respectively.
Overall, merchandise sales decreased in total by 13% over the prior year
to $3.9 million as a result of a $543,000 decrease in direct response
merchandise sales, and a $218,000 decline in merchandise sales to shopping
service members. However, merchandise incentives sales increased by 9% to
$2.25 million in 1995 versus $2.07 million in 1994. The Company has been
focusing its efforts on increasing its merchandise incentive sales which
provide higher gross profit margins (20%-30% after commissions) than member
merchandise sales (approximately 2%). Merchandise incentives sales represented
58% and 46% of total merchandise sales in 1995 and 1994, respectively.
Promotional expense decreased by $54,000 from the prior year as a result
of a reduction in catalog costs related to a bank card insert program which was
discontinued in fiscal 1994.
Selling, general and administrative expenses decreased by $295,000 (or
14%) over the prior year which resulted from budget cuts.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Registrant hereby incorporates the financial information required by this
item by reference to Item 14 hereof.

ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Registrant hereby incorporates the information required by this item by
reference to Item 14 hereof.

<PAGE> 19

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS

Directors and Executive Officers
The Directors and Executive Officers of the Company are as follows:

<TABLE>
<S> <C> <C>
Name Age Position
----------------- --- --------------------------

Joseph B. Preston 49 President, Chairman, Chief
Executive Officer and
Director

Steven Salasky 34 Secretary/Treasurer

James W. Kenney 55 Director
</TABLE>

Joseph B. Preston has served as a director of the Company and as its
President and Chief Executive Officer since October 27, 1987. He has been
Chairman of the Company since March, 1991. He served as President of ABI from
May 1, 1986 to October 27, 1987. From December, 1984 to April 30, 1986, Mr.
Preston was President of Preston Marketing Group, Inc., a consulting firm
specializing in marketing and general management consulting. Prior to owning
his own consulting firm, Mr. Preston was Vice President of Sales/Marketing for
Root-Lowell Manufacturing Corporation from October, 1983 to December, 1984.
Mr. Preston was also with Amway Corporation from February, 1978 to October,
1983 as Senior Manager of International Marketing handling development of
Amway's product lines for all its international markets. Mr. Preston served in
the U.S. Navy as a Naval Flight Officer for five (5) years following completion
of his B.S. degree in Packaging Engineering from Michigan State University. Mr
Preston also completed a M.B.A. in marketing from Michigan State University.
Steven Salasky has served as Controller since August, 1994 and as
Secretary/Treasurer since July, 1995. He graduated from Michigan State
University with a B.A. in Accounting. He gained his public accounting
experience at Egly, Brink & Co. which is a regional public accounting firm
located in Kalamazoo, Michigan, and was certified in 1989. Mr. Salasky joined
AmeriShop in September 1989 as the Accounting Manager.
James W. Kenney has been a Director since September, 1992. He is
currently associated with San Jacinto Securities, Inc. as Executive Vice
President and owner. From February, 1992 to June,

<PAGE> 20
1993 he served as Vice President of Investments for Renaissance Capital Group,
Inc. From October, 1989 to February, 1992 he served as Senior Vice President,
Director of Trading and Syndicates for Capital Institutional Services. From
February, 1987 to October, 1989, he served as Senior Vice President for retail
sales for Rauscher Pierce Refsnes, Inc. Mr. Kenney received a B.A. degree in
economics from the University of Colorado in Boulder, Colorado. Mr. Kenney
also currently serves on the Board of Directors of the following companies:
Consolidated Health Care Associates, Inc., CCC Coded Communications Corp.,
Industrial Holdings, Inc., Prism Group, Inc., Scientific Measurement Systems,
Appoint Technologies, Tecnal Medical Products, Inc., and Tricom Corporation.

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth the cash
compensation paid by the Company to each of its executive officers for services
rendered during the fiscal year ended June 30, 1996, whose cash compensation
for that period exceeded $100,000.

<PAGE> 21
Summary Compensation Table

Long Term Compensation
----------------------

Annual Compensation Awards Payout
-------------------------------------------------------------

Other Restricted Securities
Annual Stock Underlying LTIP
Name and Compen- Award(s) Options/ Payouts All Other
Principal Position Year Salary($) Bonus($) sation($) ($) SARs(#) ($) Compensation($)
- -------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joseph B. Preston-CEO 1996 135,983 0 0 0 145,000 0 45,482
1995 113,800 0 0 0 0 0 0
1994 129,375 0 0 0 200,000 0 0
1993 125,000 0 0 0 0 0 0

</TABLE>

Option/SAR Grants in Last Fiscal Year

% of
Number of Total
Securities Options/ Potential Realizable Value
Underlying SARs at Assumed Annual Rates of
Options/ Granted to Exercise Stock Price Appreciation
SARs Employees or Base for Option Term
Granted in Fiscal Price Expiration
Name (#) Year ($/Sh) Date 5%($) 10%($)
- --------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C>
Joseph B. Preston 145,000 46% $.4125 1/30/2006 28,759 81,222

</TABLE>

All Other Compensation.

On January 10, 1994 the Board of Directors increased Mr. Preston annual
compensation to $150,000 per year. Since that time Mr. Preston has taken a
reduced cash amount and the $45,482 represents the accrued balance as of June
30,1996 based upon a calendar year.

Incentive Stock Option Plan.

On October 1, 1992, the Company amended its Incentive Stock Option Plan
(the "Plan") under which options granted are intended to qualify as "incentive
stock options" under Section 422A of the Internal Revenue Code of 1986, as
amended, (the "Code"). Pursuant to the Plan, options to purchase up to 600,000
shares of the Company's common stock may be granted to employees of the
Company. The Plan is administered by the Board of Directors, which is
empowered to determine the terms and conditions of each option, subject to the
limitation that the exercise price cannot be less than the market value of the
common stock on the date of the grant and no option can have a term in excess
of ten (10) years.

Options to purchase 598,000 shares are outstanding under this plan as of
June 30, 1996. Options totaling 33,500, 31,500, 200,000, 17,100, 170,900 and
145,000 shares may be exercised at $.30, $1.00, $1.10, $.75, $.375, and $.4125
per share respectively. No options have been exercised as of the date of this
report.

<PAGE> 22

Compensation Committee Interlocks and Insider Participation. The
Company's Board of Directors does not have a compensation committee nor any
other committee performing such function. During the year, Mr. Preston
participated in all Board of Directors' deliberations concerning executive
compensation.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of the date of this Form 10-K, the
stock ownership of each person known by the Company to be the beneficial owner
of five percent or more of the Company's Common Stock, all Directors
individually and all Directors and Officers of the Company as a group. Each
person has sole voting and investment power with respect to the shares shown.
When calculating percentage ownership for each person, options held by that
person are considered exercised but are not considered exercised when
calculating percentage ownership for others.

<TABLE>
<CAPTION>
Amount of
Name and Address Beneficial Percent
of Beneficial Owner Ownership of Class
- ------------------- ---------- --------
<S> <C> <C>

Joseph B. Preston 1,253,360(1)(2)(6) 38.69%
3033 Orchard Vista Drive, SE
Grand Rapids, MI 49546

James W. Kenney 50,000(1)(2)(3) 1.71%
9 Meadowlake Drive
Heath, TX

Steven R. Salasky 56,000(1) 1.90%
3033 Orchard Vista Drive, S.E.
Grand Rapids, MI 49546

Renaissance Capital 3,551,830(2)(4) 55.10%
Partners, II, Ltd.
8089 N. Central Expressway
Suite 210
Dallas, TX 75206

Thomas D. Lyons 304,000 10.50%
10950 Grandview
Suite 465
Corporate Woods
Overland Park, KS
</TABLE>

<PAGE> 23
<TABLE>
<S> <C> <C>
Theodore F. Stearns 305,500 10.55%
10950 Grandview
Suite 464
Corporate Woods
Overland Park, KS

W. Stephen Hamlin 384,260(5)(6) 13.27%
1011 Cedarmill Lane
Westchester, PA 19382

Joseph Pacitti 378,438 13.07%
C/O Suite 100
111 South Independence Mall East
Philadelphia, PA 19106

All Directors
and Officers as a Group 1,359,360(1)(2) 40.87%
</TABLE>

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

(1) Totals include shares which may be acquired through exercise of options
granted as follows: Mr. Preston, 345,000 shares; Mr. Salasky, 56,000
shares; and Mr. Kenney, 30,000 shares.

(2) For purposes of calculating the percentage of outstanding shares owned by
each person and the indicated group, these shares are deemed to be
outstanding.

(3) Mr. Kenney has a 14-1/2% interest in the general partner of Renaissance
Capital Partners, II, Ltd., a limited partnership. This general partner
has a 20% interest in the profits of that limited partnership above a
formula return to the limited partners. The assets of the limited
partnership include an option to purchase 3,551,830 shares of the
Company's Common Stock (see footnote 5, below). This interest is,
therefore, not determinable at this point and is not included with Mr.
Kenney's beneficial ownership.

(4) Includes 3,551,830 shares that this entity may acquire upon conversion of
amounts loaned by it to Company.

<PAGE> 24

(5) Does not include 144,749 shares (5%) owned by Francis Hamlin, mother of
W. Stephen Hamlin, beneficial ownership of which is disclaimed by
W. Stephen Hamlin.

(6) Mr. Preston's beneficial ownership includes 384,260 shares owned by W.
Stephen Hamlin which he has full voting rights based upon a settlement and
option agreement between the Company and Mr. Hamlin. Mr. Hamlin's
beneficial ownership includes 275,000 shares which the Company has an
option to purchase.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 1, 1991, the Company renewed its ongoing Shopping Service
fulfillment agreement with Network Direct, Inc. (NDI). The agreement was
renewed for a five year term. Under the agreement the Company received
approximately $646,000 in membership fees from NDI during fiscal year 1996.
This excludes the below referenced $175,000 for renegotiating a new contract
and the $100,000 note payable referenced in ITEM 7 Management Discussion and
Analysis of Financial Condition and Results of Operations. Messrs. Stearns and
Lyons are each a 50% owner, an officer and an employee of NDI.
On July 1, 1995, the Company amended its service agreement with NDI
through July 1, 1998. In exchange for $175,000 in cash, the Company terminated
its existing agreement which was scheduled to run until April 1, 1996. Under
the terms of the new agreement, the service fee paid by NDI for new memberships
serviced by the Company were reduced by 15% for the first 4,000 members per
year and by 50% for any new memberships added in excess of 4,000 per year.
The Company also extended its agreement not to compete against NDI for
certain types of membership programs through July 1, 1998.
On December 14, 1994, the Company entered into a settlement, release and
option agreement with W. Stephen Hamlin whereby Mr. Hamlin granted options to
purchase 275,000 shares of the Company's common stock for $2.00 per share in
exchange for the Company's release of any and all rights or claims that it may
have had against him arising from his resignation from the Company and
subsequent employment in a related field. The options are exercisable in whole
or in part for a three year period and, with respect to 137,500 shares, for an
additional year. In addition to the options, Mr. Hamlin appointed the
Company's President, Joseph B. Preston, with full power of substitution to vote
all of the stock the Company held by Mr. Hamlin, currently 384,260 shares
during the four year term of the option agreement.

<PAGE> 25

On July 10, 1992, the Company entered into a convertible debenture loan
agreement with Renaissance Capital Partners Limited II (RCP) whereby RCP agreed
to provide up to $1,500,000 of convertible debenture financing to the Company.
The agreement provided for an initial loan of $750,000 which was closed on July
10, 1992 and three standby loan commitments of $250,000 each which were closed
September 30, 1992, December 31, 1992 and March 31, 1993, respectively.
On July 8, 1993, the convertible debenture loan agreement was modified to
provide for up to $2,000,000 of financing. The additional debentures of
$250,000 each were issued on July 8, 1993 and August 2, 1993.
The terms of the seven year debentures require that the Company make
interest only payments for the first three years and principal and interest for
the remaining four years with a balloon payment due at maturity.
Effective July 1, 1996, RCP has waived for one year any additional future
interest to be paid or accrued on the convertible debentures, short term notes
payable, and accrued interest.
RCP has the right at any time to convert any issued debenture into the
Common Stock of the Company at $0.56309 per share. The debenture can be
redeemed by the Company at any time after the third year at varying premium
rates above par.
The debentures are secured by all of the assets of the Company, including
its software, data files, trademarks and trade names.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
- INDEX

(a) The following documents are filed as part of this report:

Page
1. Financial Statements:

Independent Auditors'
Report 26 & 27

Balance Sheets 29 & 30

For each of the three years in the
period ended June 30, 1996:

Statements of Operations 31

<PAGE> 26
Statements of Changes in Shareholders'
Equity (Deficit) 32
Statements of Cash Flows 33 & 34
Notes to Financial Statements 35 - 45

2. Financial Statement Schedules:

All schedules are omitted because of absence of conditions under
which they are required or because the required information is
provided in the financial statements or notes thereto.

(b) Reports on Form 8-K during quarter ended June 30, 1996:

Registrant's Form 8-K dated May 30, 1996, Amended Form 8-K June 11,
1996

ON PAGE NO. OR
EXHIBIT INCORPORATED BY
NO. DESCRIPTION REFERENCE TO
- ------- ------------ ---------------

3.1 Certificate of Incorporation, Exhibit 3.1 to Registrant's
including amendment changing name to Form 10-K for year ended June
AmeriMark Corp. 30, 1988

3.2 Bylaws of Registrant Exhibit 3 to Registrant's
Form S-18 Reg. No. 33-8333-D

10.1 Incentive Stock Option Plan Exhibit 10.1 to Registrant's
Form 10-K for year ended June
30, 1994

10.2 a) March 29, 1991 agreement among Exhibit 10.2 to Registrant's
Registrant and Theodore F. Stearns and Form 10-K for year ended June
Thomas D. Lyon concerning an exchange 30, 1991
of stock

b) Settlement Agreement re payment Exhibit 10.2 to Registrant's
pursuant to 10.2 a) above Form 10-K for year ended June
30, 1992

10.3 a) March 29, 1991 Option Agreement Exhibit 10.3 to Registrant's
between Theodore F. Stearns and Form 10-K for year ended June
Registrant 30, 1991

<PAGE> 27
b) July 11, 1992 Amended Option Agreement Exhibit 10.3 to
with Theodore F. Stearns Registrant's Form 10-K for
year ended June 30, 1992

10.4 a) March 29, 1991 Option Agreement between Exhibit 10.4 to
Thomas D. Lyons and Registrant Registrant's Form 10-K for
year ended June 30, 1991

b) July 11, 1992 Amended Option Agreement Exhibit 10.4 to
with Thomas D. Lyons Registrant's Form 10-K for
year ended June 30, 1992

10.5 a) Fulfillment Service Agreement with NDI Exhibit 10.5 Section B to
dated April 1, 1991 with amendment dated Registrant's Form 10-K for
July 1, 1991 year ended June 30, 1992

b) Amendment dated October 21, 1991 Exhibit 10.5 to
Registrant's Form 10-K for
year ended June 30, 1992

c) Amendment dated July 1, 1995 Exhibit 10.5c to
Registrant's Form 10-K for
year ended June 30, 1995

10.6 Renaissance Capital Partners II, Ltd., Exhibit 10.6 to
12.5% Convertible Debenture #1 with Registrant's Form 10-K for
amortization schedule, Registration Rights year ended June 30, 1991
Agreement, Security Agreement

10.7 Renaissance Capital Partners II, Ltd., Exhibit 10.7 to
Amended Loan Agreement and 12.5% Registrant's Form 10K for
Convertible Debentures 2, 3, 4, 5 and 6 year ended June 30, 1992

10.8 Renaissance Capital Partners II, Ltd., Exhibit 10.8 to
Promissory Notes dated September 30, 1994 Registrant's Form 10K for
($1,428,448.38) and August 30, 1995 year ended June 30, 1995
($125,000)

10.9 Settlement, Release and Option Agreement Exhibit 10.9 to
dated December 14, 1994 with W. Stephen Registrant's Form 10K for
Hamlin year ended June 30,
1995

11 Statement re Computation of loss per share Page 46

16 Letter re Change in certifying accountants Registrant's Form 8-K Date
of Report May 30, 1996,
Amended Form 8-K June 11,
1996

<PAGE> 28
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

By: /s/ Joseph B. Preston
Joseph B. Preston, Chairman, President
and Chief Executive Officer

By: /s/ Steven Salasky
Steven Salasky, Secretary, Treasurer
and Principal Accounting Officer
Dated: September 30, 1996

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

Signature and Title Date
------------------- ----

By: /s/ Joseph B. Preston September 30, 1996
Joseph B. Preston, Director

By: /s/ James W. Kenney September 30, 1996
James W. Kenney, Director

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
15(d) OF THE ACT BY REGISTRANT WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT:

No annual report or proxy material has been sent to security holders.

<PAGE> 29

AMERISHOP CORP.

FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1996, 1995, AND 1994

24
<PAGE> 30

AMERISHOP CORP.

CONTENTS

<TABLE>
<S> <C>
INDEPENDENT AUDITORS' REPORTS 26-27

FINANCIAL STATEMENTS
Balance Sheets 29 & 30
Statements of Operations 31
Statements of Changes in Shareholders' Equity (Deficit) 32
Statements of Cash Flows 33 & 34
Notes to Financial Statements 35-45
</TABLE>

<PAGE> 31

INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
AmeriShop Corp.
Grand Rapids, Michigan

We have audited the accompanying balance sheet of AmeriShop Corp. as of June
30, 1996, and the related statements of operations, changes in shareholders'
equity (deficit) and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit 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 audit provides a reasonable basis
for our opinion.

In our opinion, the 1996 financial statements referred to above present fairly,
in all material respects, the financial position of AmeriShop Corp. at June 30,
1996, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 12 to the
financial statements, the Company has suffered recurring losses from operations
and has negative working capital and a net shareholders' capital deficiency
that raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 12.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

/s/ BDO Seidman, LLP
Grand Rapids, Michigan
September 9, 1996

<PAGE> 32

INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
AmeriShop Corp.
Grand Rapids, Michigan

We have audited the accompanying balance sheet of AmeriShop Corp. as of
June 30, 1995, and the related statements of operations, changes in
shareholders' equity (deficit) and cash flows for each of the two years in the
period ended June 30, 1995. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

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 audit provides a reasonable basis
for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of AmeriShop Corp. at June 30, 1995,
and the results of its operations and its cash flows for each of the two
years in the period ended June 30, 1995 in conformity with generally accepted
accounting principles.

The accompanying financial statements as of and for each of the two years in
the period ended June 30, 1995 have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 12 to the financial
statements, the Company's recurring losses from operations and shareholders'
capital deficiency raise substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also
described in Note 12. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

/s/ Deloitte & Touche, LLP
Grand Rapids, Michigan
September 6, 1995

<PAGE> 33

FINANCIAL STATEMENTS

28
<PAGE> 34

June 30, 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
ASSETS (Note 6)
CURRENT ASSETS
Cash and cash equivalents $ 72,429 $ 47,210
Accounts receivable 461,603 427,700
Prepayments to vendors 127,191 65,204
Prepaid expenses 65,246 7,068
Supplies inventory 80,109 76,392
- -------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 806,578 623,574

EQUIPMENT, net of accumulated depreciation and
amortization (Note 4) 29,520 25,873
- -------------------------------------------------------------------------------
$836,098 $649,447
- -------------------------------------------------------------------------------
</TABLE>

<PAGE> 35

AMERISHOP CORP.

BALANCE SHEETS

June 30, 1996 1995
- -------- ---- ----
<S> <C> <C>

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable $ 516,512 $ 493,188
Note payable (Note 5) 1,628,445 1,428,445
Customer deposits 500,811 379,780
Deferred membership revenue (Note 2) 461,364 521,710
Deferred noncompete agreement (Note 2) - 37,483
Accrued interest (Notes 5 and 6) 847,714 328,882
Current maturities of long-term debt (Note 6) 2,000,000 293,131
Other current liabilities 114,146 79,728
----------- -----------
TOTAL CURRENT LIABILITIES 6,068,992 3,562,347
DEFERRED MEMBERSHIP REVENUE (Note 2) 58,333 -
LONG-TERM DEBT, less current maturities (Note 6) 11,573 1,922,425
----------- -----------
TOTAL LIABILITIES 6,138,898 5,484,772
----------- -----------
SHAREHOLDERS' EQUITY (DEFICIT) (Notes 8 and 9)
Preferred stock, $.001 par value per share -
1,000,000 shares authorized; no shares issued - -
Common stock, $.00001 par value per share -
20,000,000 shares authorized; 2,894,765 and
2,516,327 shares issued and outstanding at
June 30, 1996 and 1995, respectively 30 25
Additional paid-in capital 697,820 484,729
Accumulated deficit (6,000,650) (5,320,079)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) (5,302,800) (4,835,325)
----------- -----------
$ 836,098 $ 649,447
=========== ===========
</TABLE>

See accompanying notes to financial statements.

<PAGE> 36

6AMERISHOP CORP.

STATEMENTS OF OPERATIONS

Year ended June 30, 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Membership fees (Note 11) $ 964,875 $ 947,492 $ 809,299
Merchandise sales 4,147,702 3,914,834 4,507,812
Promotional revenue 236,432 262,351 216,021
Travel revenue 194,801 158,898 190,393
- --------------------------------------------------------------------------------
Total revenues 5,543,810 5,283,575 5,723,525
- --------------------------------------------------------------------------------
EXPENSES
Sales commissions 442,559 313,427 215,617
Cost of merchandise sales 3,101,705 3,019,543 3,614,152
Promotional expense 202,863 170,749 258,635
Cost of travel revenue 176,279 143,603 168,389
Selling, general and administrative 1,793,594 1,905,914 2,167,005
- --------------------------------------------------------------------------------
Total expenses 5,717,000 5,553,236 6,423,798
- --------------------------------------------------------------------------------
Loss from operations (173,190) (269,661) (700,273)
- --------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Interest income 3,388 5,834 2,431
Other income 10,224 5,973 6,865
Interest expense (520,993) (440,431) (302,070)
- --------------------------------------------------------------------------------
Net other expense (507,381) (428,624) (292,774)
- --------------------------------------------------------------------------------
NET LOSS $ (680,571) $ (698,285) $ (993,047)
================================================================================
NET LOSS PER SHARE OF COMMON STOCK $ (.25) $ (.28) $ (.39)
================================================================================
</TABLE>

See accompanying notes to financial statements.

<PAGE> 37

AMERISHOP CORP.

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
Common stock Total
------------------ Additional shareholders'
paid-in Accumulated equity
Shares Amount capital deficit (deficit)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, July 1, 1993 2,516,327 $25 $484,729 $(3,628,747) $(3,143,993)
Net loss for the year - - - (993,047) (993,047)
- -------------------------------------------------------------------------------------------
BALANCE, June 30, 1994 2,516,327 25 484,729 (4,621,794) (4,137,040)
Net loss for the year - - - (698,285) (698,285)
- -------------------------------------------------------------------------------------------
BALANCE, June 30, 1995 2,516,327 25 484,729 (5,320,079) (4,835,325)
Common stock issued
(Note 7) 378,438 5 213,091 - 213,096
Net loss for the year - - - (680,571) (680,571)
- -------------------------------------------------------------------------------------------
BALANCE, June 30, 1996 2,894,765 $30 $697,820 $(6,000,650) $(5,302,800)
- -------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to financial statements.

<PAGE> 38
AMERISHOP CORP.

STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------

Year ended June 30, 1996 1995 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>

OPERATING ACTIVITIES
Net loss $(680,571) $(698,285) $(993,047)
Adjustments to reconcile net loss to
net cash for operating activities:
Depreciation and amortization 17,730 53,575 73,974
Loss on renegotiation of lease (Note 7) 17,625 - -
Gain on sale of equipment (6,964) - -
Changes in:
Accounts receivable (33,903) (109,195) (84,428)
Prepayments to vendors (61,987) (28,646) (22,040)
Prepaid expenses (58,178) 37,483 (11,057)
Supplies inventory (3,717) (36,513) 1,242
Accounts payable 23,324 44,386 (83,071)
Customer deposits 121,031 117,142 15,090
Deferred membership revenue (2,013) (129,135) (77,986)
Deferred noncompete agreement (37,483) (50,004) (50,000)
Accrued interest 518,832 241,640 87,242
Other current liabilities 34,418 (14,639) (50,421)
- --------------------------------------------------------------------------------------------------------
Net cash for operating activities (151,856) (572,191) (1,194,502)
- --------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Capital expenditures (21,834) (8,798) (18,429)
Proceeds from sale of equipment 7,421 - -
Principal payments received on
long-term note - - 11,413
- --------------------------------------------------------------------------------------------------------
Net cash for investing activities (14,413) (8,798) (7,016)
- --------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
Principal payments under long-term debt $(20,085) $(71,207) $(64,574)
Proceeds from issuance of long-term debt 11,573 - 521,417
Net borrowings on note payable 200,000 492,448 935,997
- --------------------------------------------------------------------------------------------------------
Net cash from financing activities 191,488 421,241 1,392,840
- --------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE> 39
AMERISHOP CORP.

STATEMENTS OF CASH FLOWS

Year ended June 30, 1996 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C>

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 25,219 (159,748) 191,322

CASH AND CASH EQUIVALENTS, beginning of year 47,210 206,958 15,636
- -------------------------------------------- ------- -------- -------
CASH AND CASH EQUIVALENTS, end of year $72,429 $ 47,210 $206,958
- -------------------------------------------- ------- -------- -------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for interest $ 2,161 $132,018 $214,828
- -------------------------------------------- ------- -------- --------
NONCASH INVESTING AND FINANCING ACTIVITIES
Stock issued during fiscal 1996 in settlement
of the Company's outstanding lease obligation
and installment note totaling $213,096
(Note 7)

Capital lease obligations of $18,430 were
incurred when the Company entered into leases
for new equipment in 1994.
- ------------------------------------------------------------------------------

</TABLE>

See accompanying notes to financial statements.

34
<PAGE> 40
1. SUMMARY OF NATURE OF BUSINESS
SIGNIFICANT AmeriShop Corp. (Company) operates a
ACCOUNTING computerized merchandising system and
POLICIES services customers through discount shopping
memberships, merchandise and travel
incentive award programs, and direct
response merchandise catalogs. Sales to one
major customer for the years ended June 30,
1996, 1995 and 1994, accounted for
approximately 16%, 14% and 8%, respectively,
of the Company's total sales revenues.

USE OF ESTIMATES

The preparation of financial statements
requires estimates and assumptions that
affect the amounts reported in the financial
statements and accompanying notes. Actual
results could differ from those estimates.

REVENUE RECOGNITION

Membership fees allow members to use
services provided by the Company. These
fees are generally assessed annually,
although some programs provide for
multi-year fees. Fees are recorded as
deferred revenue when received and
recognized as income on the straight-line
basis over the service period.

Merchandise sales are recorded when the
merchandise is shipped to the customer.

Promotional revenues are recorded when
promotional materials are shipped to the
customer.

Travel revenue is recognized after the
travel event has been completed.

CASH EQUIVALENTS

Cash and cash equivalents consist of cash
and highly-liquid investments purchased with
an original maturity of three months or less.

ACCOUNTS RECEIVABLE

Accounts receivable represent current
amounts due from customers for merchandise,
travel programs, catalogs and other printed
materials, program administration fees and
membership fees. The majority of
receivables are from corporate customers.
Bad debts are recognized as incurred. A
reserve for uncollectible accounts has not
been established since the Company's history
of charge-offs has been negligible.

35
<PAGE> 41

EQUIPMENT AND DEPRECIATION

Equipment is stated at cost less accumulated
depreciation. Improvements and betterments
are capitalized; maintenance and repairs are
charged to expense as incurred.
Depreciation is provided by the use of the
straight-line method over the estimated
useful life of the related equipment which
ranges from three to eight years.

LOSS PER SHARE

The net loss per common share is based upon
the weighted average number of shares
outstanding of 2,768,619 for the year ended
June 30, 1996, and 2,516,327 for the years
ended June 30, 1995 and 1994. The weighted
average number of shares outstanding is
based upon the revised number of shares
after the 1 for 10 reverse stock split which
was effective July 6, 1992.

ADVERTISING

The Company expenses the production costs of
advertising as incurred. Advertising
expense is $23,122, $43,592 and $10,090 for
the years ended June 30, 1996, 1995 and
1994, respectively, and is included in
selling general and administrative expense
in the statement of operations.

INCOME TAXES

Income taxes are provided based upon SFAS
No. 109, Accounting for Income Taxes, which
requires an asset and liability approach to
financial accounting and reporting for
income taxes. Deferred income tax assets
and liabilities are computed for differences
between the financial statement and tax
bases of assets and liabilities that will
result in taxable or deductible amounts in
the future. Such deferred income tax asset
and liability computations are based on
enacted tax laws and rates applicable to
periods in which the differences are
expected to affect taxable income.
Valuation allowances are established when
necessary to reduce deferred tax assets to
the amounts 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 deferred tax assets and
liabilities.

EMPLOYEE STOCK OPTIONS

In October 1995, the Financial Accounting
Standards Board issued SFAS No. 123,
Accounting for Stock-Based Compensation.
This Statement defines a "fair value

36
<PAGE> 42

based method" of accounting for an
employee stock option. However, it also
allows an entity to continue to measure
compensation cost for those plans using the
"intrinsic value based method" of accounting
prescribed by APB Opinion No. 25, Accounting
for Stock Issued to Employees. The Company
has elected to continue to follow the
accounting prescribed by APB Opinion No. 25.

RECLASSIFICATIONS

Certain reclassifications have been made to
1995 and 1994 balances to conform with
classifications used in 1996.

2. SALE OF SUBSIDIARY On April 1, 1991, the Company sold a
wholly-owned subsidiary, Network Direct,
Inc. (NDI) to its two former owners in
exchange for 8,967,180 shares of AmeriShop
Corp. common stock.

At the time of the sale of the subsidiary,
the Company owed NDI $550,000. Subsequent
to the sale, the Company and NDI entered
into an agreement whereby the $550,000 was
transferred to a non-refundable membership
advance. The membership advance was
amortized into income on a straight-line
basis over the five-year service agreement
period. The June 30, 1995 balance sheet
includes $110,000 of deferred membership
revenue.

On July 1, 1995, in exchange for
$175,000 in cash, the Company amended and
extended its service agreement with NDI
through July 1, 1998. The $175,000 is being
amortized over the three year period of the
contract. The unamortized balance of
$116,667 is included in deferred membership
revenue in the December 31, 1996 balance
sheet. The Company's existing agreement was
scheduled to run until April 1, 1996. Under
the terms of the revised agreement, the
enrollment paid by NDI for new memberships
serviced by the Company were reduced by 15%
for the first 4,000 memberships per year and
by 50% for any new memberships in excess of
4,000 per year.

In a transaction related to the 1991
transaction referred to above, the
Company entered into a five-year noncompete
agreement with NDI under which the Company
received $250,000 and the right to be the
sole service fulfillment company for NDI in
exchange for not competing in professional
shopping network programs which sell
memberships for a price in excess of $150.
The $250,000 was being amortized into income
on a straight-line basis over the five-year
period of the agreement. The June 30, 1995
balance sheet includes $37,483 of deferred
revenue from the noncompete agreement.

<PAGE> 43
As part of the July 1, 1995 amendment, the
Company also extended the term of the
noncompete agreement with NDI for a
three-year period expiring on July 1, 1998.

The Company also entered into option
agreements with the two former owners to
repurchase an additional 1,000,000
pre-reverse split shares of AmeriShop Corp.
common stock from each individual. The
agreements were amended in July 1992 to
provide for a price of $.15 per share
(pre-reverse split price). Effective
July 11, 1995, the options expired
unexercised.

3. INCOME TAXES For tax purposes, the Company has net
operating loss carryforwards of
approximately $4,907,000 at June 30, 1996.
The net operating loss carryforwards will
expire as follows:

<TABLE>
<CAPTION>
Year ending June 30,
-----------------------------------------
<S> <C>
2003 $ 98,000
2004 338,000
2005 167,000
2007 232,000
2008 1,365,000
2009 1,246,000
2010 777,000
2011 684,000
=========================================
</TABLE>

Deferred tax assets are as follows:
<TABLE>
<CAPTION>
Deferred tax
June 30, 1996 assets
---------------------------------------------
<S> <C>
Net operating loss
carryforwards $ 1,667,000
Other (net) 377,000
Valuation allowance (2,044,000)
---------------------------------------------
Net deferred taxes $ -
=============================================
</TABLE>

4. EQUIPMENT Equipment consists of the following:

<TABLE>
<CAPTION>
June 30, 1996 1995
--------------------------------------------
<S> <C> <C>
Furniture, fixtures
and equipment $260,811 $267,570

</TABLE>

38
<PAGE> 44

<TABLE>
<S> <C> <C>
Equipment held under
capital leases 225,853 249,227
--------------------------------------------
486,664 516,797
Less accumulated
depreciation and
amortization 457,144 490,924
--------------------------------------------
$ 29,520 $ 25,873
============================================
</TABLE>

5. NOTE PAYABLE Note payable represents borrowings from an
investment fund partnership. The borrowings
are due on demand and require monthly
interest payments of 12.5% per annum.
The Company has defaulted on its monthly
interest and principal installments on the
note. Effective July 1, 1996, the
investment group has waived for one year
future interest to be paid or accrued on
the note.

There are no quoted market prices for this
note. Because the Company is unable to
estimate the timing and ultimate settlement
of this note and the related accrued
interest, it is unable to estimate the fair
value at June 30, 1996.

6. LONG-TERM DEBT Long-term debt consists of the following:

<TABLE>
<CAPTION>
June 30, 1996 1995
------------------------------------------------------------------
<S> <C> <C>
Convertible debenture
payable to an investment
fund partnership in
quarterly installments of
interest only at 12.5%
per annum. Commencing on
August 1, 1995, monthly
installments of $10 per
$1,000 of the outstanding
debenture amount are
required.
Full payment of $2,000,000 $2,000,000
any unpaid principal and
interest is due and payable
no later than July 1, 1999.
The loan is secured
by all the Company's assets

Installment note payable to
vendor - 18,239

Accrued rent 11,573 186,767

</TABLE>

39
<PAGE> 45

<TABLE>
<CAPTION>
June 30, 1996 1995
--------------------------------------------------------
<S> <C> <C>
Capital lease obligation
(Note 7) - 10,550
--------------------------------------------------------
2,011,573 2,215,556
Less current maturities 2,000,000 293,131
--------------------------------------------------------
Long-term debt, less
current maturities $ 11,573 $1,922,425
========================================================
</TABLE>

The convertible debenture loan requires the Company, among
other things, to maintain a ratio of current assets to
current liabilities of not less than 1.0 to 1.0 and to
maintain a positive average monthly cash flow. The Company
was in violation of these covenants at June 30, 1996. In
addition, since May 1, 1994, the Company has failed to make
certain scheduled interest payments as they became due.
Furthermore, since August 1, 1995, the Company has failed to
make certain scheduled principal payments as they became
due. The covenant violations and the default from
nonpayment have only been waived through January 1, 1997.
Accordingly, the entire balance of the convertible debenture
is classified as current. Effective July 1, 1996, the
investment group has waived for one year future interest
to be paid or accrued on the convertible debt.

The investment fund partnership has the right at any time to
convert any issued debenture into the common stock of the
Company at $0.56309 per share. The debenture can be
redeemed by the Company at any time after July 1995, at
varying premium rates above par.

There are no quoted market prices for this convertible
debenture. Because the Company is unable to estimate the
timing and ultimate settlement of this convertible debenture
and related accrued interest, it is unable to estimate the
fair value at June 30, 1996.

The Company is leasing its office space under a lease that
requires reduced rentals in the early years of the
agreement. The total amount due under the lease is being
expensed ratably over the lease term. The resulting accrued
rent at June 30, 1996 will be repaid beginning September
1998. A portion of the accrued at June 30, 1995 was settled
during 1996 (see Note 7).

7. LEASES The Company leases a vehicle, office equipment, furniture
and fixtures, and data processing equipment

<PAGE> 46
under capital leases. The assets and
liabilities under the capital leases are
recorded at the lower of the present value
of the minimum lease payments at the
inception of the lease or the fair value of
the assets. The assets are amortized over
the shorter of their lease terms or their
estimated useful lives. Amortization of
assets under capital leases of 5,488,
$19,851 and $32,499 is included in
depreciation expense for 1996, 1995 and
1994, respectively.

The following is a summary of equipment held
under capital leases:

<TABLE>
<CAPTION>
June 30, 1996 1995
----------------------------------------------------------------------------
<S> <C> <C>
Vehicle $ - $ 21,497
Office furniture, fixtures and equipment 143,088 144,965
Data processing equipment 82,765 82,765
----------------------------------------------------------------------------
225,853 249,227
Less accumulated amortization 225,853 243,739
----------------------------------------------------------------------------
Net equipment held under capital leases $ - $ 5,488
============================================================================
</TABLE>

The Company leases office space under an
operating lease which expires in 2001.
During fiscal 1996, the Company renegotiated
the terms of its lease. In settlement of
its remaining accrued rent at the date the
lease was renegotiated of $180,050 and
installment note payable to the lessor of
$15,421 totaling $195,471, the Company
issued 378,438 shares of its common stock.
The common stock issued is unregistered and
valued at $213,096 or $0.56309 per share,
the price per share at which the convertible
note holder can convert (see Note 6). The
resulting loss of $17,625 has been included
in selling, general and administrative
expense in the statement of operations.
Rent expense under the lease for the years
ended June 30, 1996, 1995 and 1994 was
$152,061, $173,569 and $182,712,
respectively.

The future minimum rental obligations at
June 30, 1996, for all noncancelable
operating leases are as

<PAGE> 47

follows:

<TABLE>
<CAPTION>
Minimum Accrued
lease Rent rent
Year ended June 30, obligation expense expense
-------------------------------------------------------------------------
<S> <C> <C> <C>
1997 $123,305 $138,935 $ 15,630
1998 123,305 138,979 15,674
1999 145,121 138,979 (6,142)
2000 153,341 138,979 (14,362)
Thereafter 184,514 162,141 (22,373)
-------------------------------------------------------------------------
$729,586 $718,013 $(11,573)
=========================================================================
</TABLE>

8. PREFERRED STOCK The preferred stock may be issued by the
Board of Directors in one or more series.
The Board shall determine distinguishing
features of each, including preferences,
rights and restrictions, upon establishment
of such series.

9. STOCK OPTIONS EMPLOYEE INCENTIVE STOCK OPTION PLAN

The Company has an Incentive Stock Option
Plan (Plan) under which options granted are
intended to qualify as incentive stock
options under Section 422A of the Internal
Revenue Code of 1986, as amended. Pursuant
to the Plan, options to purchase up to
600,000 shares of the Company's common
stock, which have been reserved, may be
granted to employees of the Company. The
Plan is administered by the Company's Board
of Directors, which is empowered to
determine the terms and conditions of each
option, subject to the limitation that the
exercise price cannot be less than the
market value of the common stock on the date
of the grant and no option can have a term
in excess of ten years.

Options to purchase 598,000 shares are
outstanding under the Plan as of June 30,
1996. Options totaling 33,500, 31,500,
200,000, 17,100, 170,900 and 145,000 shares
may be exercised at $.30, $1.00, $1.10,
$.75, $.375 and $.4125 per share,
respectively. During fiscal 1996, 315,900
options were granted, 750 options were
forfeited and 209,950 options expired. No
options have been exercised as of the date
of this report.

NON-EMPLOYEE STOCK OPTIONS

<PAGE> 48

The Company has granted to a director of the
Company options to purchase 30,000 shares of
the Company's common stock. These options
are not intended to qualify as incentive
stock options under Section 422A of the
Internal Revenue Code of 1986 as amended and
are not subject to the limits of shares
specified in the Employee Incentive Stock
Option Plan, described above. These options
are administered by the Company's Board of
Directors, which is empowered to determine
the terms and conditions of each option,
subject to the limitations that the exercise
price cannot be less than the market value
of the common stock on the date of grant and
no option can have a term in excess of ten
years.

Of the 30,000 options granted, 15,000 shares
may be exercised at $1.00 and 15,000 may be
exercised at $.375. No options have been
exercised as of the date of this report.

COMPANY OPTIONS

On December 14, 1994, the Company entered
into a severence agreement with a former
officer of the Company whereby, the former
officer granted options to the Company to
purchase 275,000 shares of the Company's
common stock from the former officer for
$2.00 per share in exchange for the
Company's release of any and all rights or
claims that it may have had against the
former officer arising from his resignation
from the Company and subsequent employment
in a related field. The options are
exercisable in whole or in part and expire
138,000 on December 31, 1997 and 137,000 on
December 31, 1998.

10. RETIREMENT PLANS The Company has a 401(k) savings plan
covering substantially all employees with
more than one year of service. Employees
who participate must contribute 1% of their
compensation; however, they may elect to
contribute up to a maximum of 20%. Company
contributions are discretionary at the
direction of the Board of Directors. The
Company's contributions to the plan amounted
to $3,248 and $2,191 in 1996 and 1995,
respectively. There were no Company
contributions to the plan in 1994.

11. RELATED PARTY The Company is related to Network Direct,
TRANSACTIONS Inc. (NDI) by common ownership. The Company
receives membership fees which are amortized
into income over the period of service. The
following is a summary of these transactions
with NDI:

<TABLE>
<CAPTION>
Year ended June 30, 1996 1995 1994
--------------------------------------------------------------------------------------
<S> <C> <C>
Cash receipts for membership fees $ 645,700 $ 635,000 $ 597,000
</TABLE>

<PAGE> 49
<TABLE>
<S> <C> <C> <C>
Revenue recognized on
membership fees 872,268 721,400 448,000
========================================================
</TABLE>

The Company leases its office space from a company
owned by a stockholder of AmeriShop (see Note 7).

12. MANAGEMENT'S For the year ended June 30, 1996, the Company
PLANS REGARDING experienced a loss of $680,571 compared to a loss of
FUTURE OPERATIONS $698,285 in the prior year. Loss from operations
AND GOING CONCERN (exclusive of other income, interest income and
interest expense) was $173,190 and $269,661 for 1996
and 1995, respectively; an improvement of $96,467
(94%). However, of the 1995 operating loss of
$269,661, approximately $40,000 is attributable to
personnel reductions taken in June 1995. The
improved operating results were primarily due to
increased gross profit from merchandise, promotional
programs and a small increase in membership fee
revenues.

The Company has a working capital deficit of
$5,262,414 at June 30, 1996. A major portion of
this deficit relates to convertible debentures,
short-term notes payable and accrued interest
totaling $4,476,162 due to an investment fund
partnership. Management is currently working with
the investment group to extend this debt and/or
convert it into equity. Effective July 1, 1996, the
investment group has waived for one year future
interest to be paid or accrued on the convertible
debenture, short-term note payable and related
accrued interest. If the debt can be deferred or
converted, the Company is left with a $786,255
working capital deficit as of June 30, 1996, of
which $461,364, represents deferred membership
revenue. The deferred revenue will be liquidated
through amortization into income over the next 12
months and, therefore, will not require the use of
cash resources. Management is seeking additional
equity financing to offset the remaining working
capital deficit of $324,888.

The Company has shown a cash shortfall from
operations of approximately $152,000 for fiscal year
1996. In response to the continued loss from
operations and negative cash flows, management has
reduced fiscal year 1997 budgeted operating expenses
by 10% from 1996. To address short-term liquidity
needs, the Company received a short-term loan from
NDI for $100,000 at 12% interest. The note is due
December 1, 1996. In addition, the Company has
attained accounts receivable financing from
Publishers Credit Services, Inc. (PCS) and in August
1996, received an initial loan of approximately
$204,000.

Management anticipates continuing increases in its

<PAGE> 50

premium incentive merchandise sales,
along with improved gross profits.
Management believes that these increases,
combined with the expense reductions, should
provide for substantially improved operating
results in the coming fiscal year.

At the present time, the Company's office
space, telephone system and computer system
capabilities are underutilized. Management
anticipates that a substantial number of new
members and merchandise incentive programs
can be added without significant capital
expenditures. By adding new memberships and
merchandise incentive programs, management
believes there will be an improvement in
operating results by more fully utilizing
the Company's facilities.

<PAGE> 1
EXHIBIT 11

Statement re Computation of Loss per Share

<S> <C>

Common shares outstanding
during entire year 2,768,619

Net Loss $ (680,571)

Net Loss Per Shares $ ( .25 )
===========

</TABLE>

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 72,429
<SECURITIES> 0
<RECEIVABLES> 461,603
<ALLOWANCES> 0
<INVENTORY> 80,109
<CURRENT-ASSETS> 806,578
<PP&E> 486,664
<DEPRECIATION> 457,144
<TOTAL-ASSETS> 836,098
<CURRENT-LIABILITIES> 6,068,992
<BONDS> 0
0
0
<COMMON> 30
<OTHER-SE> 697,820
<TOTAL-LIABILITY-AND-EQUITY> 836,098
<SALES> 4,147,702
<TOTAL-REVENUES> 5,543,810
<CGS> 3,101,705
<TOTAL-COSTS> 5,717,000
<OTHER-EXPENSES> 507,381
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (680,571)
<INCOME-TAX> 0
<INCOME-CONTINUING> (680,571)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (680,571)
<EPS-PRIMARY> (.25)
<EPS-DILUTED> (.25)

</TABLE>