International Heritage Inc – ‘10KSB’ for 12/31/97

As of:  Friday, 2/13/98   ·   For:  12/31/97   ·   Accession #:  1010412-98-21   ·   File #:  2-97690-D

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Annual Report — Small Business   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual Report -- Small Business                       25±   114K 
 2: EX-27       Financial Data Schedule (Pre-XBRL)                     1      6K 

10KSB   —   Annual Report — Small Business
Document Table of Contents

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

FORM 10-KSB             

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND               
EXCHANGE ACT OF 1934                                                            

For the fiscal year ended December 31,  1997                  

OR              

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES AND         
EXCHANGE ACT OF 1934                                                            

Commission file number 002-97690-D          

Kara International, Inc.            
(Name of Small Business Issuer as specified in its charter)             

Nevada                            84-1398635          
(State or other jurisdiction of     (I.R.S. employer identification No.)      
Incorporation or organization)                                                

55 West 200 North, Provo, UT 84601        
(Address of principal executive offices)        

Registrant's telephone no., including area code:  (801) 377-1758        

897 North Artistic Circle, Springville, Utah 84663        
(Former Name or Former Address, if changed since last Report)         

Securities Registered under Section 12(b) of the Exchange Act: None             

Name of Each Exchange on Which Registered: None                                 

Securities Registered under Section 12(g) of the Exchange Act: None             

Check whether the Issuer (1) has filed all reports required to be filed by      
Section 13 or 15(d) of the Exchange Act during the preceding 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.      

(1) Yes X   No(2) Yes  X No                                                     

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Check if disclosure of delinquent filers in response to Item 405 of Regulation  
S-B is not contained in this form, and no disclosure will be contained, to the  
best of Company's knowledge, in definitive proxy of information statements      
incorporated by reference in Part III of this Form 10-KSB or any amendment to   
this Form 10-KSB.   [   ]                                                       

State Issuer's revenues for its most recent fiscal year: December 31, 1997 - 0  

State the aggregate market value of the voting stock held by non-affiliates     
computed by reference to the price at which the stock was sold, or the average  
bid and asked prices of such stock, as of a specified date within the past 60   
days.                                                                           

January 31, 1998 - $3,890,327.  There are approximately 555,761 shares of       
common voting stock of the Company held by non-affiliates.  The Company has     
valued these shares on the basis of the bid price for the Company's common      
stock on the OTC Bulletin Board on such date, which was $7 per share.           

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

Not Applicable        

APPLICABLE ONLY TO CORPORATE ISSUERS        

Indicate the number of shares outstanding of each of the Registrant's classes   
of common stock, as of the latest practicable date:                             

January 31, 1998        

4,559,761       

DOCUMENTS INCORPORATED BY REFERENCE         

A description of "Documents Incorporated by Reference" is contained in
Item 13 of this Report.                                                         

Transitional Small Business Issuer Format   Yes X  No                           

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PART I    

Item 1.     Description of Business                                             

Business Development.                                                           

  Kara International, Inc. (the "Company") was organized under the laws of
the State of Nevada on April 22, 1985.  Detailed information respecting its     
history is contained in the Company's 10-KSB Annual Report for the fiscal year  
ended December 31, 1996, which has been previously filed with the Securities    
and Exchange Commission, and is incorporated herein by reference.  See Item 13  
of this Report.                                                                 

   The only material business operations conducted by the Company during the
past year involved seeking and reviewing prospective business ventures which    
could be acquired by acquisition, reorganization or merger.                     

   The following material developments occurred during the fiscal year ended
December 31, 1997, to-wit:                                                      

Corporate Charter Amendments.  Effective April 11, 1997, the Company  
reverse split its outstanding voting securities on the basis of one common      
share for five common shares, while retaining the authorized capital at         
50,000,000 shares of $0.001 par value common voting, with appropriate           
adjustments in the additional paid in capital and stated capital accounts of    
the Company.  A copy of the Certificate respecting this reverse split was       
attached to the Company's 8-K Current Report dated April 11, 1997, which has    
been previously filed with the Securities and Exchange Commission, and is       
incorporated herein by reference.  See Item 13 of this Report.  All             
computations hereinbelow take into account this reverse split.                  

 Stock Issuances and Changes in Control.  Pursuant to resolutions of the
Board of Directors adopted on February 28, 1997, the following "unregistered"   
and "restricted" shares of the Company's common stock were issued for the       
following consideration, to-wit:  David C. Merrell, 50,000 shares, in           
consideration of services valued at $1,250; and Michael C. Brown, 50,000        
shares, in consideration of services valued at $1,250.                          

  Effective February 28, 1997, the directors also resolved to issue 50,000
shares, for the following consideration, to certain consultants pursuant to a   
written compensation agreement styled as the "Consultant Compensation           
Agreement No. 1," as follows, to-wit:  Leonard W. Burningham, Esq., 35,000      
shares, in consideration of services valued at $825; Branden T. Burningham,     
Esq., 10,000 shares, in consideration of services valued at $250; Sheryl Ross,  
4,000 shares, in consideration of services valued at $100; and Brad             
Burningham, 1,000 shares, in consideration of services valued at $25.  A copy   
of the Consultant Compensation Agreement No. 1 was filed as an exhibit to the   
Company's S-8 Registration Statement which has been previously filed with the   
Securities and Exchange Commission, and is incorporated herein by reference.    
See Item 13 of this Report.                                                     

In an Action by Unanimous Consent of the Board of Directors and the   
Majority Stockholder (David C. Merrell, who was then the President and a        
director of the Company) taken pursuant to Sections 78.315 and 78.320 of the    
Nevada  Revised Statutes, resolutions were adopted to issue 4,000,000           
"unregistered" and "restricted" shares of the Company's common voting stock to  
David N. Nemelka, in consideration of the sum of $20,000.  In connection with   
the issuance of these shares of common stock, the directors and executive       
officers of the Company, who were David C. Merrell, President and a director,   
Michael C. Brown, Secretary/Treasurer and a director, resigned, and Mr.         
Nemelka was designated, in seriatim, to serve as the sole director and the      
President and Secretary of the Company.  An 8-K Current Report dated April 11,  
1997, describing this "change in control" has been previously filed with the    
Securities and Exchange Commission, and is incorporated herein by reference.    
See Item 13 of this Report.                                                     

Current Negotiations.  The Company is currently negotiating to acquire
all of the outstanding voting securities of a privately held enterprise with    
which it formerly had a Letter of Intent; the Letter of Intent has expired.     
See the 8-K Current Report dated October 1, 1997, which has been previously     
filed with the Securities and Exchange Commission, and is incorporated herein   
by reference.                                                                   

Business.                                                                       

   The only material business operations conducted by the Company during the
past year involved seeking and reviewing prospective business ventures which    
could be acquired by acquisition, reorganization or merger.  To                 
the extent that the Company intends to continue to seek the acquisition of the  
assets, property or business that may benefit the Company and its               
stockholders, the Company is essentially a "blank check" company.  Because the  
Company conducts no business and has no employees, management anticipates that  
any such acquisition would require the Company to issue shares of its common    
stock as the sole consideration for the acquisition.  This may result in        
substantial dilution of the shares of current stockholders.  The Company's      
Board of Directors shall make the final determination whether to complete any   
such acquisition; the approval of stockholders will not be sought unless        
required by applicable laws, rules and regulations, the Company's Articles of   
Incorporation or Bylaws, or contract.  Even if stockholder approval is sought,  
David N. Nemelka, the Company's President, Secretary and sole director,         
beneficially owns approximately 87% of the outstanding shares                   
of common stock of the Company, and could approve any acquisition,              
reorganization or merger he deems acceptable.  The Company makes no assurance   
that any future enterprise will be profitable or successful.                    

The Company is not currently engaging in any substantive business     
activity and has no plans to engage in any such activity in the foreseeable     
future.  In its present form, the Company may be deemed to be a vehicle to      
acquire or merge with a business or company.  The Company does not intend to    
restrict its search to any particular business or industry, and the areas in    
which it will seek out acquisitions, reorganizations or mergers may include,    
but will not be limited to, the fields of high technology, manufacturing,       
natural resources, services, research and development, communications,          
transportation, insurance, brokerage, finance and all medically related fields  
among others.  The Company recognizes that the number of suitable potential     
business ventures that may be available to it may be extremely limited, and     
may be restricted to entities who desire to avoid what these entities may deem  
to be the adverse factors include substantial time requirements, legal and      
accounting costs, the inability to obtain an underwriter who is willing to      
publicly offer and sell shares, the lack of or the inability to obtain the      
required financial statements for such an undertaking, limitations on the       
amount of dilution to public investors in comparison to the stockholders of     
any such entities, along with other conditions or requirements imposed by       
various federal and state securities laws, rules and regulations.  Any of       
these types of entities, regardless of their prospects, would require the       
Company to issue a substantial number of shares of its common stock to          
complete any such acquisition, reorganization or merger.  For acquiring         
companies with little or no assets, this usually amounts to between 80% to 95%  
of the outstanding shares of a company similar to this Company                  
following the completion of any such transactions; because this Company         
currently has substantial assets, management expects that the amount of common  
stock to be issued will more than likely be based upon the relative assets of   
the Company and any prospective acquisition, reorganization or merger           
candidate, but will still be enough to transfer control of the Company to the   
former principals of the acquired entity.  Accordingly, investments in any      
such private entity, if available, may tend to be much more favorable than any  
investment in the Company.                                                      

 In the event that the Company engages in any transaction resulting in a
change of control of the Company and/or the acquisition of a business, the      
Company will be required to file with the Securities and Exchange Commission a  
Current Report on Form 8-K within 15 days of such transaction.  A filing on     
Form 8-K also requires the filing of audited financial statements of the        
business acquired, as well as pro forma financial information consisting of a   
pro forma condensed balance sheet, pro forma statements of income and           
accompanying explanatory notes. Management intends to consider a number of      
factors prior to making any decision as to whether to participate in any        
specific business endeavor, none of which may be determinative or provide any   
assurance of success.  These may include, but will not be limited to an         
analysis of the quality of the entity's management personnel; the anticipated   
acceptability of any; new products or marketing concepts; the merit of          
technological changes; its present financial condition, projected growth        
potential and available technical, financial and managerial resources; its      
working capital, history of operations and future prospects; the nature of its  
present and expected competition; the quality and experience of its management  
services and the depth of its management; its potential for further research,   
development or exploration; risk factors specifically related to its business   
operations; its potential for growth, expansion and profit; the perceived       
public recognition or acceptance of its products, services, trademarks and      
name identification; and numerous other factors which are difficult, if not     
impossible, to properly or accurately analyze, let alone describe or identify,  
without referring to specific objective criteria.                               

Regardless, the results of operations of any specific entity may not  
necessarily be indicative of what may occur in the future, by reason of         
changing market strategies, plant or product expansion, changes in product      
emphasis, future management personnel and changes in innumerable other          
factors.  Further, in the case of a new business venture or one that is in a    
research and development mode, the risks will be substantial, and there will    
be no objective criteria to examine the effectiveness or the abilities of its   
management or its business objectives.  Also, a firm market for its products    
or services may yet need to be established, and with no past track record, the  
profitability of any such entity will be unproven and cannot be predicted with  
any certainty.                                                                  

Management will attempt to meet personally with management and key    
personnel of the entity sponsoring any business opportunity afforded to the     
Company, visit and inspect material facilities, obtain independent analysis or  
verification of information provided and gathered, check references of          
management and key personnel and conduct other reasonably prudent measures      
calculated to ensure a reasonably thorough review of any particular business    
opportunity; however, due to time constraints of management, these activities   
may be limited.                                                                 

The Company is unable to predict the time as to when and if it may    
actually participate in any specific business endeavor.  The Company            
anticipates that proposed business ventures will be made available to it        
through personal contacts of directors, executive officers and principal        
stockholders, professional advisors, broker dealers in securities, venture      
capital personnel, members of the financial community and others who may        
present unsolicited proposals.  In certain cases, the Company may agree to pay  
a finder's fee or to otherwise compensate the persons who submit a potential    
business endeavor in which the Company eventually participates.  Such persons   
may include the Company's directors, executive officers, beneficial owners or   
their affiliates.  In the event, such fees may become a factor in negotiations  
regarding a potential acquisition and, accordingly, may present a conflict of   
interest for such individuals.                                                  

The possibility exists that the Company may acquire or merge with a   
business or company in which the Company's executive officers, directors,       
beneficial owners or their affiliates may have an ownership interest.  Current  
Company policy does not prohibit such transactions.  Because no such            
transaction is currently contemplated, it is impossible to estimate the         
potential pecuniary benefits to these persons.                                  

Further, substantial fees are often paid in connection with the       
completion of these types of acquisitions, reorganizations or mergers, ranging  
from a small amount to as much as $500,000.  These fees are usually divided     
among promoters or founders, after deduction of legal, accounting and other     
related expenses, and it is not unusual for a portion of these fees to be paid  
to members of management or to principal stockholders as consideration for      
their agreement to retire a portion of the shares of common stock owned by      
them.  It is not expected that such fees will be paid to management of the      
Company in connection with any such transaction.  However, in the event that    
such fees are paid, they may become a factor in negotiations regarding any      
potential acquisition by the Company and, accordingly, may present a conflict   
of interest for such individuals.                                               

Principal Products and Services.                                                

The limited business operations of the Company, as now contemplated,  
involve those of a "blank check" company.  The only activities to be conducted  
by the Company are to manage its current assets and to seek out and             
investigate the acquisition of any viable business opportunity by purchase and  
exchange for securities of the Company or pursuant to a reorganization or       
merger through which securities of the Company will be issued or exchanged.     

Distribution Methods of the Products or Services.                               

 Management will seek out and investigate business opportunities through
every reasonable available fashion, including personal contracts,               
professionals, securities broker dealers, venture capital personnel, members    
of the financial community and others who may present unsolicited proposals;    
the Company may also advertise its availability as a vehicle to bring a         
company to the public market through a "reverse" reorganization or merger.      

Status of any Publicly Announced New Product or Service.                        

None; not applicable.                                                 

Competitive Business Conditions.                                                

 Management believes that there are literally thousands of "blank check"
companies engaged in endeavors similar to those engaged in by the Company;      
many of these companies have substantial current assets and cash reserves.      
Competitors also include thousands of other publicly-held companies whose       
business operations have proven unsuccessful, and whose only viable business    
opportunity is that of providing a publicly-held vehicle through which a        
private entity may have access to the public capital markets.  There is no      
reasonable way to predict the competitive position of the Company or any other  
entity in the strata of these endeavors; however, the Company, having           
virtually no operating history, will likely be at a competitive disadvantage    
in competing with entities which have recently completed IPO's and have         
operating histories when compared with the extremely limited operating history  
of the Company.                                                                 

Sources and Availability of Raw Materials and Names of Principal Suppliers.     

None; not applicable.                                                 

Dependence on One or a Few Major Customers.                                     

None; not applicable.                                                 

Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or   
Labor Contracts.                                                                

None; not applicable.                                                 

Need for any Governmental Approval of Principal Products or Services.           

None; not applicable.                                                 

Effect of Existing or Probable Governmental Regulations on Business.            

The integrated disclosure system for small business issuers adopted by
the Securities and Exchange Commission in Release No. 34-30968 and effective    
as of August 13, 1992, substantially modified the information and financial     
requirements of a "Small Business Issuer," defined to be an issuer that has     
revenues of less then $25 million; is a U.S. or Canadian issuer; is not an      
investment company; and if a majority-owned subsidiary, the parent is also a    
small business issuer; provided, however, an entity is not a small business     
issuer if it has a public float (the aggregate market value of the issuer's     
outstanding securities held by non-affiliates) of $25 million or more.          

  The Securities and Exchange Commission, state securities commissions and
the North American Securities Administrators Association, Inc. ("NASAA") have   
expressed an interest in adopting policies that will streamline the             
registration process and make it easier for a small business issuer to have     
access to the public capital markets.  The present laws, rules and regulations  
designed to promote availability to the small business issuer of these capital  
markets and similar laws, rules and regulations that may be adopted in the      
future will substantially limit the demand for "blank check" companies like     
the Company, and may make the use of these companies obsolete.                  

Research and Development.                                                       

None; not applicable.                                                 

Cost and Effects of Compliance with Environmental Laws.                         

   None; not applicable.  However, environmental laws, rules and regulations
may have an adverse effect on any business venture viewed by the Company as an  
attractive acquisition, reorganization or merger candidate, and these factors   
may further limit the number of potential candidates available to the Company   
for acquisition, reorganization or merger.                                      

Number of Employees.                                                            

None.                                                                 

Item 2.     Description of Property.                                            

  The Company has virtually no assets, property or business; its principal
executive office address and telephone number are the office address and        
telephone number of its President, David N. Nemelka, and are currently          
provided at no cost.  Because the Company has no business, its activities will  
be limited to keeping itself in good standing in the State of Nevada and to     
preparing and filing the appropriate reports with the Securities and Exchange   
Commission.  These activities have consumed an insubstantial amount of          
management's time.                                                              

Item 3.     Legal Proceedings.                                                  

The Company is not a party to any pending legal proceeding.  To the   
knowledge of management, no federal, state or local governmental agency is      
presently contemplating any proceeding against the Company.  No director,       
executive officer or affiliate of the Company or owner of record or             
beneficially of more than five percent of the Company's common stock is a       
party adverse to the Company or has a material interest adverse to the Company  
in any proceeding.                                                              

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

No matter was submitted to a vote of the Company's security holders   
during the fourth quarter of the fiscal year covered by this Report.            

PART II           

Item 5.  Market for Common Equity and Related Stockholder Matters.              

Market Information.                                                             

 The Company's common stock was only recently listed on the OTC Bulletin
Board of the NASD under the symbol "KARA" on December 2, 1996; and there was    
no listing or any market whatsoever for the Company's securities for at least   
the five previous fiscal years.                                                 

No assurance can be given that any "established public market"  will  
develop in the common stock of the Company, regardless of whether the Company   
is successful in completing any acquisition, reorganization or merger deemed    
by management to be beneficial for the Company, or if any such market does      
develop, that it will continue or be sustained for any period of time.  Sales   
of "restricted" securities by current and past members of management under      
Rule 144 could also have an adverse effect on any market that does develop in   
the future; this is also the case with respect to the shares issued to certain  
consultants pursuant to an S-8 Registration Statement filed with the            
Securities and Exchange Commission.  See the heading "Business Development" of  
Item 1 of this Report.                                                          

   The following table sets forth the high and low bid prices for the Common
Stock based on closing transactions during each specified period as reported    
by the Over-the-Counter Bulletin Board, which prices reflect inter-dealer       
prices without retail mark-up, mark-down or commission and may not necessarily  
represent actual transactions:                                                  

Fiscal 1997                   High                 Low                

1st Quarter                   .125                 .125               
2nd Quarter                   .50                  .50                
3rd Quarter                   N/A                   N/A               
4th Quarter                  $5.00                 $4.00              

Holders.                                                                        

   The number of record holders of the Company's common stock as of the date
of this Report is approximately 395.                                            

Dividends.                                                                      

The Company has not declared any cash dividends with respect to its   
common stock and does not intend to declare dividends in the foreseeable        
future.  The future dividend policy of the Company cannot be ascertained with   
any certainty, and until the Company completes any acquisition, reorganization  
or merger, as to which no assurance may be given, no such policy will be        
formulated.  There are no material restrictions limiting, or that are likely    
to limit, the Company's ability to pay dividends on its common stock.           

Item 6.      Management's Discussion and Analysis or Plan of Operation.         

Plan of Operation.                                                              

The Company has not engaged in any material operations since its      
inception or during the calendar year ended December 31, 1997.                  

  The Company's plan of operation for the next 12 months is to continue to
seek the acquisition of assets, properties or businesses that may benefit the   
Company and its stockholders.  Management anticipates that to achieve any such  
acquisition, the Company will issue shares of its common stock as the sole      
consideration for such acquisition.                                             

During the next 12 months, the Company's only foreseeable cash        
requirements will relate to maintaining the Company in good standing or the     
payment of expenses associated with reviewing or investigating any potential    
business venture, which the Company expects to pay from advances from           
management.                                                                     

Results of Operations.                                                          

   The Company did not engage in any business activities during the calendar
year ended December 31, 1997,  nor the year ended December 31, 1996.  General   
and administrative expenses for the period ended December 31, 1996, were $      
5,841, compared with $ 21,754 for the period ended December 31, 1997.  These    
increased expenses related primarily to bringing the Company's financial        
statements current and related expenses.                                        

Liquidity.                                                                      

During the year ended December 31, 1997, 4,000,000 shares of the      
Company's "unregistered" and "restricted" common stock were issued to David N.  
Nemelka in consideration of $20,000.                                            

Other Information.                                                              

 On May 1, 1997, the Internal Revenue Service issued Kara International,
Inc. a new EIN on Notice CP 576 A.  The new number is 84-1398635.               

Item 7.     Financial Statements.                                               

Financial Statements for the years ended December 31, 1997 and 1996.  

Independent Auditor's report.                                         

Balance Sheets - December 31, 1997 and 1996.                          

   Statements of Operations, for the years ended December 31, 1997 and 1996,
and for the cumulative period from January 1, 1989 Through December 31, 1997.   

Statements of Stockholders' Equity (Deficit) for the cumulative period
from January 1, 1989 through December 31, 1997.                                 

  Statements of Cash Flows for the years ended December 31, 1997 and 1996,
and for the cumulative period from January 1, 1989 through December 31, 1997.   

Notes to the Financial Statements.                                    

Item 8.     Changes in and Disagreements with Accountants on Accounting and     
Financial Disclosure.                                                           

There has been no change in the principal accountants of the Company  
during the past three years.                                                    

PART III      

Item 9.     Directors, Executive Officers, Promoters and Control Persons;       
Compliance with Section 16(a) of the Exchange Act.                              

Identification of Directors and Executive Officers.                             

The following table sets forth the names of all current directors and 
executive officers of the Company and those persons who served as directors     
and executive officers of the Company during the fiscal year ended December     
31, 1997.  These persons will serve until the next annual meeting of the        
stockholders (to be held within 180 days after the end of each fiscal year) or  
until their successors are elected or appointed and qualified, or their prior   
resignation or termination.                                                     

                                         Date of       Date of
                                         Election or   Termination
Name                        Held                Designation  or Resignation     

David N. Nemelka       Director and               4/11/97          *            
Pres/Sec/Treasurer                

David C. Merrell       Director and               5/4/94        4/11/97         
President                         

Michael C. Brown       Director and                                             
              Sec/Treasurer              5/4/94        4/11/97

* This person presently serves in the capacities indicated.           

Business Experience.                                                            

   David N. Nemelka   Since December 1994, he has been the President and CEO
of McKinley Capital, an investment consulting company.  From June 1993 to July  
1994, he was an Assistant Brand Manager at Proctor and Gamble in Cincinnati,    
Ohio.  From September 1991 to May 1993, he attended the Wharton Business        
School at the University of Pennsylvania from which he earned a MBA.  From      
August 1989 to August 1991, he served as CEO of  Northstar Adventures, an       
Alaska based fishing lodge,  which he co-founded.  From January 1989 to July    
1994, he served as President of Tri-Nem, Inc. a public company that was merged  
in July 1994 with Innovus Multimedia, Inc., a software development company.     
From August 1988 to August 1991, he served as President and co-founder of       
Certified Share Transfer Company, a stock transfer company.  Mr. Nemelka        
received his B.S. in business finance from Brigham Young University and his     
MBA in finance from the Wharton Business School.                                

Significant Employees.                                                          

  The Company has no employees who are not executive officers, but who are
expected to make a significant contribution to the Company's business.          

Family Relationships.                                                           

There are no family relationships between any directors or executive  
officer of the Company, either by blood or by marriage.                         

Involvement in Certain Legal Proceedings.                                       

 Except as stated below, during the past five years, no director, person
nominated to become a director, executive officer, promoter or control person   
of the Company:                                                                 

(1) was a general partner or executive officer of any business against
which any bankruptcy petition was filed, either at the time of the bankruptcy   
or two years prior to that time;                                                

  (2) was convicted in a criminal proceeding or named subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);    

(3) Was subject to any order, judgment or decree, not subsequently    
reversed, suspended or vacated, of any court of competent jurisdiction,         
permanently or temporarily enjoining, barring, suspending or otherwise          
limiting his involvement in any type of business, securities or banking         
activities; or                                                                  

 (4) was found by a court of competent jurisdiction (in a civil action),
the Securities and Exchange Commission or the Commodity Futures Trading         
Commission to have violated a federal or state securities or commodities law,   
and the judgement has not been reversed, suspended or vacated.                  

Compliance with Section 16(a) or the Exchange Act.                              

The Company is not subject to Section 16(a) of the Securities Exchange
Act of 1934, as amended, as the Company files its Reports pursuant to Section   
15(d) thereof.                                                                  

Item 10.  Executive Compensation.                                               

The following table sets forth the aggregate compensation paid by the 
Company for services rendered during the periods indicated:                     

SUMMARY COMPENSATION TABLE        

                                        Long Term Compensation

       Annual Compensation        Awards       Payouts
(a)           (b)      (c)     (d)    (e)      (f)    (g)     (h)   (i)         
                                             Secur-        All
                              Other            ities         Other
Name and     Year or                 Annual   Rest-   Under-  LTIP  Com-        
Principal    Period   Salary  Bonus  Compen-  ricted  lying   Pay-  pensa-      
Position      Ended    ($)     ($)   sation    Stock  Options out   tion*       

David N.                                                                        
Nemelka,    12/31/97    0       0       0       0        0     0      0         
President                                                                       
Sec/Treas                                                                       
Director                                                                        

David C.    12/31/96    0       0       0       0        0     0      0         
Merrell,    12/31/97    0       0       0       *        0     0      0         
President,                                                                      
Director                                                                        

Michael C.                                                                      
Brown,      12/31/96    0       0       0       0        0     0      0         
Sec/Treas   12/31/97    0       0       0       *        0     0      0         
Director                                                                        

* For information regarding compensation paid to Messrs. Merrell and  
Brown by the issuance of "unregistered" and "restricted" securities of the      
Company, see the heading "Business Development" of Item 1 of this Report.       

  No other cash compensation, deferred compensation of long-term incentive
plan awards were issued or granted to the Company's management during the       
calendar years ending December 31, 1997 or 1996, or the period ending on the    
date of this Report.                                                            

Compensation of Directors.                                                      

There are no standard arrangements pursuant to which the Company's    
directors are compensated for any services provided as director.  No            
additional amounts are payable to the Company's directors of Committee          
participation or special assignments.                                           

There are no arrangements pursuant to which any of the Company's      
directors was compensated during the Company's last completed fiscal year for   
any service provided as director.                                               

Employment Contracts and Termination of Employment and Change-in-Control        
Arrangements.                                                                   

There are no employment contracts, compensatory plans or arrangements,
including payments to be received from the Company, with respect to any         
director or executive officer of the Company which would in any way result in   
payments to any such person because of his or her resignation, retirement or    
other termination or employment with the Company or any subsidiary, any change  
in control of the Company, or a change in the person's responsibilities         
following a change in control of the Company.                                   

Item 11.     Security Ownership of Certain Beneficial Owners and Management.    

Security Ownership of Certain Beneficial Owners.                                

   The following table sets forth the shareholdings of those persons who own
more than five percent of the Company's common stock as of December 31, 1997,   
and to the date of this Report, with the computations being based upon          
4,559,761 shares of common stock being outstanding:                             

        Number of                    Number of
       Shares                       Shares
                     Beneficially     Percent     Beneficially     Percent
Name and Address      Owned - 12/31/97   of Class  Owned - 2/13/97    of Class  

David N. Nemelka         4,004,000        87.7%       4,004,000       87.7%     
897 South Artistic Cr.                                                          
Springville, UT 84663                                                           

*Summer Ventures, Inc.     259,000         5.7%         184,600         4%      
1310 East 1600 South                                                            
Mapleton, UT 84664                                                              

* Summer Ventures is wholly-owned by David R. Nemelka, the father of  
David N. Nemelka.  David R. Nemelka disclaims an "affiliate" status because     
these persons do not reside together, each make his own investment decisions    
and David N. Nemelka owns sufficient voting securities of the Company to elect  
all directors and executive officers.                                           

Security Ownership of Management.                                               

The following table sets forth the shareholdings of the Company's     
directors and executive officers as of December 31, 1997, and to the date of    
this Report, with the computations being based upon 4,559,761 shares of common  
stock being outstanding:                                                        

Number of Shares      
                    Beneficially Owned           Percentage of
                As of 12/31/97                   Class

David N. Nemelka*               4,004,000                      87.7%            
897 S. Artistic Circle                                                          
Springville, UT 84663                                                           

All officers and directors                                                      
as a group (1)                  4,004,000                      87.7%            

* See Item 9 of this Report for information concerning the offices or 
other capacities in which the foregoing person served with the Company.         

Changes in Control.                                                             

  There are no present arrangements or pledges of the Company's securities
which may result in a change in control of the Company.                         

Item 12.   Certain Relationships and Related Transactions.                      

Transactions with Management and Others.                                        

Except as indicated under Item 1 of this Report, there have been no   
material transactions, series of similar transactions, currently proposed       
transactions, or series of similar transactions, to which the Company or any    
of its subsidiaries was or is to be a party, in which the amount involved       
exceeded $60,000 and in which any director or executive officer, or any         
security holder who is known to the Company to own of record or beneficially    
more than five percent of the Company's common stock, or any member of the      
immediate family of any of the foregoing persons, had a material interest.      

Certain Business Relationships.                                                 

Except as indicated under Item 1 of this Report, there have been no   
material transactions, series of similar transactions, currently proposed       
transactions, or series of similar transactions, to which the Company or any    
of its subsidiaries was or is to be a party, in which the amount involved       
exceeded $60,000 and in which any director or executive officer, or any         
security holder who is known to the Company to own of record or beneficially    
more than five percent of the Company's common stock, or any member of the      
immediate family of any of the foregoing persons, had a material interest.      

Parents of the Issuer.                                                          

The Company has no parents.                                           

Transactions with Promoters.                                                    

Except as indicated under Item 1 or this Report, there have been no   
material transactions, series of similar transactions, currently proposed       
transactions, or series of similar transactions, to which the Company or any    
of its subsidiaries was or is to be a party, in which the amount involved       
exceeded $60,000 and in which any promoter or founder, or any member of the     
immediate family of any of the foregoing persons, had a material interest.      

   PART IV

Item 13.   Exhibits and Reports on Form 8-K.                                    

(a) (i)  Documents Incorporated Herein by Reference.                  

                              Where Incorporated
                          In This Report

10-KSB Annual Report for the                    Part I                          
fiscal year ended December 31, 1996                                             

Initial Articles of Incorporation of                          
R & D Connections, Inc.                                       

Articles of Amendment regarding name                          
change to "Kara International, Inc."                          

Certificate of Amendment regarding                            
reverse split                                                 

Financial Data Schedule                                       

S-8 Registration Statement                     Part I                           

Opinion regarding Legality                                  

Consent of Leonard W. Burningham, Esq.                      

Consent of Pritchett, Siler & Hardy,                        
Certified Public Accountants                                

Consultant Compensation Agreement No. 1                     

8-K Current Report dated April 11, 1997         Part I                          

Certificate of Amendment respecting                         
reverse split                                               

(ii)  Exhibits.                                               

Exhibit                                                                         
Number                     Description                                          

27                   Financial Data Schedule                                

(b)  Reports on Form 8-K.                                             

8-K Current Report dated September 16, 1997.                          

News Release                                                

SIGNATURES            

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

            KARA INTERNATIONAL, INC.

Date:2/13/98                      By   /s/ David N. Nemelka                     
                     President, Secretary and Director

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KARA INTERNATIONAL, INC.    
[A Development Stage Company]     

FINANCIAL STATEMENTS        

December 31, 1997 AND 1996      

PRITCHETT, SILER & HARDY, P.C.      

INDEPENDENT AUDITORS' REPORT        

Board of Directors                                                              
KARA INTERNATIONAL, INC.                                                        
Salt Lake City, Utah                                                            

We have audited the accompanying balance sheets of Kara International, Inc. [a  
development stage company] at December 31, 1997 and 1996, and the related       
statements of operations, stockholders' equity (deficit) and cash flows for     
the years ended December 31, 1997 and 1996.  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 audits.           

We conducted our audits in accordance with generally accepted auditing          
standards.  Those standards require that we plan and perform the audit to       
obtain reasonable assurance about whether the financial statements are free of  
material misstatements.  An audit includes examining, on a test bases,          
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 financial statements audited by us present fairly, in all   
material respects, the financial position of Kara International, Inc. as of     
December 31, 1997 and 1996, and the results of its operations and its cash      
flows for the years ended December 31, 1997 and 1996, in conformity with        
generally accepted accounting principles.                                       

The accompanying financial statements have been prepared assuming the Company   
will continue as a going concern.  As discussed in Note 6 to the financial      
statements, the Company has suffered losses since inception, has a              
stockholders' deficit and has expended most of its working capital, raising     
substantial doubt about its ability to continue as a going concern.             
Managements' plans in regards to these matters are also described in Note 6.    
The financial statements do not include any adjustments that might result from  
the outcome of these uncertainties.                                             

/s/ Pritchett, Siler & Hardy, P.C.                                            

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                            KARA INTERNATIONAL, INC.                  
                         [A Development Stage Company]                
                                BALANCE SHEETS                        


                              ASSETS                                  

                                  Dec. 31, 1997          Dec. 31, 1996
                                                                      
CURRENT ASSETS:                                                       
  Cash                            $ 491                      163      
       Total Current Assets         491                      163      

            LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)            

CURRENT LIABILITIES:                                                  
  Accounts payable                3,804                      723      
  Advance from shareholder          -                      4,749      
       Total Current Liabilities  3,804                    5,472      

STOCKHOLDERS' EQUITY (DEFICIT):                                       
  Common stock, $.001 par value,                                      
  50,000,000 shares authorized,                                       
  2,048,810 shares issued and                                         
  Outstanding                     4,560                      410      
  Capital in excess of par                                            
    value                     1,141,367                1,121,767      
  Retained earnings (deficit)(1,134,783)              (1,134,783)     
  Earnings (deficit)                                                  
    accumulated during the                                            
    development stage           (14,457)                   7,297      
       Total Stockholders'                                            
           Equity (Deficit)      (3,313)                  (5,309)     
                             $      491             $        163      
                                                                [Download Table]
                            KARA INTERNATIONAL, INC.                      
                         [A Development Stage Company]                    
                            STATEMENTS OF OPERATIONS                      

                             For the Year   For the Year   Cumulative From
                                Ended          Ended       January 1, 1989
                               Dec. 31        Dec.  31     through Dec. 31
                                1997            1996             1997     
                                                                          
REVENUE:                                                                  
     Interest income         $    --        $    --         $   --        

EXPENSES:                                                                 
     General and                                                          
       administration          21,754          5,841           28,962     
     Interest Expense             --             --           161,459     
     Total Expenses:           21,754          5,841          190,421     

 LOSS FROM CONTINUING OPERATIONS                                          
   BEFORE INCOME TAXES AND                                                
   DISCONTINUED OPERATIONS    (21,754)        (5,841)        (190,421)    

CURRENT INCOME TAX EXPENSE       --             --               --       

DEFERRED INCOME TAX EXPENSE      --             --               --       

(LOSS) BEFORE DISCONTINUED                                                
   OPERATIONS                 (21,754)        (5,841)        (190,421)    

(LOSS) FROM OPERATIONS OF                                                 
   DISCONTINUED SUBSIDIARY                                                
    (NO TAX EFFECT)              --              --           (27,426)    

GAIN ON DISPOSAL OF DISCONTINUED                                          
   SUBSIDIARY                    --              --           203,390     

NET INCOME (LOSS)            $(21,754)       $(5,841)        $(14,457)    

INCOME (LOSS) PER COMMON SHARE                                            
     (Loss) from continuing                                               
     Operations              $   (.01)       $  (.00)        $   (.40)    
     (Loss) from discontinued                                             
     Operations                   .00            .00             (.06)    
     Gain on disposal of                                                  
     discontinued operations      .00            .00              .43     

INCOME (LOSS) PER COMMON SHARE: $(.01)       $  (.00)        $   (.03)    

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                               KARA INTERNATIONAL, INC.                       
                            [A development Stage Company]                     

                      STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)             
                    FOR THE CUMULATIVE PERIOD FROM JANUARY 1, 1989            
                               THROUGH DECEMBER 31, 1997                      

                                                                   Earnings   
                                                                 Accumulated  
                           Common Stock   Capital in   Retained   During the  
                                          Excess of    Earnings   Development 
                          Shares   Amount Par Value    (Deficit)     Stage    
                                                                              
BALANCE,                                                                      
     January 1, 1989      13,952   $   14  $ 688,805  $(1,134,783) $   --     

Net income for the                                                            
     period ended                                                             
     December 31, 1989      --        --        --           --      160,520  

BALANCE,                                                                      
     December 31, 1989    13,952        14   688,805   (1,134,783)   160,520  

Net loss for the                                                              
     year ended                                                               
     December 31, 1990      --         --       --          --       (31,300) 

BALANCE,                                                                      
     December 31, 1990    13,952        14   688,805   (1,134,783)   129,220  

Net loss for the                                                              
     year ended                                                               
     December 31, 1991      --         --       --           --      (31,300) 

BALANCE,                                                                      
     December 31, 1991    13,952        14   688,805   (1,134,783)    97,920  

Net loss for the                                                              
     year ended                                                               
     December 31, 1992      --         --       --           --      (31,300) 

BALANCE,                                                                      
     December 31, 1992    13,952        14   688,805   (1,134,783)    66,620  

Net loss for the                                                              
     year ended                                                               
     December 31, 1993      --         --       --           --      (31,300) 

BALANCE,                                                                      
     December 31, 1993    13,952        14   688,805   (1,134,783)    35,320  

Issuance of 16,000                                                            
shares to a related                                                           
party as payment for a                                                        
judgment related to a                                                         
note payable and                                                              
related interest                                                              
     November, 1994       16,000        16   431,443        --           --   

Net loss for the                                                              
     year ended                                                               
     December 31, 1994      --         --      --           --       (21,895) 

BALANCE,                                                                      
     December 31, 1994    29,952        30 1,120,248   (1,134,783)    13,425  

Issuance of 379,810                                                           
shares to officers and                                                        
shareholders to repay                                                         
amounts previously                                                            
advanced for                                                                  
investments at $.005                                                          
per share                                                                     
     January, 1995       379,810       380     1,519        --          --    

Net loss for the                                                              
     year ended                                                               
     December 31, 1995      --         --       --          --          (287) 

BALANCE,                                                                      
     December 31, 1995   409,761       410 1,121,767   (1,134,783)    13,138  

Net loss for the                                                              
     period ended                                                             
     December 31, 1996     --           --      --           --       (5,841) 

BALANCE,                                                                      
     December 31, 1996   409,761       410 1,121,767   (1,134,783)     7,297  

Issuance of 150,000                                                           
shares in payment of                                                          
consulting fees at                                                            
$.005 per share          150,000       150     3,600         --          --   

Issuance of 4,000,000                                                         
shares for cash at                                                            
$.005 per share, to an                                                        
officer/director of                                                           
the Company            4,000,000     4,000    16,000         --          --   

Net loss for the                                                              
     year ended                                                               
     December 31, 1997      --         --       --           --       (21,754)

BALANCE,                                                                      
     December 31, 1997 4,559,761     4,560 1,141,367  $(1,134,783)   $(14,457)
                                                                [Download Table]
                           KARA INTERNATIONAL, INC.                          
                        [A Development Stage Company]                        
                           STATEMENTS OF CASH FLOWS                          

                               For the Year   For the Year    Cumulative from
                                  Ended          Ended        January 1, 1989
                               December 31    December 31       December 31  
                                  1997           1996               1997     
                                                                             
Cash Flows to operating Activities:                                          
Net income (loss)              $(21,754)       $ (5,841)        $  7,297     

Adjustments to reconcile net                                                 
   Income to net cash used by                                                
   Operating activities:                                                     
      Non-cash expenses (income)   --              --            (14,505)    
      Changes in assets and liabilities:                                     
          Accounts payable        3,081             723              723     

Net Cash Flows to Operating                                                  
   Activities                   (18,673)         (5,118)          (6,485)    

Cash Flows from Investing                                                    
   Activities                      --              --               --       

Net Cash Flows used by                                                       
    Investing Activities           --             --               --        

Net Cash From Financing Activities:                                          
   Proceeds from common                                                      
   stock issuance               23,750            --               --        
   Advances by shareholders     (4,749)         4,668             6,648      

Net Cash From Financing                                                      
   Activities                   19,001          4,668             6,648      

Net Increase (Decrease) in Cash    328           (450)              163      

Cash at Beginning of Period        163            613               --       

Cash at End of Period            $ 491        $   163            $  163      

Supplemental Disclosures of Cash Flow information:                           
     Cash paid during the period for:                                        
          Interest               $ --         $   --             $  --       
          Income taxes           $ --         $   --             $  --       

Supplemental schedule of Non-cash Investing and Financing Activities:           
For the period ended December 31, 1997:                                         
The Company issued 150,000 shares of common stock in payment of consulting      
services rendered, valued at $3,750 or $.001 per share                          

For the period ended December 31, 1996:                                         
The Company issued 1,899,048 shares of common stock in payment of advances by   
shareholders in the amount of $1,899.                                           

      KARA INTERNATIONAL, INC.
     [A Development Stage Company]

     NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

Organization - The Company was incorporated in the State of Nevada under the    
name of R & D Connections on April 22, 1985.  The Company completed a public    
offering of common stock during 1986 [See Note 5].  On September 22, 1986, the  
Company acquired all of the outstanding shares of Kara Incorporated, a Utah     
corporation, that manufactured and marketed candy, and changed its name to      
Kara International, Inc. [the Company].  From September 1986, the Company       
commenced operating the business of marketing and developing confectionary      
products.  The Company abandoned its subsidiary operation during the last       
quarter of 1988 [See Note 3].  The Company is not currently engaged in any      
business activity, but is seeking potential investments or business             
acquisitions and consequently is considered a developmental stage company as    
defined in SFAS No. 7.  The Company has, at the present time, not paid any      
dividends and any dividends that may be paid in the future will depend upon     
the financial requirements of the Company and other relevant factors.           

Income (Loss) Per share - The computation of income (loss) per share is based   
on the weighted average number of shares outstanding during the period          
presented.                                                                      

Statement of Cash Flows - For purposes of the statement of cash flows, the      
Company considers all highly liquid debt investments purchased with a maturity  
of three months or less to be cash equivalents.                                 

Accounting Estimates - The preparation of the financial statements in           
conformity with generally accepted accounting principles requires management    
to make estimates and assumptions that affect the reported amounts of assets    
and liabilities, the disclosures of contingent assets and liabilities at the    
date of the financial statements and the reported amount of revenues and        
expenses during the reporting period.  Actual results could differ from those   
estimated.                                                                      

Reclassification - The financial statements for periods prior to 1996 have      
been reclassified to conform to the titles and headings used in the 1996        
financial statements.                                                           

Stock Split  -   During April, 1997, the Board of Directors authorized a 1 for  
5 reverse stock split of the issued and outstanding common shares of the        
Company.  The Company retained the authorized shares at 50,000,000 shares with  
the par value at $.001 per share.  During January 1995, the Board of Directors  
authorized a 1 for 250 reverse stock split of the issued and outstanding        
common shares of the Company.  The Company retained the authorized shares at    
50,000,000 shares with the par value at $.001 per share.  The financial         
statements for all periods presented have been restated to reflect the effect   
of the common stock split.                                                      

NOTE 2 - INCOME TAXES                                                           

The Company accounts for income taxes in accordance with Statement of           
Financial Accounting Standards No. 109 "Accounting for Income Taxes".  FASB     
109 requires the Company to provide a net deferred tax asset/liability equal    
to the expected future tax benefit/expenses of temporary reporting differences  
between book and tax accounting methods and any available operating loss or     
tax credit carryforwards.                                                       

The Company has available at December 31, 1997, unused operating loss           
carryforwards of approximately $1,000,000 which may be applied against future   
taxable income and which expire in various years from 1999 through 2012.        
However, due to substantial changes in the Company's ownership, there will be   
limitations on the actual amount of net operation loss carryforwards which can  
be utilized by the Company.  The amount of and ultimate realization of the      
benefits from the operating loss carryforwards for income tax purposes is       
dependent, in part, upon the tax laws in effect, the future earnings of the     
Company, and other future events, the effects of which cannot be determined.    
Because of the uncertainty surrounding the realization of the loss              
carryforwards the Company has established a valuation allowance equal to the    
amount of the loss carryforwards and therefore, no deferred tax asset has been  
recognized for the loss carryforwards.  The change in the valuation allowance   
is equal to the tax effect of the current periods net loss.                     

NOTE 3 - DISCONTINUED OPERATIONS                                                

On September 22, 1986, the Company acquired all of the outstanding shares of    
Kara Incorporated, a Utah corporation, by the issuance of 7,193 (restated)      
shares of the Company stock to the shareholders of Kara Incorporated in a tax   
free reorganization wherein Kara Incorporated became a wholly-owned subsidiary  
of the Company.  The business combination was accounted for using the purchase  
method of accounting.  The investment in the subsidiary was recorded in the     
financial statements based on the net asset value of the subsidiary at June     
30, 1986, which was $146,992.  Kara Incorporated manufactured and marketed      
candy.  The Company operated its subsidiary candy company through 1988.         
During the last quarter of 1988, the Company abandoned and discontinued all of  
its candy manufacturing and marketing operations.  All of the assets of the     
company were foreclosed and used to satisfy liabilities.  At the point in time  
when the company discontinued its operations, there were 13,952 shares of       
common stock issued and outstanding The Company also had certain notes payable  
that were not satisfied from the discontinued operation.  During 1994, in       
settlement of a judgment from the court, the Company issued 16,000 shares of    
common stock to satisfy the notes payable including principal of $270,000 and   
accrued interest of $161,459.  The discontinued operations have been            
segregated on the Statements of Operations.  There was a $203,390 gain          
recorded during 1989 for the disposal of the discontinued operations.           

NOTE 4 - RELATED PARTY TRANSACTIONS                                             

Rent - The Company has not had a need to rent office space.  An officer of the  
Company is allowing the Company to use his address, as needed, at no expense    
to the Company.                                                                 

Management Compensation - During the periods presented the Company did          
not pay any compensation to its officers and directors.  However, 50,000        
shares each were issued to two former officers and directors as compensation    
during February, 1997, valued at $1,250 each or $.005 per share. per share.     

Advance from Shareholder - During 1994, a shareholder/officer advanced $1,080   
to the Company.  An additional advance of $900 was made during 1995.  At        
December 31, 1995 the unpaid balance owing the shareholder/officer was $ 81.    
During 1996, a shareholder made advances of $ 4,668 to the Company.  During     
1997, the Company repaid advances totaling $4,749 to an officer/shareholder.    
At December 31, 1997 the advances owing a shareholder/officer amounted to $0.   

Stock Issued - In January, 1995, the Company issued 379,810 shares to           
shareholders and officers to reduce shareholder advances, valued at $.005 per   
share.                                                                          

NOTE 5 - COMMON STOCK                                                           

During April, 1997, the Company issued 4,000,000 shares of common stock to an   
officer/director of the Company for $20,000 cash or $.005 per share.            

During February, 1997, the Company issued 50, 000 shares of common stock to     
consultants of the Company for compensation, valued at $1,250 or $.005 per      
share.                                                                          

During February, 1997, the Company issued 100,000 shares of common stock to     
former officers/directors of the Company for compensation, valued at $2,500 or  
$.005 per share                                                                 

Public Stock Offering - The Company previously completed a public offering of   
2,123 shares of its authorized but unissued common stock.  The offering was     
registered on Form S-18 in accordance with the Securities Act of 1933.  Total   
proceeds of the offering amounted to $265,360 and stock offering costs of       
$68,251 were offset against capital in excess of par value.                     

Debt Cancellation - During November, 1994, the Company issued 16,000 shares of  
common stock as payment in full for a judgment related to a note payable of     
$270,000 and related accrued interest of $161,459.                              

Officer/Shareholder - In January, 1995, the Company issued 379,810 shares of    
common stock to shareholders and officers to repay previous advances made by    
the shareholders.                                                               

Stock Split - On April 9, 1997, the Board of Directors authorized a 1 for 5     
reverse stock split of the issued and outstanding common shares of the          
Company.  The Company retained the authorized shares at 50,000,000 shares with  
the par value at $.001 per share.  During January 1995, the Board of Directors  
authorized a 1 for 250 stock reverse of  the issued and outstanding common      
shares of the Company.  The Company retained the authorized shares at           
50,000,000 shares with the par value at $.001 per share.  The financial         
statements for all periods presented have been restated to reflect the reverse  
split.                                                                          

NOTE 6- GOING CONCERN                                                           

The accompanying financial statements have been prepared in conformity with     
generally accepted accounting principles which contemplate continuation of the  
Company as a going concern.  However, the Company has incurred losses since     
inception, has expended most of its working capital and has not yet been        
successful in establishing profitable operations.  These factors raise          
substantial doubt about the ability of the Company to continue as a going       
concern.  In this regard, management is proposing to raise additional funds     
through loans and/or through additional sales of its common stock or through    
the acquisition of another company by issuing common stock.  There is no        
assurance that the Company will be successful in raising this additional        
capital.                                                                        

The financial statements do not include any adjustments relating to the         
recoverability and classification of recorded asset amounts or the amounts and  
classification of liabilities that might be necessary should the company be     
unable to obtain additional financing or establish profitable operations.       

NOTE 7 - CONTINGENCIES                                                          

During 1989, the Company discontinued the candy manufacturing and marketing     
operations of its subsidiary.  Management believes that the Company is not      
liable for any existing liabilities related to its former operations and        
subsidiary but the possibility exists that creditors and others seeking relief  
from the subsidiary may also include the Company in claims and suits pursuant   
to the parent subsidiary relationship which existed between the Company and     
its subsidiary.  The Company is not currently named in any such suits nor is    
it aware of any such suits against is former subsidiary.  It is the belief of   
Management and their Counsel that the Company would be successful in defending  
against any such claims and that no material negative impact on the financial   
position of the Company would occur.  Management and counsel further believe    
that with the passage of time the likelihood of any such claims being raised    
is becoming more remote and that various Statutes of Limitations should         
provide adequate defenses for the Company.  Consequently, the financial         
statements do not reflect any accruals or allowances for any such claims.       

The Company has approximately 68 shares of common stock outstanding for which   
it is unable to identify a shareholder.  The Company is contingently liable     
should the unidentified shares someday be traded to a third party.  The shares  
are not included in the outstanding stock of the Company.                       

NOTE 8 - SUBSEQUENT EVENTS                                                      

Proposed Business Acquisition                                                   

The Company continues to investigate and seek potential investments or          
business acquisitions, which would likely be structured as a stock-for-stock    
business acquisition.                                                           

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10KSB’ Filing		Date		First		Last			Other Filings
Filed on:		2/13/98
		1/31/98		2
For Period End:		12/31/97		1		6
		10/1/97		3					8-K
		9/16/97		3					8-K
		5/1/97		3
		4/11/97		3					8-K
		4/9/97		6
		2/28/97		3
		12/31/96		3		6			10KSB40
		12/2/96		3
		12/31/95		6					10KSB40
		12/31/94		6
		12/31/93		6
		12/31/92		6
		8/13/92		3
									List all Filings