LEADING EDGE EARTH PRODUCTS INC
10QSB, 1997-01-15
CONCRETE PRODUCTS, EXCEPT BLOCK & BRICK
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<PAGE>   1
                                  FORM 10-QSB

                    U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                  FORM 10-QSB

  (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934



                For the quarterly period ended   July 31, 1996
                                              -------------------

      (  ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

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

           Commission file number     93-67656-S
                                 -------------------


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

                   Oregon                                       93-1002429
  ---------------------------                             ---------------------
  (State of incorporation or organization)                (IRS Employer ID No.)

               319 Nickerson St.  #186,   Seattle, WA        98109
         --------------------------------------------------------------
           (Address of principal executive offices)        (Zip Code)

                                800-788-3599
                       ------------------------------
                          Issuer's telephone number

     --------------------------------------------------------------------
  (Former name, former address and former fiscal year, if changed since last
                                    report)

   Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) 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

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS

    Check whether the registrant filed all documents and reports required to be
filed by Section 12,13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court.  Yes.......  No.......

                      APPLICABLE ONLY TO CORPORATE ISSUERS

    State number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 30,017,951 as of January 8,
1997

    Transitional Small Business Disclosure Format (check one):
Yes...........  No......X....
<PAGE>   2
                       LEADING-EDGE EARTH PRODUCTS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                                     PART 1

ITEM 1.  FINANCIAL STATEMENTS

Interim Financial Statements for the periods ending July 31, 1996, and 1995 are
attached hereto.

ITEM 2.  PLAN OF OPERATION

The Company has yet to generate revenues from the sale of building panels.  No
revenues were earned in fiscal 1994/1995; however, $294,324 were earned in
fiscal 1995/1996, primarily in the form of License revenue from the Agile
license. Additional sums are expected from Agile, (see exhibits to 10-KSB for
year ended April 30, 1996). The operations of the Company, since inception,
have been focused on research and development.  No independent research and
development activities by the Company are planned in fiscal 1996/1997, although
the Company reserves the right to resume such activities at any time.  No
significant purchase or sale of any equipment by the Company is expected during
fiscal 1996/1997, and no significant change in the number of employees of the
Company is expected.

Management of the Company intends to concentrate its efforts to support its
consulting obligations to Agile under the Agile License (see exhibits to 10-KSB
for year ended April 30, 1996) during 1997; however, in the event that
additional research and development or other related activities by the Company
appear desirable after the Company's review of Agile's progress under the Agile
License, such related activities may be undertaken.  No budgets have been
established therefore.  The Company management and directors believe, to the
extent that Agile is successful in its operation, it will benefit the Company
due to the Company's equity ownership interest in Agile.  The Company believes
Agile's technological and business successes will enable the Company, per the
December 4, 1995 Agreement, to build other plants similar to Agile's,
throughout the United States and the world, or engage in direct operations, or
joint ventures or otherwise participate with Agile in such activities.

The Company approved on December 4, 1995, and entered into a comprehensive
license agreement with Grant Record, WLP, Agile and Agile Investment
Corporation ("AIC") under which the Company non-exclusively licensed Agile to
manufacture, market and sell products based on the Company's: composite
building system concepts, patents, patents pending, pending patent
applications, trade secrets and future product developments (jointly or
independently accomplished).  The license is for fifty years for the, U.S.A.
with exclusive rights for up to three-years, (subject to achieving a $1.0
million initial investment within one year of the closing).  Agile realized the
specified investment level during the first half of calendar 1996.  Agile also
acquired the right to manufacture, exclusively, within a 500-mile radius of
Williamsport, PA (the "Home Territory"), for the term of the License.  LEEP has
the right to continue to use the technology, as well as enhancements and
improvements made by Agile, subject to the exclusive rights period.







<PAGE>   3
Company personnel are to be available, on notice, for three years to consult
with Agile to implement and develop the technology, at a cost to Agile of $500
per day, plus expenses. License and consulting revenues therefore increased
from $25,000 during the period ending July 31, 1995, to $119,125 in
corresponding period of the current year.

As of December 31,1996, $202,500 has been remitted by Agile to the Company for
payment of fees due upon receipt of capitalization into Agile. $22,500 is still
due the Company based on capital received by Agile.  $24,500 has been paid to
the Company for consulting services due the Company under the December 4, 1995,
Agreement and $143,500 is still due the Company. The Company has agreed to
temporarily defer a portion or portions of the consulting fees due from Agile
under the December 4, 1995 Agreement, and reserves the right to demand such
amounts at any time.

The Company is owed $50,000 per month from Agile, beginning at the time Agile
receives an aggregate amount of $4.0 million in capitalization. Agile has
received approximately $2.4 million in capitalization as of December 31,1996.
The State of Pennsylvania has committed to loan and grant Agile an aggregate of
$3.0 million at the time Agile receives an aggregate total of $7.0 million of
capitalization. During December 1996, the $3.0 million State offer expired.
However; Agile management believes that the State of Pennsylvania will renew
the offer. The Company believes that debt and equity sources are available to
Agile, whereby Agile should obtain more than the above cited $7.0 million
capitalization.  Based on Agile attaining the $4.0 million aggregate total
capitalization level, management believes the Company should began receiving
its $50,000/month License payment in 1997; however, no assurances can be made
that this will happen.

Agile, at December 31,1996, had approximately $500,000 in trade and other
short-term debt.  Approximately one-half of this amount was consolidated under
the Bank line discussed herein and longer-term notes.  Agile is seeking bridge
financing assistance to ensure orderly operations until  larger financing  is
completed.  No assurances can be made that bridge or other classes of
capitalization will be finalized.

The bank line which consolidated debt in December 1996, was also used to secure
a fully operational polyisocyanurate expansion foam panel lamination production
line. Agile plans to begin immediate manufacturing operation on the new line.

The Company has limited cash reserves.  The Company anticipates administrative
and other overhead in the twelve months ending April 30, l997, of $600,000
(cash and non cash items combined). It is anticipated that this amount can be
raised by private equity and/or debt placement by itself and/or AIC, in the
event the $50,000/month license payments required by the Agile License
Agreement are delayed.  There can be no assurance that these positive results
will be attained.

The Company financed it's cost of operations from stock sales, stockholder
loans, stockholders exercising options for stock, and license fee income.  For
further analysis, see the Company's







<PAGE>   4
"Statement of Cash Flows".

The Company is no longer in the start-up phase of it's development nor is it
seeking SEC approval for Securities Registration, as it was earlier. For that
reason, legal and professional expenses are in line with the previous year at
$21,995 compared to $15,243 in the previous year. These fees can be expected to
stabilize at a level under $100,000 annually.

Because of the increased stock market trading activity of what is becoming a
more mature company, management retained the services of an outside company to
provide corporate development activities which include: organizing stock broker
and analyst following, providing a publishing and mailing program, compiling
and publishing research and diligence information about the Company, managing
broker/dealer relations and providing other corporate consulting in the area of
financial and corporate strategies.  For this reason development expenses have
increased from the previous periods zero, to $117,202 in the current period.

R&D expense is in line with the pervious year.  During fiscal 1995/1996 the
Company's efforts were turned more to the task of identifying a financial
partner with whom it could complete the next phase of Production Engineering
and Building System Development.  Expenses were shifted toward G&A and fixed
overhead was reduced. However; license fees increased to $10,000 for the
period ending July 31, l996, from zero in the same period of the pervious year.
This increase represents payment under a licensing agreement entered into by
the Company for the right to use Polymag proprietary magnesiumoxide technology
and to receive one years consulting.

Payroll expense increased to $14,375 for the quarter ended July 31, 1996 from
zero in the same period of the previous year. This increase represents a
non-recurring payment to a former employee of the Company.


                          PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

On July 27, 1995, the Company filed an action against Timothy J. Metz in the
Superior Court of the State 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 judgement
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







<PAGE>   5
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 has not been able to respond
to the discovery requested of him by the Company.  The Company has not used and
does not use the technology to which Mr. Metz claims rights.  Although the suit
has been pending for over a year, no discovery has taken place. Based on the
Company's knowledge of Mr. Metz's claims, the Company is of the opinion that it
has meritorious defenses and intends to defend vigorously against the claims
brought by Mr. Metz.

The Company has made demands to Harvey and Gary Bryant (Bryant Investment
Company, Las Vegas, NV) for their return to the Company of, respectively,
250,000 shares each of the common, restricted stock of the Company due to
nonperformance on an earlier (1994) undertaking in which Bryant Investment
Company committed to raise a minimum of $1.0 million for the Company. To
date, Bryant Investment Company has not responded to the Company's demands to
return the stock and the company is contemplating legal action to retrieve and
cancel the shares.

One of WLP's founding directors and note holder was recently dismissed from the
WLP and Agile Boards by the WLP shareholders, due to an apparent loss of
confidence on the part of the director and business differences.  Legal action
is pending between the director and WLP.


ITEM 2.  CHANGES IN SECURITIES

There have been no changes in instruments defining the rights of holders of any
class of securities.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None

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

On October 14, 1996, at the annual meeting of shareholders, A. Charles Bush and
Richard M. Pell, in addition to the incumbent Board of Directors, were elected
to serve as directors of the Company until the next annual meeting. Each of the
director nominees (7 persons) received 23,731,293 votes for and 15,337 votes
against election to serve as director, with no votes withheld.

At the same meeting, management was given the authority to consider moving its
audit responsibility to the East Coast, to be more consistent with managements'
location. 23,497202 votes in favor and 15,200 votes against were cast, with
234,228 votes withheld.





<PAGE>   6
ITEM 5.  OTHER INFORMATION

Matters discussed herein, contain forward looking statements that involve risk
and uncertainties. The Company's results may differ significantly from results
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 effecting customers, the Company, or
         Agile.

- - - - - - - - - - -        Risks generally involved in the construction business, including
         weather, fixed price contracts and shortages of materials or price
         competitive labor.

- - - - - - - - - - -        Competition;

- - - - - - - - - - -        The ability of Agile to successfully bring the products from
         Development Stage into full and profitable Production Stage.

- - - - - - - - - - -        The Company and/or Agile's ability to raise sufficient debt and equity
         capital to perfect Agile's business plans and to enable Agile to
         continue in existence.

- - - - - - - - - - -        The occurrences of incidents which could subject the Company to
         liability or fines;

- - - - - - - - - - -        Agiles ability to obtain the sales orders necessary to support the
         production intended by the Agile Business Plan.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits
                 27 Financial Data Schedule (for SEC use only)

(b)      Reports on Form 8-K
                 None







<PAGE>   7
                                   SIGNATURES


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



                                             LEADING-EDGE EARTH PRODUCTS, INC.
                                             ---------------------------------
                                                      (Registrant)
                               
                               
                               
Date:    JANUARY 14, 1997                    By:      GRANT C. RECORD        
         ----------------                             ---------------        
                                                      Grant C. Record        
                                                      President and Secretary
                               






<PAGE>   8
                       LEADING-EDGE EARTH PRODUCTS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          INTERIM FINANCIAL STATEMENTS

                             JULY 31, 1996 AND 1995

                                  (UNAUDITED)







<PAGE>   9
                       LEADING-EDGE EARTH PRODUCTS, INC.
                        (A Development Stage Enterprise)

           Condensed Balance Sheets July 31, 1996 and April 30, 1996
 ------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                 31-Jul-96        30-Apr-96
- - - - - - - - - - --------------------------------------------------------------------------------------------
<S>                                                            <C>             <C>
ASSETS
Current assets:
   Cash                                                             $1,976           $5,700
   Receivables from Agile Building Technology Inc.                 $89,250          $68,125
   Inventory                                                        $4,778           $4,778
   Prepaid expenses and deposits                                    $5,276          $38,401
                                                             --------------    -------------
              Total current assets                                $101,280         $117,004

Property, plant and equipment                                      $50,695          $50,695
   Less accumulated depreciation                                    $3,161           $3,161
                                                             --------------    -------------
              Net plant and equipment                              $47,534          $47,534

   Investments in affiliates                                        -                -
                                                             --------------    -------------
                                                                    -                -

                                                             --------------    -------------
              Total assets                                        $148,814         $164,538

LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
   Notes payable                                                        $0          $40,000
   Accounts payable                                                $38,944         $108,525
   Accrued contract salary                                        $257,376         $242,377
   Accrued royalties and interest payable                          $66,115          $59,418
   Loans from shareholder                                         $272,095         $177,798
                                                             --------------    -------------
              Total current liabilities                           $634,530         $628,118

Shareholders' equity (deficit):
   Common stock, no par value                                   $3,641,309       $3,470,409
   Note receivable from shareholders                             ($208,784)       ($128,784)
   Deficit accumulated during development stage                ($3,918,241)     ($3,805,205)
                                                             --------------    -------------
              Total shareholders' equity                         ($485,716)       ($463,580)
   Adjustment
                                                             --------------    -------------
              Total liabilities and shareholders' equity          $148,814         $164,538
============================================================================================
</TABLE>







<PAGE>   10

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

  Statements of Operations Three Months Ended July 31, 1996 and July 31, 1995
 ------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                    Period from
                                                                                   Dec. 23, 1991
                                                        Three months ended       (inception)thrgh
                                                      7/31/96         7/31/95         7/31/96
- - - - - - - - - - -------------------------------------------------------------------------------------------------
<S>                                                 <C>            <C>             <C>
INCOME:
   Licence and consulting revenues                    $119,125         $25,000         $391,000
   Interest                                                $70              $0           $8,195
   Other                                                $1,361              $0          $15,683
                                                  -------------    ------------    -------------
   Total income                                       $120,556         $25,000         $414,878

RESEARCH AND DEVELOPMENT EXPENSES:
   Salaries                                                 $0          $2,380         $418,827
   Supplies/shipping                                      $301          $1,266          $91,130
   Professional fees                                    $2,083              $0         $162,583
   License fees                                        $10,000                          $10,000
   Travel                                                   $0              $0          $11,418
   Rent                                                     $0            $249          $37,715
   Legal                                                $3,796         $12,000          $22,722
   Depreciation                                             $0            $522           $6,264
   Utilities                                                $0            $317           $6,209
   Write-down of assets                                     $0              $0         $100,141
                                                  -------------    ------------    -------------
   Total research and development                      $16,180         $16,734         $867,009

GENERAL AND ADMINISTRATIVE EXPENSES:
   Contract salaries                                   $34,080         $36,000       $1,223,738
   Rent                                                 $4,951          $6,821          $68,813
   Depreciation                                             $0            $678           $7,912
   Office supplies                                      $1,532          $3,044          $42,081
   Postage and shipping                                 $1,350            $845          $18,787
   Telephone                                            $4,830          $1,415         $114,874
   Travel and entertainment                             $8,222          $8,419         $151,114
   Relocation                                               $0              $0          $15,169
   Payroll and payroll expenses                        $14,375              $0          $17,410
   Legal and professional                              $21,995         $15,243         $802,896
   Stockholder costs                                      $858          $1,744          $38,160
   Interest and bank charges                            $6,950          $6,646         $116,544
   Promotion & corp. development                      $117,202              $0         $312,947
   Insurance                                                $0          $1,691           $7,865
   Other                                                $1,067             $30          $17,802
                                                  -------------    ------------    -------------
   Total general and administrative                   $217,412         $82,576       $2,956,112

Royalties and royalty buyout expense                        $0              $0         $510,000

                                                  -------------    ------------    -------------
                                       Net loss      ($113,036)       ($74,310)     ($3,918,243)

Loss per common share                                   ($0.00)         ($0.00)          ($0.25)

Weighted average shares outstanding                 29,319,249      16,701,516       15,891,099
=================================================================================================
</TABLE>

<PAGE>   11

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

   Condensed Statements of Cash Flows Three Months Ended July 31, 1996 and
                                July 31, 1995
   -----------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                  Period from
                                                                                                 Dec. 23, 1991
                                                                    Three months ended         (inception)thrgh
                                                               07/31/96           07/31/95          07/31/96
- - - - - - - - - - ---------------------------------------------------------------------------------------------------------------
<S>                                                            <C>                <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                    ($113,036)         ($74,310)        ($3,918,241)
Adjustments to reconcile net loss to cash
flows used in operating activities:
   Noncash compensaton expenses related to
      nonqualified stock options granted                              $0                            $1,199,339
   Depreciation                                                       $0            $1,200             $14,176
   Write-off of long-term assets                                      $0                $0            $110,555
   Noncash compensation expenses
       related to stock grants                                   $90,900                $0            $675,648
   Accrued royalty obligation                                                                         $200,000
   Changes in operating assets and liabilities:
   Receivables                                                  ($21,125)                             ($89,250)
   Inventory                                                          $0                $0             ($4,778)
   Prepaid expenses and deposits                                 $33,125            $1,000             ($5,276)
   Accounts payable                                             ($69,581)             $212            $345,843
   Accrued salary obligations                                    $14,999           $36,000            $257,376
   Accrued royalties and interest payable                         $6,697            $6,575            $239,150
                                                          ---------------    --------------      --------------
                        Net cash used                           ($58,021)         ($29,323)          ($975,458)

CASH FLOWS FROM INVESTING ACTIVITIES:
   Equipment purchases                                                $0           ($2,841)          ($170,064)
   Investment in supplier                                                                              ($1,000)
   Pmts on notes receivable fm stockholders                                                             $6,500
                                                          ---------------    --------------      --------------
                        Net cash used in investing                    $0           ($2,841)          ($164,564)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Sale of common stock                                               $0                $0            $370,000
   Exercise of stock options                                          $0                $0             $42,537
   Exercise of Class A warrants                                                                         $3,300
   Contributed capital                                                                                $100,910
   Proceeds from notes payable                                                                        $197,500
   Proceeds from loans from stockholders                         $94,297           $84,475            $673,630
   Payments on notes payable                                    ($40,000)               $0            ($53,500)
   Payments on loans from stockholders                                $0          ($50,850)          ($192,379)
                                                          ---------------    --------------      --------------
                        Cash provided by financing               $54,297           $33,625          $1,141,998

                        Net change in cash                       ($3,724)           $1,461              $1,976

Cash at beginning of period                                       $5,700              $387                  $0
                                                          ---------------    --------------      --------------
Cash at end of period                                             $1,976            $1,848              $1,976
===============================================================================================================
</TABLE>







<PAGE>   12
                       LEADING-EDGE EARTH PRODUCTS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                         NOTES TO FINANCIAL STATEMENTS
                            JULY 31, 1996, AND 1995
                                  (UNAUDITED)

1. GENERAL

The interim financial statements have been prepared by the Company without
audit and are subject to normal recurring year-end adjustments.  Certain
information and footnote disclosure normally included in financial statements
prepared in accordance with generally accepted accounting principles has been
condensed or omitted pursuant to the rules and regulations of the Securities
and Exchange Commission.  In the opinion of the Company, the accompanying
unaudited financial statements contain all adjustments, (all of which are of a
normal recurring nature), necessary to present fairly the financial position of
the Company as of July 31, 1996, and the results of operations  for the three
months July 31, 1996 and 1995.  It is suggested that these interim statements
be read in conjunction with the financial statements and notes thereto
contained in the Company's audited financial statements for the years ended
April 30, 1996 and 1995.  The results of operations for the three months ended
July 31, 1996 and 1995 are not necessarily indicative of the results to be
expected for the full year.

2.  INCOME TAXES

The Company has no taxable income to date; therefore, no provision for income
taxes has been made.  The deficit accumulated during the development stage is
generally available to offset future taxable income.

3.  NET LOSS PER COMMON STOCK

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.

4.  CONTINUING EXISTENCE

The Company has yet to produce and sell its products.  The burden of trade debt
has been substantially reduced by equity advances made by WLP, license fee
income, and intermediate term loans.  Its ability to continue in existence is
dependent upon obtaining sufficient funding to begin manufacturing operations
with Agile and achieve a positive cash flow in which the Company can
participate.  Management believes that sufficient funding and operational
success will be achieved to allow the Company to realize planned business
objectives, but at this time it is not assured.

5.  ISSUANCE OF SECURITIES





<PAGE>   13
21,200 rule 144 restricted shares were issued to a former employee for services
rendered to comply with an employment contract.  75,000 rule 144 restricted
shares were issued to a vendor for services rendered during the quarter as
described in note 9, plus 75,000 shares have been reserved for future services
to the Company.

An officer and stockholder of the Company exercised options to purchase 150,000
rule 144 restricted shares at per share prices of $.50 and $.55 using a full
recourse note for $80,000 with collateral in the form of stock.  As long as the
optionee provides sufficient shares of the Company's stock as collateral for
the note based upon changes in the fair market value of the Company's stock, no
interest will accrue and no amounts will be considered payable under terms of
the note.

6.  AGILE FEE

In accordance with the Pennsylvania Agreement, $119,125 in License fees were
received during the quarter from Agile.  $89,250 of fees due from Agile have
been accrued and were still owed the Company at the end of the quarter.

7.  INVESTMENTS IN AFFILIATES

The Company has a 35% interest in Agile with the remaining 65% interest held by
WLP.  This investment is accounted for using the equity method.  Any asset or
equity distributions from Agile will be made in accordance with the respective
ownership interests.  Agile is a development stage enterprise established to
manufacture building panels using technology developed jointly and/or
independently by the Company and/or Agile.  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.

AIC is an enterprise whose primary asset (Company stock) is used as security to
support Agile and the Company's operation using the investment to secure loans,
sell and or otherwise use as required for financing purposes for five years.
The respective ownership interest of the Company decreases at a specified rate
as WLP, AIC and/or the Company contribute operating capital or financing to
Agile.  No value has been recorded by the Company related to the investment in
AIC due to the indeterminable values related to the Company's common stock
given or the common stock of AIC received in the investment transaction.

8.  AGILE AND A.I.C. REPORTED NET LOSES

Both Agile and A.I.C. report substantial net loses as a result of shares issued
to WLP for services rendered.  These services are associated with work done by
principles of WLP and was required to make the Agreement possible.  The Company
has not recognized its proportionate share of Agile's and AIC's net losses as
the Company has no obligation to fund any such losses and carries its
investment in Agile and AIC at zero.





<PAGE>   14
9.  CORPORATE DEVELOPMENT

The Promotion and corporate development expense includes $75,000 paid for
services rendered with 75,000 rule 144 restricted shares, and $37,500 paid with
stock in the previous quarter.

10.  NOTES RECEIVABLE FROM SHAREHOLDERS

The "Notes receivable from shareholder" is increased by $80,000 because of the
stock transaction described in note 5.

11.  PROPERTY AND EQUIPMENT

Property and equipment is stated at cost.  Certain production assets have been
written down to net realizable value when the Company determined that the
assets would not be used in future related activities.  The Company is not
continuing to take depreciation as the remaining equipment is expected to be
sold or written down during the fiscal year.



12  SUBSEQUENT EVENTS

On August 10, 1996 a former officer of the Company exercised options to
purchase 50,000 rule 144 restricted shares in exchange for a $3,500 reduction
of a note payable by the Company.

On August 22, 1996, the Company issued a total of 100,000 shares of restricted
common stock in exchange for the cancellation of $69,000 in loans from
stockholders.  Additionally, the Company issued 275,000 shares of restricted
common stock in exchange for a note payable from A.I.C. in favor of a
shareholder for $275,000.  The note was assigned to the company by the
shareholder who lent the money to A.I.C..  A.I.C. will deliver 275,000 shares of
the Company's common stock held by A.I.C. for the note.  The Company has
recorded a note receivable from A.I.C. in the amount of $275,000.

On June 18, 1996 the Company entered into a consulting agreement with its chief
financial officer and agreed to issue him options on October 1, 1996 to
purchase 50,000 shares at $.75 per share and 50,000 shares at $1.00 per share.

On October 3, 1996 a former employee of the Company exercised an option to
purchase 50,000 shares of common stock for $25,000 in cash

The 75,000 shares reserved for future services by a vendor described in note 5
were issued on December 10, 1996.








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<ARTICLE> 5
       
<S>                             <C>
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          APR-30-1997
<PERIOD-START>                             MAY-01-1996
<PERIOD-END>                               JUL-31-1996
<CASH>                                           1,976
<SECURITIES>                                         0
<RECEIVABLES>                                   89,250
<ALLOWANCES>                                         0
<INVENTORY>                                      4,778
<CURRENT-ASSETS>                               101,280
<PP&E>                                          50,695
<DEPRECIATION>                                   3,161
<TOTAL-ASSETS>                                 148,814
<CURRENT-LIABILITIES>                          634,530
<BONDS>                                              0
                                0
                                          0
<COMMON>                                     3,641,309
<OTHER-SE>                                 (4,127,025)
<TOTAL-LIABILITY-AND-EQUITY>                   148,814
<SALES>                                              0
<TOTAL-REVENUES>                               120,556
<CGS>                                                0
<TOTAL-COSTS>                                        0
<OTHER-EXPENSES>                               233,592
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                               6,950
<INCOME-PRETAX>                              (113,036)
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                          (113,036)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                 (113,036)
<EPS-PRIMARY>                                     0.00
<EPS-DILUTED>                                     0.00
        

</TABLE>



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