Builders Warehouse Association Inc – ‘10KSB’ for 5/31/96

As of:  Friday, 8/16/96   ·   For:  5/31/96   ·   Accession #:  950148-96-1792   ·   File #:  0-21082

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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                       54    268K 
 2: EX-27       Financial Data Schedule                                1      7K 

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

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-KSB 

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

FOR THE FISCAL YEAR ENDED MAY 31, 1996                                  

OR

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

COMMISSION FILE NUMBER 0-2108-2 

BUILDERS WAREHOUSE ASSOCIATION, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

COLORADO                                                       84-1090968       
(State or other jurisdiction of                             (I.R.S. Employer    
incorporation or organization)                           Identification No.)    

2800 28TH STREET, SUITE 100 
SANTA MONICA, CALIFORNIA 90405
(Address of Registrant's principal executive offices) 
(310) 453-4371
(Registrant's telephone number, including area code)

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

TITLE OF EACH CLASS                  NAME OF EACH EXCHANGE ON WHICH REGISTERED  
Common Stock, Par Value $0.008                          Nasdaq                  

Indicate by check mark whether the Registrant (1) has filed all reports         
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of   
1934 during the preceding 12 months (or for such shorter period that the        
Registrant was required to file such reports), and (2) has been subject to such 
filing requirements for the past 90 days.   Yes X     No                        
                          ----   -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405  
of Regulation S-B is not contained herein, and will not be contained, to the    
best of Registrant's knowledge, in definitive proxy or information statements   
incorporated by reference in Part III of this Form 10-KSB or any amendment to   
this Form 10-KSB. [ ]                                                           

The Registrant's revenues for its most recent fiscal year were $16,402,276.     

The aggregate market value of voting stock based upon the closing market price  
held by non-affiliates of the Registrant on July 12, 1996 was $ 20,616,039.     

The number of shares of the Registrant's Common Stock, $0.008 par value,        
outstanding on July 12, 1996 was 3,983,237.                                     

DOCUMENTS INCORPORATED BY REFERENCE :  None 

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TABLE OF CONTENTS 

PART I

                                                        [Enlarge/Download Table]
                                                                                                            
Item 1. Business  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1

               Company Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
               History    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
               Acquired Businesses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
                        Uni Precision Industrial Limited  . . . . . . . . . . . . . . . . . . . . . . . .  2
                        Sciteq Electronics, Inc.  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
                        Pacific Data Products, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
                        Relialogic Technology Corporation . . . . . . . . . . . . . . . . . . . . . . . .  3
               Discontinued Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
               Business Strategy  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
               Key Products for the Local Area Network Market . . . . . . . . . . . . . . . . . . . . . .  4
               Key Products Utilizing Radio Frequency Synthesis . . . . . . . . . . . . . . . . . . . . .  5
               Other Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
               Intellectual Properties  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
               Manufacturing and Quality  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8

Item 2. Properties  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8

Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9

               Pending Litigation and Potential Claims  . . . . . . . . . . . . . . . . . . . . . . . . .  9

Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . .  9

                                               PART II                                                      

Item 5. Market for Company's Common Equity and Related Matters  . . . . . . . . . . . . . . . . . . . .   10

Item 6. Management's Discussion and Analysis of Financial Condition and Results                             
            of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
               Results of Operations: Comparison of Year Ended May 31, 1996                                 
                        and July 1, 1994 (inception) to May 31, 1995  . . . . . . . . . . . . . . . . . . 11
               Results of Operations: Analysis of Period July 1, 1994 (inception)                           
                        to May 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
               Liquidity and Capital Resources  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
               Other Matters  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Item 7.  Financial Statements and Supplementary Data. . . . . . . . . . . . . . . . . . . . . . . . . . . 14

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                                                        [Enlarge/Download Table]
                                                                                                               
Item 8.   Changes in and Disagreements with Accountants on Accounting and                                      
                 Financial Disclosure.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 

                                                PART III                                                       

Item 9.  Directors and Executive Officers of the Company  . . . . . . . . . . . . . . . . . . . . . . . . .  16

                 Compliance with Section 16(a) of the Exchange Act  . . . . . . . . . . . . . . . . . . . .  17

Item 10.  Executive Compensation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18

                 Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
                 Long-Term Incentive Plans  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
                 Option Grants  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19

Item 11.  Security Ownership of Certain Beneficial Owners and Management. . . . . . . . . . . . . . . . . .  19

Item 12.  Certain Relationships and Related Transactions  . . . . . . . . . . . . . . . . . . . . . . . . .  21

                                                PART IV                                                        

Item 13.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K  . . . . . . . . . . . . . . . .  22

ii

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PART I

ITEM 1.  BUSINESS.                                                              

COMPANY OVERVIEW                                                                

Builders Warehouse Association, Inc., (the "Company") through its subsidiaries  
designs, manufactures and markets networking, connectivity and add-on products  
for Local Area Networking markets.  The Company's products include network      
adapters, hubs, Ethernet switches, video cards, shared printer network servers  
and adapters, printer enhancement products and products utilizing Phase-Locked  
Loop, direct analog, and direct digital radio frequency ("RF") synthesis.       
The Company's products are sold worldwide to original equipment manufacturers   
and through distributors.                                                       

On June 18, 1996, the Company agreed to merge with Osicom Technologies, Inc.    
("Osicom"), a leader in Local Area and Wide Area Networking and broad band      
communications markets.  Specific goals of the merger, from the perspective of  
the Company, include access to Osicom's design capabilities and product         
research and development, utilization of the Company's ISO-9001-certified plant 
to manufacture products from Osicom's product line; and access to Osicom's      
traditional customers and sales channels, which include the original equipment  
manufacturers, state and federal governments, and the telephone and cable       
providers.  It is therefore anticipated that the merger will yield to the       
Company expanded market opportunities, increased utilization of manufacturing   
capacity, and, as a result, improved margins through reductions in cost.        

Management intends to continue its strategy of acquiring companies that control 
proprietary technologies, have significant market share in products which fit   
into the Company's product lines, give the Company access to new sales          
channels, or offer enhanced manufacturing capabilities.                         

HISTORY                                                                         

Builders Warehouse Association, Inc., is a Colorado corporation originally      
incorporated under the name of Ceetac Corp. on June 30, 1988, and subsequently  
doing business as Omni Corporation.  The primary purpose of the Company was to  
evaluate acquisition candidates and complete acquisitions of, or mergers with   
those candidates.  The Company was therefore accounted for as a "development    
stage company" and, until September 20, 1991, conducted no business activities. 

On May 31, 1995, the Company acquired 100% of the outstanding common stock of   
Relialogic Technology Corporation ("RTC"), a designer and manufacturer of       
add-on products for the multimedia computer marketplace as well as a            
distributor of computer products manufactured by others.  At the time of this   
acquisition, the shareholders of RTC gained voting control of the Company and   
therefore became the acquiring entity.  As a result, RTC is the accounting      
survivor and reporting successor.  The acquisition of RTC by the Company was    
recorded as a reverse acquisition.  The predecessor company balance sheets      

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were adjusted to reflect the recapitalization of RTC pursuant to the            
acquisition.  The historical stockholders' equity of RTC was adjusted to        
reflect the cost basis of the RTC shareholders in the net assets of RTC.  As a  
result of the acquisition of RTC by the Company, RTC changed its accounting     
year end to May 31.                                                             

ACQUIRED BUSINESSES                                                             

A primary goal of the Company in 1996 has been to expand its networking         
business through the acquisition of companies both in the United States and     
abroad.                                                                         

UNI PRECISION INDUSTRIAL LIMITED                                                

On April 1, 1996, the Company acquired 100% of the common stock of Uni          
Precision Industrial, Ltd. ("Uni"), a Hong Kong corporation, for a purchase     
price of $6 million in cash and debt assumed, $500,000 paid at the closing of   
the transaction, an additional $5.5 million paid upon completion of audited     
financial statements in May, 1996.  An additional $4.0 million payment will be  
made April 1, 1997 subject to pro rata adjustment based upon Uni achieving net  
income after tax of $2.5 million during the 12-month period ending March 31,    
1997.  The Company incurred additional costs in connection with the purchase of 
Uni of $813,000, of which $809,000 was paid through the issuance of restricted  
common shares.                                                                  

Uni has as its corporate headquarters a 14,000 square foot facility in Hong     
Kong, and it operates one of the few ISO-9001-certified manufacturing           
facilities in China (ISO-9001 being the most stringent of the ISO 9000 series   
of standards).  UNI has a combined workforce of approximately 1,200 at its      
258,000 square foot plant in China and its offices in Hong Kong.  Uni derives   
revenues from the design, manufacture and sale of networking products.  Uni     
also designs and manufactures many other products, including joysticks and      
cable TV set-top descramblers.  Uni also has majority and minority interests    
in several technology companies that produce such products as advanced          
hand-held point of sale systems and miniature digital foreign language          
translators.                                                                    

SCITEQ ELECTRONICS, INC.                                                        

On May 31, 1996, through a merger with a newly-formed corporation, Sciteq       
Communications, Inc. ("Sciteq"), the Company acquired 100% of Sciteq            
Electronics, Inc., for $600,000 in cash, plus stock and below-market stock      
options of the Company valued at $2.4 million.  A final payment in stock of the 
Company valued at $2 million will be made 12 months from closing.  The final    
payment is subject to pro rata adjustment based upon Sciteq achieving pretax    
net income of $750,000 in the twelve months ending December 31, 1996.  The      
Company incurred additional costs in connection with this acquisition of        
$579,000, of which $532,000 was paid or will be paid through the issuance of    
common shares.                                                                  

Sciteq designs, manufactures and markets products utilizing Phase-Locked Loop,  
direct analog, and direct digital RF synthesis, the principal technologies      
employed in a wide array of emerging electronic systems including wireless,     
fiber optic cable and satellite communications.  Sciteq has 18 employees at its 
San Diego, California facility.                                                 

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PACIFIC DATA PRODUCTS, INC.                                                     

On May 24, 1996, the Company, through its newly-created, wholly-owned           
subsidiary PDP Acquisition Corp. ("PDPA"), acquired substantially all of the    
assets of Pacific Data Products, Inc. ("PDP").  The Company paid $273,000 in    
cash and assumed PDP's bank indebtedness of approximately $2.4 million in       
return for all of PDP's assets, including cash, accounts receivable, inventory, 
fixed assets and intangibles including patents, trademarks, copyrights and      
certain specified business agreements.  The Company incurred additional costs   
in connection with the purchase of PDP's assets of $123,000, of which $121,000  
was paid through the issuance of common shares.                                 

PDP Acquisition Corp. entered into an agreement with Coast Business Credit      
("Coast") for a $5 million credit facility secured by all of PDP Acquisition    
Corp.'s newly-acquired assets.  The Company provided for a $500,000 infusion of 
working capital to PDP Acquisition Corp., as well as a limited guarantee of     
$750,000 to effectuate the Coast credit facility.                               

PDP is a designer and manufacturer of shared printer network adapters, servers  
and other products including font cartridges and memory modules.                

RELIALOGIC TECHNOLOGY CORPORATION                                               

As mentioned above, on May 31, 1995, the Company acquired 100% of the           
outstanding stock of Relialogic Technology Corporation.  RTC is a designer and  
manufacturer of add-on products for the multimedia computer marketplace, as     
well as a distributor of computer products manufactured by others.  RTC is also 
a provider of video graphics cards in the United States.  Sales by RTC are made 
primarily through national and regional distributors.  RTC subcontracts all of  
its manufacturing.  Research and development is conducted in-house, as well as  
by developers engaged on a project-by-project basis.                            

DISCONTINUED BUSINESSES                                                         

As of  May 31, 1995, the Company disposed of its loss-generating, wholly-owned  
subsidiary, BWA, Inc., which owned two Arkansas-incorporated operating          
subsidiaries, Builders Warehouse Association, Inc., and American Plywood Sales, 
Inc., both of which were engaged in the building supply industry.  Such         
operations incurred an operating loss of approximately $2.4 million during the  
year ended May 31, 1995 and had a consolidated negative book value at           
disposition of $1,143,042.  Under the terms of the disposition agreement the    
Company transferred its shares in BWA, Inc., plus 125,000 restricted shares of  
its common stock to Krypton Management, Inc., with an approximate market value  
of $437,500 at May 31, 1995.  In addition, the Buyer assumed future costs and   
potential losses from any litigation and claims related to BWA, Inc. and its    
activities prior to the disposition.                                            

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BUSINESS STRATEGY                                                               

During the fiscal year just completed, and continuing into the immediate        
future, the Company's overall strategy has been and will be to position itself  
for significant growth in the burgeoning computer interconnectivity/networking  
area.  As a player in this market, the Company believes that its greatest       
potential for growth in sales and earnings is to offer products with large      
market appeal and to offer those products at prices low enough that the Company 
will be able to garner significant amounts of new market share.  The Company    
has therefore chosen to acquire technology (through the acquisition of          
companies like Sciteq, Uni Precision and PDP, which have already developed      
promising technologies) rather than rely solely on the expensive and uncertain  
process of internal research and development.  Similarly, the Company has       
created corporate alliances in order to exploit very low-cost manufacturing     
capacity (as in the case of Uni Precision) and to expand into new sales and     
distribution channels (as in the case of RTC).  The centerpiece of this         
strategy is the Company's broad and growing product line of more than 100       
products.  The products themselves generally fall into one of two categories:   
Products which serve the growing Local Area Network market, and products for    
the similarly emergent wireless, satellite and fiber optic communications       
markets which depend upon Radio Frequency synthesis technology for a high level 
of performance.                                                                 

KEY PRODUCTS FOR THE LOCAL AREA NETWORK MARKET                                  

R-NET 800 SERIES SERVER HUB                                                     

The 800 Series Server Hubs are fully-managed 10Base-T hub cards for small- to   
medium-size networks or departmental workgroups within an enterprise network.   
The 800 Series hubs are easy to use and install, and are a cost-effective       
solution for Ethernet 10Base-T environments.  Features include 12 or 24         
10Base-T ports per card, an Integrated network management chip for low server   
overhead, connectivity to any 10Base-T server network adapter, Novell HUBCON    
and HUBSNMP utilities, optional Client Redirector software for NetWare client   
installation, and an optional SNMP agent for Windows NT Advanced Server         
installation.                                                                   

Each hub card supports either 12 or 24 ports per card.  As many as 8 cards can  
be connected to form up to a 192 node network segment.  Multiple segments can   
also be configured by installing individual hub cards within one host PC.  Once 
the hub cards are installed in the PC, the hub software automatically detects   
the number of cards and the configuration of each card, and runs diagnostics    
to make sure that every port is working properly.  The hub also automatically   
partitions a port that generates too many errors.                               

R-NET 8000 SERIES NETWORK ADAPTER CARDS                                         

The 8000 Series is a complete line of 10 Mbps and 10/100 Mbps Ethernet Network  
Adapter Cards.  Both 32-bit PCI and 16-bit ISA products, with either BNC, UTP   
or both are available on various products.  The 8000 Series also includes a     
PCMCIA LAN adapter card, as well as 8- and 16-port 10Base-T standalone Ethernet 
hubs.                                                                           

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POCKET ETHERNET PRINT SERVERS                                                   

Pacific DirectNet PEPS3 is a family of Pocket Ethernet Print Servers for        
Novell, TCP/IP and AppleTalk networks.  PEPS3 servers support any printer or    
plotter with a parallel port, and enable the user to connect a printer anywhere 
on a network for maximum convenience and cost efficiency.                       

The PEPS3 product family is designed to meet the  needs of  complex networks    
and as such fully supports the IPX/SPX protocol for Novell networks.            
PEPS3-IPX/XL includes NDS support and is upgradeable to multiprotocol           
capabilities, while PEPS3-IPX can only be used as an IPX/SPX server.  PEPS3-TCP 
dramatically improves printer speed and performance on UNIX-TCP/IP networks.    
PEPS3-TCP can only be used in TCP/IP environments.  PEPS3-MPS is designed to    
support a wide range of protocols (IPX/SPX, TCP/IP, AppleTalk, Windows 95/NT    
with DHCP*), while offering complete NDS support.  It delivers maximum          
flexibility in networks with multiple operating systems.                        

The PEPS3 servers are the smallest pocket servers on the market, measuring only 
1" x 2.5" x 3".  Each includes an SNMP agent, thereby allowing network          
management software to recognize and manage printers like any other network     
device, providing real-time printer status information.  They are fully         
updateable via Flash memory.                                                    

OPTIFORM                                                                        

The OptiForm Flash SIMM and Management Software package transforms an existing  
HP LaserJet into a high-speed, on-demand electronic forms printer for nearly    
any computing environment.  It replaces costly paper forms with dynamic         
electronic forms instantly and at the same time prints faster, cuts network     
traffic, improves forms management, and enhances data security.                 

OptiForm is a solution for applications demanding heavy forms printing          
capabilities such as insurance, banking, healthcare, and manufacturing.  It is  
intended to provide cost effective, high quality, flexible solutions for all    
corporate stationery needs including invoices, letterhead, fax sheets, checks   
and other general business forms.  It improves network performance by reducing  
graphic data transmitted over the network to shared printers, increasing the    
effective network bandwidth.  Network access and control are provided for       
either centralized or remote management of forms and fonts.  OptiForm's         
SIMMLock feature ensures complete control of  company forms and fonts,          
preventing unauthorized use of sensitive forms such as checks and signatures.   

KEY PRODUCTS UTILIZING RADIO FREQUENCY SYNTHESIS                                

Sciteq offers products based on radio frequency synthesis ("RF") technology.    
The requirement for RF derives from a growing market need for multiple          
frequencies that are accurate, stable and free of noise and distortion.  A      
single channel radio for instance, is best tuned with a quartz crystal to       
achieve these characteristics.  However, when multiple channels are required, a 
single generator is used to create or "synthesize" all of the desired           
frequencies.  Thus, a frequency synthesizer is a single generator which is      

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numerically locked to a reference frequency (the crystal or other source) in    
order to preserve the accuracy, spectral purity and stability characteristics   
of the reference.                                                               

Synthesizers are used broadly in the electronics industry as accurate tuning    
devices.  Synthesizers provide the world of communications, data transmission   
and instrumentation with otherwise unattainable channel density, clarity and    
bandwidth (speed).  Among Sciteq's various products, all three technologies, as 
well as combinations thereof (hybrids) are employed to deliver performance that 
best fits the cost-performance criteria of the customer.                        

DIRECT ANALOG ("DA")                                                            

This is the most costly end of the product spectrum, but it sometimes provides  
features that are mandatory.  DA employs electronic circuitry to mix, multiply  
and divide the signal to achieve the desired output frequency.  This technique  
has the advantages of fast switching and excellent phase noise properties.      
However it is inherently a costly approach because of the amount of circuitry   
required to generate the many references for the mix/filter/divide process.     
Sciteq's use of this technology emphasizes cost-effective combinations that     
pair it with other technologies to achieve a desired result.                    

DIRECT DIGITAL SYNTHESIS ("DDS")                                                

This process utilizes logic and memory to construct a digital representation of 
the desired wave form, which is then converted to the desired analog signal by  
a data conversion device.  Accuracy is achieved by clocking the digital process 
with a crystal frequency reference.  This technique has most of the advantages  
of DA, but is much less costly for a given level of performance.  The Direct    
Digital Synthesizer provides fine steps, sub-microsecond switching speed,       
digital wave form manipulation (modulation), all in a small package with        
digital reliability.  Sciteq products operate up to 300 MHz and that upper      
limit has steadily increased over time.  Since this technology can be easily    
and reliably reproduced, many DDS products have now been brought into the       
mainstream of the electronics industry as off-the-shelf components.  Sciteq,    
however, remains at the forefront of new technology development in this area.   

PHASE LOCK LOOP ("PLL")                                                         

PLL or "Indirect" synthesizers employ feedback loops to continually compare the 
output from an oscillator to the reference frequency and correct any errors     
through the use of correction signals which restore the oscillator to the       
desired output.  PLL techniques can cover virtually any frequency range and     
have low distortion and excellent stability, all at reasonable cost.  Because   
of these characteristics, this is the most broadly used synthesizer in the      
market.                                                                         

An important Sciteq innovation within this family is the Arithmetically Locked  
Loop ("ALL").  The ALL is a PLL-derivative that achieves a given phase noise    
performance with fewer parts, lower power consumption, and greatly reduced cost 
over PLL's.                                                                     

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OTHER PRODUCTS                                                                  

CABLE CONVERTERS, DESCRAMBLERS AND CONVERTER/DESCRAMBLERS                       

The Company's Uni subsidiary is a producer of set-top equipment necessary for   
home cable television reception.  Converters transpose channel signals          
emanating from the cable company into a single channel (usually 3) at the       
user's television.  Descramblers restore the picture and sound of "premium"     
cable channels and must be used in conjunction with a converter.                
Converter/Descramblers combine both functions in a single unit.                 

INTELLECTUAL PROPERTIES                                                         

PATENTS                                                                         

The Company holds patents but does not consider its business to be dependent    
upon patent protection.  Nevertheless, the Company could be subject to the risk 
of adverse claims and litigation alleging infringement of the proprietary       
rights of others.  Although the Company has not been threatened and is not      
involved in any such patent infringement litigation, and while the Company      
believes that it is not infringing on the valid patents of others, there can be 
no assurances that third parties will not assert infringement claims in the     
future or that such claims would not have a material impact on the Company's    
business.  Following is a list of patents held by the Company and including     
those in process:                                                               

                                                                [Download Table]

         PATENT                            PATENT NUMBER
         ------                            -------------
                                                        
Digital Frequency Synthesizer                4,752,902  

Device for Fixing the Phase of               4,868,510  
Frequency Synthesizer Outputs                           

Digital Frequency Synthesizer                4,958,310  
Having Multiple Processing Paths                        

Programming Fractional-N                     5,224,132  
Frequency Synthesizer                                   

A Source of Quantized Samples              3518 PA 04   
for Synthesizing Sine Waves                             

RESEARCH AND DEVELOPMENT IN PROCESS                                             

Sciteq is developing a number of proprietary techniques--which may at a later   
date take form as proprietary products--for improving the "digitization" of     
data for transmission, reception, analysis and manipulation by computers.       
These include:                                                                  

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 -   Ultra fast signal generators for system agility and
multiplexing;                                 

          -   Broad Band Digital Wave Form Generators designed to generate
           sound, image, cellular information, etc., at clock speeds
above 1000 Mhz;                               

        -   Next-generation Antennae Control, Downconverters and Phase
Shifters for Digital Cellular Communication;  

     -   "Deglitchers" for use in concert with Digital to Analog
Converters;                                   

       -   Digital Signal Processing (DSP) noise-shaping techniques,
            including All-Digital Fractional Synthesis, for use in the
Phase Locked Loop synthesizer;                

-   Ultra Wide Band FM Discriminators.                

MANUFACTURING AND QUALITY                                                       

Uni operates a registered ISO 9001 manufacturing plant.  The Company's ultimate 
goal is to have all its products carry the ISO 9001 Seal of Approval for        
commercial markets.  Since ISO 9001 is the most stringent of the ISO 9000       
series, the Company perceives this to be a competitive advantage in global      
markets.                                                                        

Sciteq has adopted total quality management (TQM) and currently has a program   
underway involving each of its employees.  This program may qualify for funding 
from the State of California.  Its quality program is compliant with MIL-Q-9858 
and MIL-STD-2000.                                                               

ITEM 2.  PROPERTIES                                                             

The Company leases a total of approximately 322,000 square feet of office,      
manufacturing and distribution space:  43,300 square feet in the United States, 
and 279,000 square feet in Hong Kong and China.   The lease term for a 6,000    
square foot office and warehouse space in Fremont, California expired on July   
31, 1996.  Until operations can be relocated to an existing facility in San     
Diego, California, the Fremont space is being occupied on a month-to-month      
basis.  The Company occupies 37,000 square feet in San Diego with a lease       
expiring on September 1, 1997, and an additional 32,000 square feet leased on   
a month-to-month basis.  The corporate offices of the Company occupy 1,000      
square feet leased on a month-to-month basis.  The Company leased 21,000        
square feet of office and warehouse space in Hong Kong, which lease expired     
May 31, 1996.  Subsequently, the Company relocated to a 14,000 square foot      
facility which is owned by the Company.  The Company leases space totaling      
258,000 square feet in China used primarily for manufacturing, warehousing,     
distribution and administrative offices, due to expire on May 31, 1999.         

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ITEM 3.  LEGAL PROCEEDINGS                                                      

PENDING LITIGATION AND POTENTIAL CLAIMS                                         

Charles H. Fargo, On behalf of himself and all others similarly situated v.     
Joseph McCartney, Robert L. Ott, DeWayne Davis, David Sowell, David Spivey, Tom 
Watson and Builders Warehouse Association, Inc., United States District Court,  
Eastern Division of Arkansas, Western Division.  This complaint was filed on    
May 9, 1994 by a shareholder of the Company and such shareholder also purports  
to represent all persons who purchased stock of the Company between March 3,    
1993 through April 17, 1994.  The Plaintiff seeks a declaration that his action 
be determined a class action under Federal Rules, and for compensatory damages, 
costs and attorney fees.                                                        

The Plaintiff alleges that the Company violated certain securities laws as well 
as committing common law fraud and deceit through the issuance of positive      
public statements.  The Company believes that the matter is without merit as to 
it and as to the directors and officers. The matter is currently in discovery   
and the Company believes it is premature to attempt to evaluate the likelihood  
of an unfavorable outcome or the extent of such outcome, if any.  The Company   
has been indemnified against any loss which may result by the purchaser of BWA, 
Inc.                                                                            

Columbia Forest Products Corp. d.b.a. Panel Products Division, a Virginia       
Corporation v. Builders Warehouse Association., State of Oregon Circuit Court,  
Multnomah County, No. 9506-04186.  This action was brought by a supplier of     
disposed subsidiary for payment of outstanding invoices totaling approximately  
$158,000 plus interest. A default judgment was entered against the Company      
without proper service.  The Company has filed a notice of appeal and it has    
been indemnified for any loss resulting from this litigation.                   

Lee Roy Jordan Redwood Lumber Co. v. Builders Warehouse Association, Inc.,      
Arkansas Circuit Court, Faulkner County, No. CIV 95-365.   This action was      
brought by a supplier of the disposed of subsidiary  for payment of invoices    
totaling approximately $10,000 plus costs.   No discovery has occurred and the  
Company has been indemnified against any loss resulting from this litigation.   

The Company has been notified that other suppliers may file suit to collect     
amounts owed by the disposed subsidiary.  See "Management's Discussion and      
Analysis" at page 6.                                                            

The costs and expenses of the outstanding legal proceedings and any corporate   
liabilities resulting thereof are the responsibility of the purchaser of the    
disposed businesses.                                                            

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

None.                                                                           

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PART II 

ITEM 5.  MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.    

The Company's Common Stock has traded on the Nasdaq Small Cap Market under the  
symbol BWAI since May 3, 1993.                                                  

The following table sets forth the high and low closing bid prices for the      
Company's Common Stock in the over-the-counter market from June 1, 1994 to May  
31, 1996, based upon information obtained from Nasdaq and taking into account   
the 1-for-6 reverse split on April 10, 1995, and the 1-for-2 reverse split on   
June 30, 1995.  Quotations represent inter-dealer prices; they do not include   
retail markups, markdowns, or commissions; and, they may not represent actual   
transactions.                                                                   

                                                                [Download Table]

Fiscal 1994-1995                                    High               Low
----------------                                    ----               ---
                                                                          
Quarter from June 1, 1994                          $31.50           $10.50
   to August 31, 1994                                                     
Quarter from September 1, 1994                     $33.00           $11.25
   to November 30, 1994                                                   
Quarter from December 1, 1994                      $15.00           $4.50 
   to February 29, 1995                                                   
Quarter from March 1, 1995                         $6.38            $2.50 
   to May 31, 1995                                                        

                                                                [Download Table]

Fiscal 1995-1996                                   High               Low 
----------------                                   ----               --- 
                                                                          
Quarter from June 1, 1995                                                 
   to August 31, 1995                              $6.50            $1.75 
Quarter from September 1, 1995                                            
   to November 30, 1995                            $10.00           $4.75 
Quarter from December 1, 1995                                             
   to February 28, 1996                            $11.125          $5.375
Quarter from March 1, 1996                                                
   to May 31, 1996                                 $19.00           $8.625

On July 12, 1996, the average bid quotation for the Company's Common Stock was  
$11.50 per share.  However, there is no assurance that a market in the          
Company's securities will continue.                                             

As of July 12, 1996, the latest practicable date, there were 851 shareholders   
of record, including brokerage firms and nominees, of the Company's Common      
Stock.                                                                          

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The Company has never paid any cash dividends on its Common or Preferred Stock. 
The present policy of the Board of Directors is to retain all available funds   
to finance the development of the Company's existing and proposed products and  
the expansion of its business.  In light of the anticipated cash needs of the   
Company's business, it is not anticipated that any cash dividends will be paid  
to the holders of the Common or Preferred Stock in the foreseeable future.      

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND        
RESULTS OF OPERATIONS                                         

The results of operations reflect the activities of the Company and its RTC     
subsidiary from its inception on July 1, 1994; the Company's newly-formed       
subsidiary, R-Net International, Inc. from its inception in November, 1995;     
Uni from April 1, 1996 (61 days); PDP Acquisition Corp. from its inception on   
May 24, 1996 (7 days); and the activities of Sciteq from May 31, 1996 (1 day).  

RESULTS OF OPERATIONS: COMPARISON OF THE YEAR ENDED MAY 31, 1996 AND JULY 1,    
1994 (INCEPTION) TO MAY 31, 1995                                                

Net sales and gross profits of the Company for the year ended May 31, 1996 were 
$16.4 million and $2.4 million, respectively, up from $6.7 million and $804,000 
for the period July 1, 1994 (inception) through May 31, 1995.  Gross margin     
improved to 14.4% for the current year, up from 12.0% for the period ended May  
31, 1995, reflecting the impact of Uni's higher gross margin as well as an      
improved gross margin for RTC of 13.4%.                                         

The 61 days of Uni's operations reflected in the consolidated results           
contributed $10.2 million to net sales and $1.4 in gross profits, prior to      
elimination of intercompany transactions.  It is Management's opinion that the  
Company's future gross margins will experience significant positive influence   
from Uni, but can give no assurance that such performance will be realized in   
the future.                                                                     

RTC achieved an increase in units sold for the year ended May 31, 1996, over the
prior period ended May 31, 1995, while net sales dollars declined 5.7% from the 
prior period.  This decline was due to declining sales prices for various of    
RTC's products as well as greater use by customers of early payment discounts.  
RTC's gross margin increased to 13.4% for the current period from 12% in the    
prior period.                                                                   

This year's selling, general and administrative costs were impacted by the      
Company's aggressive acquisition program and included $2.4 million of purchased 
research and development costs, $427,000 of acquisition related expenses, and   
$76,000 of amortization of excess cost over net book value of assets acquired   
for a total of $2.9 million as compared to a total of $57,000 for the period    
ended May 31, 1995.                                                             

The Company's net income from operations would have been $544,000 but for       
acquisition related expenses and amortization of $2.9 million.  After these     
expenses the company experienced a net loss from operations of $2.4 million for 
the year ended May 31, 1996.                                                    

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Selling, general and administrative expenses exclusive of the acquisition       
impacted items totaled $1,819,000 or 11.1% of net sales as compared to 13.3% of 
net sales for the prior period. For the two months ended May 31, 1996, Uni's    
selling, general and administrative expenses were 6.3% of its net sales.        
Salaries, wages and related payroll costs increased 144% to $753,00; rents      
increased 259% to $97,000; travel, promotion and advertising increased 235% to  
$348,000; professional and consulting fees increased 1634% to $213,000;         
depreciation increased 1102% to $36,000; and other expenses increased 826% to   
$372,000.                                                                       

These increases reflect the results of Uni's operations for the two months      
ended May 31, 1996 as well as increases primarily resulting from auditing and   
accounting fees, transfer agent fees, business consultants, investor relation   
costs and other expenses which were not required during the period ended May    
31, 1995 as such costs were partially encompassed by the management fee with    
the former owners of RTC (see Note 10 to the financial statements) which was    
terminated as of May 31, 1995.  The increase in travel, promotion and           
advertising was due to RTC's co-operative pricing program whereby customers     
are allowed credits towards purchases for a portion of advertising featuring    
Relialogic TM products as well as overall increases in promotional activities.  

Other non-operating income and expenses for the year ended May 31, 1996         
included investment income of $21,000 (an increase of 469%), net foreign        
currency exchange gains of $15,000, income tax expense of $40,000 and interest  
expense of $165,000 (an increase of 11536%) for a total net charge of $169,000. 
The increase in interest income reflects the capital-raising activities of the  
Company as well as increases in interest-bearing cash deposits at both RTC and  
Uni.  Interest expense increased as the result of Uni's operations for the two  
months ended May 31, 1996.                                                      

Exclusive of acquisition-related items and amortization expense, the Company    
would have had net income of $375,000.  After these expenses, the Company       
experienced a net loss for the year ended May 31, 1996 of $2.5 million or $1.31 
per common share as compared to $81,000 or $.27 per common shares for the       
period July 1, 1994 (inception) to May 31, 1995.                                

The Company has a carryforward of federal net operating losses which may be     
potentially available to reduce future taxable income in the United States.     
However, due to potential adjustments to the net operating loss carryforwards   
as provided by the Internal Revenue Code with respect to future ownership       
changes, future availability of these tax benefits is not assured.              

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RESULTS OF OPERATIONS: ANALYSIS OF THE PERIOD JULY 1, 1994 (INCEPTION) TO MAY   
31, 1995                                                                        

The results of operations reflect the activities of RTC from its inception on   
July 1, 1994 through May 31, 1995.                                              

Net sales were $6.7 million and gross profit was $804,000 or 12% of net sales.  
As discussed above RTC's gross margin increased to 13.4% in the following year. 

Selling, general and administrative expenses were $887,000 or 13.3% of net      
sales including salaries, wages and related costs of $309,000, management fee   
of $335,000, rents of $27,000, travel, promotion and advertising of $104,000,   
professional and consulting fees of $12,000, amortization and depreciation of   
$60,000 and other expenses of $40,000.  The management fee pursuant to an       
agreement with the former shareholder of RTC was 5% of net sales and was        
terminated by mutual consent of the parties on May 31, 1995.  Exclusive of the  
management fee selling, general and administrative expenses were $553,000 or    
8.3% of net sales.                                                              

Net loss from operations was ($83,000).  The results of operations before the   
management fee reflected income of $251,000 or 3.8% of net sales.               

Interest income and expense were not material.                                  

LIQUIDITY AND CAPITAL RESOURCES                                                 

At May 31, 1996, the Company had net worth of $3 million, with total assets of  
$30.8 million.  Of these assets, current assets totaled $18 million including   
$4.4 million cash and cash equivalents, $5.3 million accounts receivable and    
$6.9 million inventory.                                                         

The working capital deficit at May 31, 1996 of $1.2 million reflected the       
dividends payable to the former shareholders of Uni declared prior to the       
acquisition of Uni by the Company ($1.3 million) and accrued liabilites which   
will be satisfied through the issuance of common shares ($175,000).  Unused     
credit lines available to the Company and its subsidiaries totaled $7.8 million 
as of year end.                                                                 

The Company completed a private placement of its 8% callable, convertible       
debentures which resulted in net proceeds of $6.6 million through May 31, 1996  
and additional net proceeds of $3.0 million subsequent to year end.  If not     
called by the Company prior to conversion by the holders, the debentures        
convert into the Company's common stock at the then common stock market price   
or, depending upon certain conditions, at other prices including premiums to    
market.  See Note 6 to the consolidated financial statements.                   

The Company called $1,375,000 face value of bonds prior to their conversion by  
the holders on March 25, 1996 utilizing a temporary loan from a director and    
officer to effectuate the call.                                                 

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Additionally, the Company completed a private placement of its common stock     
resulting in proceeds of $260,000 to the Company during the third quarter.      

Subsequent to year end the Company completed a placement of its of its new      
class of callable, convertible preferred stock with warrants attached, and      
received approximately $8.1 million as net proceeds.  These shares carry a      
dividend rate of 8% (beginning October 1, 1996), and include call and           
conversion provisions at market or various conditions thereto.  Warrants to     
purchase 145,310 shares of common stock at $18.50 per share were also issued    
in this placement.  See Note 14 to the financial statements.                    

The Company's customers remit payments within the terms of sale.  The Company   
is able to meet its obligations as they become due.  Management believes that   
the Company has sufficient working capital to meet its planned level of         
operations.  The Company plans to grow both internally as well as through       
acquisitions.  The capital needed to accomplish this will have to be raised.    
The Company cannot give any assurances of the continued availability of working 
capital or its ability to obtain funds.                                         

OTHER MATTERS                                                                   

The Company and certain former officers and directors are defendants in         
litigation filed in May 1994 seeking unspecified damages for allegedly          
violating sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and   
making a series of positive public statements to the securities marketplace.    
Management believes the claims to be without merit and has retained legal       
counsel and intends to vigorously defend itself against the claim.  Management  
and counsel believe the claims to be without merit. Nevertheless, the ultimate  
outcome of the litigation cannot presently be determined and no provision for   
any loss that may result upon resolution of this matter has been reflected in   
the financial statements.  The buyer of the Company's BWA, Inc., subsidiary has 
indemnified the Company against any loss that may result.  See Note 1 to the    
consolidated financial statements.                                              

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                           

The information required by Item 7 is set forth in Item 13 of this Form 10-KSB. 

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

On June 20, 1996 the Company terminated its relationship with its former        
accountant Jay J. Shapiro C.P.A., a Professional Corporation ("Shapiro"), and   
engaged Weinbaum & Yalamanchi to audit the Company's consolidated financial     
statements for the year ended May 31, 1996.                                     

Shapiro served as the independent auditor of the Company's financial            
statements for the year ended May 31, 1995.  During the year ended May 31,      
1995, the Company acquired its only operating                                   

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company, RTC, and contributed the assets and liabilities of its original        
operation to a wholly-owned subsidiary, BWA, Inc. which was disposed as of May  
31, 1995.  During the year ended May 31, 1995 and prior to Shapiro's            
replacement, the Company had no disagreements with Shapiro on matters of        
accounting principles or practices, financial statement disclosure or auditing  
scope or procedure which, if not resolved to the satisfaction of Shapiro, would 
have caused Shapiro to make reference to such matters in its reports.  The      
Company authorized Shapiro to respond fully to the successor auditor during     
their audit of the Company's financial statements.                              

On June 18, 1996, the Company agreed to merge with Osicom Technologies, Inc.,   
and Weinbaum & Yalamanchi have served as the auditors for Osicom for two years. 

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PART III

Item 9.          DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY                

On July 12, 1996, the Company's Directors, executive officers, and other        
significant employees were:                                                     

                                                                [Download Table]

      Name            Age                   Position               
     -----           ----                   --------               
                                                                   
Par Chadha          41     Director, Chairman of the Board,        
                             Secretary, Chief Accounting Officer   
Barry Witz          55     Director, Chief Executive Officer, Chief
                             Financial Officer                     
Kelvin Y. O. Li     37     President, RTC; CEO, Uni Precision Ltd. 
John S. Hwang       35     Vice President, RTC; CEO PDP            
                             Acquisition Corp.                     
Fred Schlaffer      50     President, PDP Acquisition Corp.        
Anthony P. Mauro    55     COO, Sciteq Communications, Inc.        
Bar-Giora Goldberg  50     Chief Technology Officer, Sciteq        
                             Communications, Inc.                  

All Directors serve until the next Annual Meeting of Stockholders and           
thereafter until their successors have been elected and qualified.  All         
directors and officers of the Company and its subsidiaries will spend such time 
as is necessary in order to carry out the business of the Company.              

Par Chadha, age 41, was appointed director of the Company on March 30, 1995.    
Mr. Chadha also serves as Chairman of Osicom Technologies, Inc., a Nasdaq       
traded company in the broadband communications sector.  From January 28, 1995   
to July, 1995 Mr. Chadha served as a director of Saratoga Brands, Inc., a       
Nasdaq company.  From September 1993 to November 1993, Mr. Chadha served as     
Chairman of the Board and as a Director of Phoenix Laser Systems, Inc., an      
American Stock Exchange company.  Since February 1994, Mr. Chadha has served as 
President, CEO and Chairman of the Board of Oxford Acquisitions Group, Inc., a  
publicly held company engaged in seeking potential business acquisitions.  Mr.  
Chadha has served as a director of Rand Research Corporation , RII Partners,    
Inc., and RT Investments, Inc., private holding companies with investments in   
several private and publicly held companies including the Company.              

Barry Witz, age 55 was appointed director of the Company on March 30, 1995.     
Mr. Witz also serves as Chairman of the Board of Saratoga Brands, Inc., a       
Nasdaq company.  Mr. Witz is focused on turn-around situations, in which he can 
bring his financial and legal expertise to assist in financial restructuring,   
recapitalizations, mergers and acquisitions.  Since 1994, he has been Chairman  
of the Board, Director and President of Brite Lite Industries, Inc., a          
privately held company with investments in several private and publicly-held    
companies, including the Company.  Mr. Witz has acted as an attorney for the    
United States Securities and Exchange Commission, he has been an officer of the 
New York Stock Exchange, and was a Senior Partner in the law firms of Arney,    
Hodes, Costello, Berman, and Wood, Lucksinger and Epstein.                      

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Kelvin Y. O. Li, age 37, has been President of RTC since its formation in June  
1994.  Mr. Li also serves as the Chief Executive Officer of Uni Precision       
Industry Ltd.  Mr. Li was a founder of Relialogic Corporation  and served as    
its president until its dissolution in May 1994.  Mr. Li was a director of      
Co-Time Computer and Uni Precision Industrial in Hong Kong since 1990 and       
worked as a sales engineering manager for Hong Kong Ryosan during 1984 through  
1989.                                                                           

John S. Hwang, age 35, has been Vice President of sales and marketing since its 
formation in June 1994.  Mr. Hwang  also serves as the Chief Executive Officer  
of PDP Acquisition Corp.  Mr. Hwang served as a consultant to Relialogic        
Corporation, from 1991 to 1993 when he became its Vice President of sales and   
marketing; he served in this position until its dissolution in May 1994.  Mr.   
Hwang was employed by Samsung America, Inc. during 1984 through 1991; initially 
as a manager and from 1989 through 1991 as a Vice President of sales and        
marketing for the computer and monitor department.                              

Fred Schlaffer, age 50, was appointed President of PDP Acquisition Corp. on May 
24, 1996. He served as Senior Vice President of sales and marketing for Pacific 
Data Products since July 1994.  Mr. Schlaffer served as Senior Vice President   
of sales and marketing for Digital Products, Inc. from November 1991 to July    
1994 and as Senior Vice President and Chief Operating Officer of Connectivite   
Corporation from January to October 1991.   Mr. Schlaffer has more than 20      
years experience in the network communications and software industry.           

Anthony P. Mauro, age  55, has served as Chief Operating Officer of Sciteq      
since 1993.  From 1990 to 1993, Mr. Mauro served as Executive Vice President    
for Hixon Metal Finishing.  Concurrent with these positions, Mr. Mauro has been 
Owner and President of Two Mauro Enterprises and MFG.  Service Company. Mr.     
Mauro received a Bachelor of Science degree from Fordham University and         
Bachelor and Master of Science degrees in Electrical Engineering from           
California State University, Pomona. Mr. Mauro also has a Master of Arts degree 
in Vocational Education from California State University, San Bernadino. Mr.    
Mauro has over 30 years experience in multi-facility international operations,  
high tech electronics, and telecommunications.                                  

Bar-Giora Goldberg, age 50, was a co-founder of Sciteq Electronics in 1984 and  
has since served as its Chief Technical Officer.  He received Bachelor of       
Science and Master of Science degrees in electrical engineering from the        
Technion in Israel where he served in the air force as a technical officer.     
Mr. Goldberg has a strong background in radar, communications and signal        
analysis.                                                                       

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT                               

The Securities Exchange Act of 1934 requires the Company's directors and        
executive officers and persons who own more than ten percent of a registered    
class of the Company's equity securities to file reports of beneficial          
ownership and changes in beneficial ownership with the Securities and Exchange  
Commission.  To the knowledge of the Company, all filing requirements under     
Section 16(a) in respect of the Company were complied within the year ended May 
31, 1996.                                                                       

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ITEM 10.         EXECUTIVE COMPENSATION.                                        

Both the officers and directors may receive remuneration from the Company, and  
reimbursements may also be made for any expenses incurred on behalf of the      
Company.  The Company's Bylaws provide that directors may be paid their         
expenses, if any, and may be paid a fixed sum for attendance at a Board of      
Directors meeting.                                                              

At this time the Company does not offer any retirement benefits, Company-wide   
stock option plans, profit sharing or other similar remuneration plans or       
programs.                                                                       

SUMMARY COMPENSATION TABLE                                                      

The following table summarizes all compensation awarded to, earned by, or paid  
to (i) all individuals who served or functioned as the Company's Chief          
Executive Officer ("CEO") during the fiscal year ended May 31, 1996 and (ii)    
the Company's four most highly compensated executive officers who were serving  
at the end of the fiscal year ended May 31, 1996 (all of the foregoing          
individuals being hereinafter referred to collectively as the "Named Executive  
Officers"), for services rendered in all capacities to the Company and its      
subsidiaries for the Company's last fiscal year, ended May 31, 1996.  There     
were two officers of the Company's wholly-owned subsidiaries RTC and PDP        
Acquisition Corp. who were compensated in the amount of $120,000 each.          

                                                        [Enlarge/Download Table]

--------------------------------------------------------------------------------------------------------------------------
                                                 SUMMARY COMPENSATION TABLE                                               
--------------------------------------------------------------------------------------------------------------------------
                                                                                                               All Other  
   Name and Principal            Year          Annual Compensation             Long-Term Compensation        Compensation 
   Position                             -----------------------------------------------------------------       ($) (1)   
                                          Salary      Bonus     Other    Restricted   Securities    Long-                 
                                            ($)        ($)      Annual      Stock       Under-      Term                  
                                                               Compen-     Award(s)      lying     Incen-                 
                                                                sation       ($)        Options     tive                  
                                                                 ($)                      (#)       Plan                  
                                                                                                   Payouts                
--------------------------------------------------------------------------------------------------------------------------
                                                                                                                          
   Par Chadha, Chairman          1996        0          0         0           0            0          0            0      
   Secretary, Chief                                                                                                       
   Accounting Officer                                                                                                     
--------------------------------------------------------------------------------------------------------------------------
   Barry Witz, Director          1996        0          0         0           0            0          0            0      
   Chief Executive Officer                                                                                                
   Chief Financial Officer                                                                                                
--------------------------------------------------------------------------------------------------------------------------
   Kelvin Y.O. Li                1996     120,000       0         0           0            0          0        $499,562   
   President of RTC, CEO,                                                                                                 
   Uni                                                                                                                    
--------------------------------------------------------------------------------------------------------------------------
   John S. Hwang                 1996     120,000       0         0           0            0          0        $499,562   
   Vice President of RTC,                                                                                                 
   CEO, PDP Acquisition                                                                                                   
   Corp                                                                                                                   
--------------------------------------------------------------------------------------------------------------------------

(1)  "All Other Compensation" for Mr. Li and Mr. Hwang consists of, for each    
executive: personal use of Company leased vehicle, $2,562; and non-cash         
compensation earned in connection with the Company's acquisition of Uni of      
$497,000                                                                        

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LONG-TERM INCENTIVE PLANS                                                       

The Company has no long-term incentive plans.                                   

OPTION GRANTS                                                                   

The Company granted stock options to certain officers and directors during the  
fiscal year ended May 31, 1995, as described in Note 9 to the financial         
statements.                                                                     

ITEM 11.         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 

The following table sets forth certain information as of July 12, 1996,         
regarding the ownership of the Common Stock and Class A Preferred Stock by (i)  
each Director of the Company; (ii) each of the executive officers named in the  
Summary Compensation Table, above; (iii) each person known to the Company to    
beneficially own 5% or more of Common Stock; and (iv) all Directors and         
executive officers of the Company as a group.  Except as indicated, all persons 
named as beneficial owners of Common Stock have sole voting and investment      
power with respect to the shares indicated as beneficially owned by them.       

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------ 
                                                           Common Stock              
                                             --------------------------------------- 
                                                                       Percentage of 
Name of Beneficial Owner (A)                 Number of Shares         Outstanding (F)
------------------------------------------------------------------------------------ 
                                                                                     
Par Chadha                                                                           
15332 Antioch Street                            1,220,007 (B)                27.28%  
Pacific Palisades, Ca  90272                                                         
------------------------------------------------------------------------------------ 
RII Partners, Inc.                                                                   
2250 East Tropicana Ave., Suite 19-246          1,220,007 (B)                27.28%  
Las Vegas, Nevada  89119                                                             
------------------------------------------------------------------------------------ 
RT Investments, Inc.                                                                 
2250 East Tropicana Ave., Suite 19-246          1,220,007 (B)                27.28%  
Las Vegas, Nevada  89119                                                             
------------------------------------------------------------------------------------ 
Barry Witz                                                                           
505 S. Beverly Drive, Suite 1066                1,220,007 (C)                27.28%  
Beverly Hills, Ca  90212                                                             
------------------------------------------------------------------------------------ 
Brite Lite Industries, Inc.                                                          
505 S. Beverly Drive, Suite 1066                1,220,007 (C)                27.28%  
Beverly Hills, Ca  90212                                                             
------------------------------------------------------------------------------------ 
John S. Hwang                                                                        
48006 Freemont Blvd.                             172,291 (D)                 4.15%   
Freemont, Ca 94538                                                                   
------------------------------------------------------------------------------------ 
Kelvin Li                                                                            
48006 Freemont Blvd.                             172,291 (E)                 4.15%   
Freemont, Ca 94538                                                                   
------------------------------------------------------------------------------------ 
All Directors and executive officers as                                              
a group                                           2,784,596                  62.86%  
------------------------------------------------------------------------------------ 

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   A)       All information with respect to beneficial ownership of the shares
        is based upon filings made by the respective beneficial owners
    with the Securities and Exchange Commission or information
provided by such beneficial owners to the Company.    

B)       Includes shares held in the name of R II Partners, Inc., and RT
           Investments, Inc.  Mr. Chadha owns, directly and indirectly, 100%
         of the outstanding capital stock of R II Partners, Inc., and RT
         Investments, Inc.  Mr. Chadha holds options to purchase 125,000
          shares of common stock for which the exercise price of $3.50 per
            share was equal to the market price on the date granted, August 7,
        1995.  R II Partners, Inc., holds warrants to purchase 297,029
shares of common stock at the exercise price of $5.30.

            Mr. Chadha also has options to purchase:  125,000 shares of common
           stock which are to be vested and exercisable upon the last day of
       the Company's 1997 fiscal year; and, 125,000 shares of common
           stock which are to be vested and exercisable upon the last day of
      the Company's 1997 fiscal year.  The exercise price of these
           options is $3.50 per share which was equal to the market price as
of the August 7, 1995 grant date.                     

C)       Includes shares held in the name of Brite Lite Industries, Inc.
         Mr. Witz owns, directly and indirectly, 100% of the outstanding
      capital stock of Brite Lite Industries, Inc.  Mr. Witz holds
            options to purchase:  125,000 shares of common stock for which the
            exercise price of $3.50 per share was equal to the market price on
         the date granted, August 7, 1995.  Brite Lite Industries, Inc.,
          holds warrants to purchase 297,029 shares of common stock at the
exercise price of $5.30.                              

          Mr. Witz also has options to purchase:  125,000 shares of common
           stock which are to be vested and exercisable upon the last day of
       the Company's 1997 fiscal year; and, 125,000 shares of common
           stock which are to be vested and exercisable upon the last day of
     the Company's 1998 fiscal year. The exercise price of these
           options is $3.50 per share which was equal to the market price as
of the August 7, 1995 grant date.                     

    D)       Mr. Hwang has options to purchase 75,000 shares of common stock, of
            which 37,500 shares are to be vested and exercisable upon the last
         day of the Company's 1997 fiscal year, and 37,500 shares are to
      be vested and exercisable upon the last day of the Company's
            1998 fiscal year. The exercise price of these options is $5.00 per
         share, which was equal to the market price on the date granted,
October 17, 1995.                                     

           Mr. Hwang options to purchase 26,291 shares of common stock.  The
            exercise price of such options is $3.18 per share, which was equal
to the market price on the date granted.              

E)       Mr. Li has options to purchase 75,000 shares of common stock of
            which 37,500 shares are to be vested and exercisable upon the last
        day of the Company's 1997 fiscal year and 37,500 shares are to
      be vested and exercisable upon the last day of the Company's
            1998 fiscal year. The exercise price of these options is $5.00 per
         share, which was equal to the market price on the date granted,
October 17, 1995.                                     

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            Mr. Li has options to purchase 26,291 shares of common stock.  The
            exercise price of such options is $3.18 per share, which was equal
to the market price on the date granted.              

F)       For each beneficial owner, the "Percentage of Outstanding"     
   equals each owner's actual holdings of shares plus shares
          represented by unexercised options and warrants held, divided by
      total shares outstanding of the Company at July 12, 1996, of
      3,983,237, plus the above-referenced unexercised options and
  warrants of the referenced holder only.  In other words,
          individual percentages of the listed holders will not add to the
           group total because the calculations are made separately for each
holder.                                               

ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.                      

On May 12, 1995 the Company sold 175,824 shares of its Common Stock to R II     
Partners, Inc. and Brite Lite Industries, Inc. for marketable securities valued 
at $400,000. Such marketable securities are presently held by the Company.  Par 
Chadha, director and Chairman of the Board, owns directly and indirectly 100%   
of the outstanding capital stock of R II Partners, Inc.  Barry Witz, director,  
owns directly and indirectly 100% of the outstanding capital stock of Brite     
Lite Industries, Inc.  The directors of the Company had an equity interest in   
RTC which was acquired by the Company as of May 31, 1995 for stock and          
warrants.                                                                       

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PART IV 

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

(a)         Exhibits and Consolidated Financial Statement Schedules     

      1.      Financial Statements:  (see index to financial
statements at page 24)          

Independent Auditors' Reports 

                      Consolidated Balance Sheets at May 31, 1996 and 1995

                        Consolidated Statements of Operations for June 1, 1995
                 to May 31, 1996 and July 1, 1994 (inception) to
May 31, 1995                  

                    Consolidated Statement of Stockholders' Equity for
               June 1, 1995 to May 31, 1996 and July 1, 1994
(inception) to May 31, 1995   

                       Consolidated Statements of Cash Flows June 1, 1995 to
              May 31, 1996 and July 1, 1994 (inception) to
May 31, 1995                  

            Notes to Consolidated Financial Statements

2.       Exhibits:                            

                        2.3     Stock Purchase Agreement dated May 31, 1995,
                         between and Jardine Cho, Ltd. and the
                            Registrant related to the acquisition of
                     Relialogic Technology Corporation
                                (Incorporated by reference to Form 8-K filed
                               with the Securities and Exchange Commission
     on June 16, 1995)

                        2.4     Amended and Restated Agreement as of May 31,
                                 1995, related to the disposition of BWA, Inc.
                               and its wholly owned subsidiaries, Builders
                              Warehouse Association, Inc. (Arkansas) and
                     American Plywood, Inc. (Arkansas)
                                (Incorporated by reference to Form 8-K filed
                               with the Securities and Exchange Commission
          on September 11, 1995)

                      2.5     Stock Purchase Agreement dated November 7,
                              1995 to acquire shares of XNET Technology,
                               Inc. (Incorporated by reference to Form 8-K
                          filed with the Securities and Exchange
                    Commission on November 17, 1995)

                        2.6     Stock Purchase Agreement dated April 3, 1996
                              regarding the acquisition of Uni Precision
                                 Industrial Limited (Incorporated by reference
                             to Form 8-K filed with the Securities and
                          Exchange Commission on April 17, 1996)

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                       2.7     Stock Purchase Agreement dated May 31, 1996
                       regarding the acquisition of Sciteq
                                (Incorporated by reference to Form 8-K filed
                               with the Securities and Exchange Commission
     on June 16, 1995)

                      2.8     Agreement dated May 24, 1996 regarding the
                             acquisition of the assets of Pacific Data
                                 Products, Inc. from Coast Business Credit and
                    establishment of credit facility
                                (Incorporated by reference to Form 8-K filed
                               with the Securities and Exchange Commission
     on June 12, 1996)

                       3.0     Articles of incorporation  (Incorporated by
                                 reference to Form S-18 of the Company, number
                       33-24544, effective March 29, 1989)

                    16.1    Letter on change in Company's certifying
                                 accountant (Incorporated by reference to Form
                              8-K filed with the Securities and Exchange
                     Commission on September 12, 1995)

                    16.2    Letter on change in Company's certifying
                                 accountant (Incorporated by reference to Form
                              8-K filed with the Securities and Exchange
                Commission on July 24, 1996)

           21      Subsidiaries of the Registrant:

                                     -    Sciteq Communications, Inc. a Nevada
                 corporation

                                    -    PDP Acquisition Corp., a California
                                      corporation , (doing business as
                            Pacific Data Products)

                                     -    Relialogic Technology Corporation, a
                            California corporation

                                  -    Uni Precision Industrial Limited,
                               incorporated in Hong Kong

                                    -    R-Net International, Inc., a Nevada
                 corporation

    (b)          Reports on Form 8-K filed during the quarter ended May 31, 1996

                April 17, 1996         Acquisition of Uni Precision Industrial
       Limited

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BUILDERS WAREHOUSE ASSOCIATION, INC.
AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                        [Enlarge/Download Table]

                                                                             PAGE     
                                                                       ---------------
                                                                                      
Independent Auditors Reports                                              F-1 to F-4  

Consolidated Balance Sheets as of May 31, 1996 and May 31, 1995           F-5 to F-6  

Consolidated Statement of Operations for the year ended May 31, 1996                  
     and July 1, 1994 (inception) to May 31, 1995                            F-7      

Consolidated Statement of Shareholders' Equity for the year ended                     
     May 31, 1996 and July 1, 1994 (inception) to May 31, 1995            F-8 to F-9  

Consolidated Statements of Cash Flows for the year ended May 31, 1996                 
     and July 1, 1994 (inception) to May 31, 1995                            F-10     

Notes to Consolidated Financial Statements                               F-11 to F-26 

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INDEPENDENT ACCOUNTANTS' REPORT 

To the Stockholders of                                                  
Builders Warehouse Association, Inc.                                    

We audited the accompanying consolidated balance sheet of Builders      
Warehouse Association, Inc. ("BW") as of May 31, 1996 and the related   
   consolidated statements of operations, stockholders' equity, and cash flows
 for the year then ended.  These consolidated financial statements are the
responsibility of BW's management.  Our responsibility is to express an 
  opinion on these consolidated financial statements based on our audit.  We
   did not audit the financial statements of Uni Precision Industrial Limited,
a wholly-owned subsidiary, which statements reflect total assets of     
$21,913,000 as of May 31, 1996 and total revenues of $9,927,000 for two 
 months then ended.  Those statements were audited by other auditors whose
  report has been furnished to us, and our opinion, insofar as it relates to
  the amounts included for Uni Precision Industrial Limited, is based solely
on the report of the other auditors.                                    

We conducted our audit in accordance with generally accepted auditing   
 standards.  Those standards require that we plan and perform the audit to
   obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial        
statements.  An audit also includes assessing the accounting principles 
used and significant estimates made by management, as well as evaluating
   the overall financial statement presentation.  We believe our audit and the
 report of the other auditors provides a reasonable basis for our opinion.

In our opinion, based on our audit and the report of the other auditors,
  the consolidated financial statements referred to above present fairly, in
all material respects, the consolidated financial position of BW and    
subsidiaries as of May 31, 1996 and the results of their operations and 
their cash flows for the year then ended in conformity with generally   
accepted accounting principles.                                         

/s/ Weinbaum & Yalamanchi                                               
---------------------------                                             
WEINBAUM & YALAMANCHI                                                   

Canoga Park, California                                                 
August 5, 1996                                                          

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ARTHUR  
ANDERSEN

                                              ----------------------------
                                       Arthur Andersen & Co.
                                              Certified Public Accountants
                                              ----------------------------
                                       25/F., Wing On Centre
                                            111 Connaught Road Central
                           Hong Kong
                               852 2852 0222
                                   852 2815 0548 Fax

AUDITORS' REPORT TO THE SHAREHOLDERS OF                                 
UNI PRECISION INDUSTRIAL LIMITED                                        
(Incorporated in Hong Kong with limited liability)                      

We have audited the financial statements on pages 3 to 22 which have been       
prepared in accordance with accounting principles generally accepted in the     
United States of America.                                                       

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS                           

The Company's directors are responsible to prepare financial statements which   
give a true and fair view.  In preparing financial statements which give true   
and fair view it is fundamental that appropriate accounting policies are        
selected and applied consistently.                                              

It is our responsibility to form an independent opinion, based on our audit, on 
those statements and to report our opinion to you.                              

BASIS OF OPINION                                                                

We conducted our audit in accordance with generally accepted auditing standards 
in the United States of America.  An audit includes examination, on a test      
basis, of evidence relevant to the amounts and disclosures in the financial     
statements.  It also includes an assessment of the significant estimates and    
judgments made by the directors in the preparation of the financial statements, 
and of whether the accounting policies are appropriate to the circumstances of  
the Company, consistently applied and adequately disclosed.                     

We planned and performed our audit so as to obtain all the information and      
explanations which we considered necessary in order to provide us with          
sufficient evidence to give reasonable assurance as to whether the financial    
statements are free from material misstatement.  In forming our opinion we also 
evaluated the overall adequacy of the presentation of information in the        
financial statements.  We believe that our audit provides a reasonable basis    
for our opinion.                                                                

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ARTHUR
ANDERSEN

OPINION                                                                         

In our opinion the financial statements give a true and fair view of the state  
of affairs of the Company as of May 31, 1996 and of the profit and cash flows   
of the Company for the period from April 1, 1996 to May 31, 1996 and have been  
properly prepared  in accordance with generally accepted accounting principles  
in the United States of America and the SEC Regulation S-X disclosure           
requirements.                                                                   

/s/ Arthur Andersen                                                             
-------------------                                                             
ARTHUR ANDERSEN                                                                 

Hong Kong,                                                                      
July 12, 1996                                                                   

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INDEPENDENT AUDITOR'S REPORT

The Board of Directors                                                          
Builders Warehouse Association, Inc.:                                           

I have audited the accompanying consolidated balance sheet of Builders          
Warehouse Association, Inc. and subsidiary (the "Company") as of May 31, 1995   
and related consolidated statements of operations, changes in shareholders'     
equity and cash flows for the year then ended.  These financial statements are  
the responsibility of the Company's management.  My responsibility is to        
express an opinion on these financial statements based on my audit.             

I conducted my audit in accordance with generally accepted auditing standards.  
Those standards require that I plan and perform the audit to obtain reasonable  
assurance about whether the financial statements are free of material           
misstatement.  An audit includes examining on a test basis, evidence supporting 
the amounts and disclosures in the financial statements.  An audit also         
includes assessing the accounting principles used and significant estimates     
made by management, as well as evaluating the overall financial statement       
presentation.  I believe that my audit provides a reasonable basis for my       
opinion.                                                                        

In my opinion, the consolidated financial statements present fairly, in all     
material respects, the financial position of the Company as of May 31, 1995,    
and the results of its operations and their cash flows for the year then ended  
in conformity with generally accepted accounting principles.                    

The financial statements reflect a reverse acquisition transaction and as of    
May 31, 1995 the disposition of all the Company's previous operations (Notes 1, 
7 and 12).                                                                      

In addition, as discussed in Note 10, the Company is a defendant in litigation  
relating to alleged security law violations.  The ultimate outcome of this      
uncertainty can not presently be determined.  Accordingly, the financial        
statements do not include any adjustment that might result upon resolution of   
this matter.                                                                    

/s/ Jay J. Shapiro                                                              
------------------                                                              
JAY J. SHAPIRO, C.P.A., a Professional Corporation                              
Encino, California                                                              

September 16, 1995                                                              

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

CONSOLIDATED BALANCE SHEETS                                                     

                                                        [Enlarge/Download Table]

==========================================================================================================
                                                                           MAY 31, 1996      MAY 31, 1995 
----------------------------------------------------------------------------------------------------------
                                                                                                          
ASSETS                                                                                                    

CURRENT ASSETS                                                                                            
  Cash and equivalents                                                  $     4,372,287   $         85,608
  Receivables, net of reserve for doubtful accounts $400,743                                              
    and $33,000 at May 31, 1996 and 1995, respectively                        5,321,195            799,932
  Inventory (Notes 2 and 4)                                                   6,900,304            230,000
  Marketable securities, less allowance for unrealized losses                                             
    (Note 11)                                                                   149,091            327,274
  Other receivables (Notes 11 and 18)                                           795,503                  0
  Prepaid expenses and other current assets                                     450,488             43,210
----------------------------------------------------------------------------------------------------------
    TOTAL CURRENT ASSETS                                                     17,988,868          1,486,024
----------------------------------------------------------------------------------------------------------

PROPERTY AND EQUIPMENT, NET  (Note 3)                                         8,153,823             28,509
----------------------------------------------------------------------------------------------------------

OTHER ASSETS                                                                                              
  Excess of cost over net assets acquired, less accumulated                                               
    amortization (Notes 1 and 2)                                              2,869,232            342,857
  Other investments (Note 2)                                                  1,623,380                  0
  Other assets                                                                  211,138              7,198
----------------------------------------------------------------------------------------------------------
    TOTAL OTHER ASSETS                                                        4,703,750            350,055
----------------------------------------------------------------------------------------------------------

TOTAL ASSETS                                                            $    30,846,441   $      1,864,588
==========================================================================================================

See accompanying notes.                                                         

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

CONSOLIDATED BALANCE SHEETS                                                     

                                                        [Enlarge/Download Table]

==========================================================================================================
                                                                       MAY 31, 1996         MAY 31, 1995  
----------------------------------------------------------------------------------------------------------
                                                                                                          
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                      

CURRENT LIABILITIES                                                                                       
  Accounts payable                                                $          9,354,241   $       588,397  
  Short-term debt (Note 4)                                                   5,834,394           133,444  
  Accrued liabilities (Note 11)                                              2,109,939            55,704  
  Dividends payable (Note 11)                                                1,255,751                 0  
  Current maturities of long term debt (Note 5)                                350,010                 0  
  Other current liabilities                                                    252,274                 0  
----------------------------------------------------------------------------------------------------------
    TOTAL CURRENT LIABILITIES                                               19,156,609           777,545  
----------------------------------------------------------------------------------------------------------

Long-term debt and capital lease obligations (Note 5)                        3,350,689                 0  
Debentures payable (Notes 6 and 13)                                          2,978,237                 0  
Liability for cash put - common shares (Note 1)                              1,993,578                 0  
Deferred income taxes (Note 12)                                                248,127                 0  
Other liabilities                                                              131,250                 0  
----------------------------------------------------------------------------------------------------------
    TOTAL LIABILITIES                                                       27,858,490           777,545  
----------------------------------------------------------------------------------------------------------

COMMITMENTS AND CONTINGENCIES (Note 7)                                                                    

STOCKHOLDERS' EQUITY (Notes 9 and 10)                                                                     
  Preferred stock, $.01 par value; 10,000,000 shares authorized,                                          
    none issued and outstanding                                                                           
  Preferred stock, Series A stock $.008 par value; 6% cumulative                                          
    dividend; convertible into 285.75 shares common stock;                                                
    10,000,000 shares authorized; 0 shares and 4,000 shares                                               
    issued and outstanding at May 31, 1996 and 1995, respectively                    0                32  
  Common stock, $.008 par value; 25,000,000 shares authorized;                                            
    3,872,938 shares issued and 3,869,978 shares outstanding                                              
    at May 31, 1996; 772,045 shares issued and 769,084 shares                                             
    outstanding at May 31, 1995                                                 29,630             6,176  
  Common stock to be issued; 0 shares and 220,600 shares                                                  
    at May 31,1996 and 1995, respectively                                            0           772,100  
  Additional paid-in capital                                                 5,752,572           567,248  
  Accumulated deficit                                                       (2,616,758)          (81,020) 
  Treasury stock, 2,961 shares at May 31, 1996 and 1995, at cost              (177,493)         (177,493) 
----------------------------------------------------------------------------------------------------------
    TOTAL STOCKHOLDERS' EQUITY                                               2,987,951         1,087,043  
----------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                        $         30,846,441   $     1,864,588  
==========================================================================================================

See accompanying notes.                                                         

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

CONSOLIDATED STATEMENTS OF OPERATIONS                                           

                                                        [Enlarge/Download Table]

===============================================================================================================================
                                                                                                   YEAR           JULY 1, 1994 
                                                                                                  ENDED          (INCEPTION) TO
                                                                                               MAY 31, 1996       MAY 31, 1995 
-------------------------------------------------------------------------------------------------------------------------------
                                                                                                                               
REVENUES                                                                                                                       
  Net sales                                                                               $        16,402,276  $     6,693,731 
COST OF GOODS SOLD                                                                                                             
  Net purchases and direct costs                                                                   14,038,851        5,890,071 
-------------------------------------------------------------------------------------------------------------------------------
    GROSS PROFIT                                                                                    2,363,425          803,660 
-------------------------------------------------------------------------------------------------------------------------------

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                                                                                   
  Salaries, wages, benefits and related payroll taxes                                                 752,923          309,049 
  Management fee (Note 10)                                                                                  0          334,600 
  Rents (Note 7)                                                                                       97,221           27,090 
  Travel and promotion                                                                                166,068           64,181 
  Advertising                                                                                         182,309           39,670 
  Professional and consulting fees                                                                    213,493           12,315 
  Depreciation                                                                                         35,526            2,955 
  Other                                                                                               371,798           40,135 
  Purchased research and development (Note 1)                                                       2,408,059                0 
  Acquisition related costs (Note 1)                                                                  427,067                0 
  Amortization of excess cost over net book value of assets acquired (Note 2)                          76,114           57,143 
-------------------------------------------------------------------------------------------------------------------------------
    TOTAL SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                                              4,730,578          887,138 
-------------------------------------------------------------------------------------------------------------------------------

LOSS FROM OPERATIONS                                                                               (2,367,153)         (83,478)
-------------------------------------------------------------------------------------------------------------------------------

OTHER INCOME (CHARGES)                                                                                                         
  Investment income (Note 11)                                                                          21,068            3,876 
  Net foreign currency exchange gains                                                                  14,810                0 
  Income taxes (Note 12)                                                                              (39,898)               0 
  Interest expense (Note 11)                                                                         (164,997)          (1,418)
-------------------------------------------------------------------------------------------------------------------------------
    TOTAL OTHER INCOME (CHARGES)                                                                     (169,017)           2,458 
-------------------------------------------------------------------------------------------------------------------------------

NET LOSS AND LOSS APPLICABLE TO COMMON STOCK                                              $        (2,536,170) $       (81,020)
===============================================================================================================================

LOSS PER COMMON SHARE (Note 2)                                                                         ($1.31)          ($0.27)
===============================================================================================================================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                                                                     
(RESTATED) (Note 10)                                                                                1,933,764          305,285 
===============================================================================================================================

See accompanying notes.                                                         

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                
For the Year Ended May 31, 1996                                                 

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY                                  

                                                        [Enlarge/Download Table]

===============================================================================================================
                                                   COMMON STOCK            PREFERRED STOCK       ADDITIONAL    
                                               Shares         Amount      Shares     Amount    PAID IN CAPITAL 
---------------------------------------------------------------------------------------------------------------
                                                                                                               
Balance at May 31, 1995                         772,045      $  6,176      4,000      $ 32       $   567,248   
Conversion of preferred shares                1,143,000         9,144     (4,000)      (32)           (9,112)  
Issuance of shares for                                                                                         
  management fee (Note 10)                       95,600           765                                333,835   
Whole shares issued for fractional                                                                             
  shares in one-for-two stock split                 222             2                                     (2)  
Private placement of common                                                                                    
  stock for cash (Note 10)                       65,000           520                                259,480   
Expenses attributed to stock                                                                                   
  issuances                                                                                         (268,750)  
Expenses paid with stock issuances                2,768            23                                 26,978   
Disposition of BWAI (Note 1)                    125,000         1,000                                436,500   
Additional shares and costs for                                                                                
  acquisition of RTC                            800,083         6,401                                (23,067)  
Payment of liabilities of                                                                                      
  investment with stock                          33,944           271                                 70,347   
Exercises of stock options                      121,763           974                                   (974)  
Conversion of debentures                                                                                       
  (Note 6)                                      323,100         2,585                              2,649,647   
Issuance of shares for                                                                                         
  acquisitions (Note 2)                         388,846         3,111                              3,683,929   
Common shares subject to cash                                                                                  
  put by holders (Note 2)                                      (1,354)                            (1,992,224)  
Issuance of shares for                                                                                         
  other assets (Note 10)                          1,567            12                                 18,737   
Foreign currency gain                                                                                          
Net loss                                                                                                       
-------------------------------------------------------------------------------------------------------------  

BALANCE AT MAY 31, 1996                       3,872,938      $ 29,630          0      $  0       $ 5,752,572   
============================================================================================================== 


                                                        [Enlarge/Download Table]

=========================================================================================================== 
                                           ACCUMULATED       TREASURY STOCK           STOCK TO BE ISSUED    
                                             DEFICIT        Shares      Amount        Shares        Amount  
----------------------------------------------------------------------------------------------------------- 
                                                                                                            
Balance at May 31, 1995                  $    (81,020)        2,961    $(177,493)     220,600      $ 772,100
Conversion of preferred shares                                                                              
Issuance of shares for                                                                                      
  management fee (Note 10)                                                           (95,600)      (334,600)
Whole shares issued for fractional                                                                          
  shares in one-for-two stock split                                                                         
Private placement of common                                                                                 
  stock for cash (Note 10)                                                                                  
Expenses attributed to stock                                                                                
  issuances                                                                                                 
Expenses paid with stock issuances                                                                          
Disposition of BWAI (Note 1)                                                        (125,000)      (437,500)
Additional shares and costs for                                                                             
  acquisition of RTC                                                                                        
Payment of liabilities of                                                                                   
  investment with stock                                                                                     
Exercises of stock options                                                                                  
Conversion of debentures                                                                                    
  (Note 6)                                                                                                  
Issuance of shares for                                                                                      
  acquisitions (Note 2)                                                                                     
Common shares subject to cash                                                                               
  put by holders (Note 2)                                                                                   
Issuance of shares for                                                                                      
  other assets (Note 10)                                                                                    
Foreign currency gain                            432                                                        
Net loss                                  (2,536,170)                                                       
------------------------------------------------------------------------------------------------------------

BALANCE AT MAY 31, 1996                  $(2,616,758)        2,961    $(177,493)           0      $       0 
============================================================================================================

See accompanying notes.                                                         

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                
July 1, 1994 (inception) to May 31, 1995                                        

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY                                  

                                                        [Enlarge/Download Table]

==================================================================================================================================
                                                                      ADDITIONAL   ACCU-                                          
                                      COMMON STOCK   PREFERRED STOCK   PAID IN    MULATED  TREASURY STOCK    STOCK TO BE ISSUED   
                                   Shares    Amount   Shares  Amount   CAPITAL    DEFICIT  Shares   Amount    Shares    Amount    
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                  
Balance at July 1, 1994              1,000   $ 6,189       0    $ 0   $400,000   $      0          $      0         0   $      0  

Contribution of note payable                                                                                                      
  to additional paid in capital                                                                                                   
  (Note 10)                                                            100,000                                                    

Conversion of accrued                                                                                                             
  management fee into                                                                                                             
   95,600 shares of                                                                                                               
  common stock (Note 10)                                                                                       95,600    334,600  

Reverse acquisition of BWA                                                                                                        
  (Notes 1 and 10)                                                                                                                
    Exchange of BWA stock                                                                                                         
      for RTC stock              1,544,090    12,353   4,000     32     54,882              5,921  (177,493)                      
    Elimination of RTC                                                                                                            
      common stock                  (1,000)   (6,189)                    6,189                                                    

One-for-two stock split           (772,045)   (6,177)                    6,177             (2,960)                                
  (Note 10)                                                                                                                       

Disposition of BWAI                                                                                                               
  (Notes 1 and 10)                                                                                            125,000    437,500  

Net loss                                                                          (81,020)                                        
----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT MAY 31, 1995            772,045   $ 6,176   4,000    $32   $567,248   $(81,020)  2,961 $(177,493)  220,600   $772,100  
==================================================================================================================================

See accompanying notes.                                                         

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

CONSOLIDATED STATEMENTS OF CASH FLOWS                                           

                                                        [Enlarge/Download Table]

===============================================================================================================================
                                                                                                   YEAR           JULY 1, 1994 
                                                                                                  ENDED          (INCEPTION) TO
                                                                                               MAY 31, 1996       MAY 31, 1995 
-------------------------------------------------------------------------------------------------------------------------------
                                                                                                                               
CASH FLOWS FROM OPERATING ACTIVITIES                                                                                           

   Net loss                                                                          $         (2,536,170)  $        (81,020)  
-------------------------------------------------------------------------------------------------------------------------------
   Adjustments to reconcile net loss to net cash used in                                                                       
      operating activities:                                                                                                    
         Purchased research and development (Note 1)                                            1,890,194                  0   
         Depreciation and amortization                                                            111,640             63,143   
         Expenses paid through issuances of securities                                             97,619            334,600   
         Unrealized losses on marketable securities (Note 11)                                     178,183                  0   
         Equity in earnings of unconsolidated subsidiary (Note 2)                                 (39,708)                 0   
      Changes in assets and liabilities net of effects of business entity                                                      
         acquisitions and divestiture:                                                                                         
            Increase in accounts receivable                                                    (1,021,561)          (799,932)  
            Increase in inventories                                                            (1,027,610)          (230,000)  
            (Increase) decrease in other current assets                                            30,639            (50,408)  
            Increase (decrease) in accounts payable                                              (262,693)           588,397   
            Increase in accrued expenses                                                          381,324             55,704   
-------------------------------------------------------------------------------------------------------------------------------
      NET CASH USED IN OPERATING ACTIVITIES                                                    (2,198,143)          (119,516)  
-------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS USED IN INVESTING ACTIVITIES:                                                                                       
   Purchase of property and equipment                                                          (1,900,276)           (34,509)  
   Other receivables                                                                             (241,256)                 0   
   Cash outlays for acquired companies in excess of cash acquired                                (630,613)                 0   
   Purchase of investment securities (Note 2)                                                     (72,726)                 0   
-------------------------------------------------------------------------------------------------------------------------------
      NET CASH USED IN INVESTING ACTIVITIES                                                    (2,844,871)           (34,509)  
-------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES (Notes 6 and 10):                                                                         
   Notes payable issued net of payments                                                         2,181,967            133,444   
   Proceeds from capital contribution (Note 10)                                                         0            100,000   
   Common stock issued including conversions                                                    2,546,105              6,189   
   Debentures issued net of conversion                                                          2,978,237                  0   
   Long-term debt issued net of repayments                                                      1,623,384                  0   
-------------------------------------------------------------------------------------------------------------------------------
      NET CASH PROVIDED BY FINANCING ACTIVITIES                                                 9,329,693            239,633   
-------------------------------------------------------------------------------------------------------------------------------

INCREASE IN CASH AND CASH EQUIVALENTS                                                           4,286,679             85,608   

CASH  AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                                   85,608                  0   
-------------------------------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS - END OF PERIOD                                            $          4,372,287   $         85,608   
===============================================================================================================================

See accompanying notes.                                                         

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

______________________________________________________________________________  

Builders Warehouse Association, Inc. (the "Company" or "BW") through its        
subsidiaries designs, manufactures and markets networking, connectivity and     
add-on products for Local Area Networking markets.  The Company's products      
include network adapters, hubs, video cards, shared printer network servers and 
adapters and printer enhancement products and products using Phase-Locked Loop, 
direct analog, and direct digital radio frequency ("RF") synthesis.  The        
Company's products are sold worldwide to original equipment manufacturers and   
through distributors.                                                           

   The preparation of financial statements in conformity with United
States generally accepted accounting principles requires management to make     
estimates that affect the reported amounts of assets, liabilities, revenues and 
expenses, and the disclosure of contingent assets and liabilities.  Actual      
results could differ from these estimates.                                      

1.       DESCRIPTION OF BUSINESS, ACQUISITIONS, AND DISCONTINUED OPERATIONS     

Builders Warehouse Association, Inc. is a Colorado corporation
originally incorporated under the name of Ceetac Corp. on June 30, 1988, and    
subsequently doing business as Omni Corporation.  The primary purpose of BW was 
to evaluate acquisition candidates and complete acquisitions of, or mergers     
with those candidates.  The Company was therefore accounted for as a            
"development stage company" and until September 20, 1991, conducted no business 
activities.                                                                     

      Effective May 31, 1995, the Company acquired 100% of the outstanding
common stock of Relialogic Technology Corporation ("RTC"), a designer and       
manufacturer of add-on products for the multimedia computer marketplace as well 
as a distributor of computer products manufactured by others.  At the time of   
this acquisition, the shareholders of RTC gained voting control of the Company  
and therefore RTC became the acquiring entity.  As a result, RTC is the         
accounting survivor and reporting successor.  The acquisition of RTC by the     
Company was recorded as a reverse acquisition.  The predecessor company's       
balance sheets were adjusted to reflect the recapitalization of RTC pursuant to 
the acquisition.  The historical stockholders' equity of RTC was adjusted to    
reflect the cost basis of the RTC shareholders in the net assets of RTC.  As a  
result of the acquisition of RTC by the Company, RTC changed its accounting     
year end to May 31.                                                             

      The Company recorded the following summarized balances effective May
31, 1995 to reflect the reverse acquisition of BW:                              

                                                                [Download Table]
                                                                    
Current assets                                          $ 1,788,908 
Inventories                                               1,743,431 
Property and equipment (net)                                966,790 
Other assets                                                  5,537 
Current liabilities                                      (5,220,390)
Notes payable                                              (100,044)
                                                        ----------- 
        Stockholders' equity (net)                      $  (815,768)
                                                        =========== 

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

______________________________________________________________________________  

      Summarized below are pro forma consolidated results of operations of
the Company as though the reverse acquisition had occurred at the beginning of  
the earliest period presented:                                                  

                                                                [Download Table]
                                                                   
Revenues                                               $ 6,693,731 
Loss from continuing operations                            (81,020)
Loss from discontinued operations                       (2,433,000)
Net loss                                                (2,514,020)
Loss per common share                                  $     (8.23)

     ACQUISITION OF UNI PRECISION INDUSTRIAL LIMITED - On April 1, 1996,
the Company acquired 100% of the common stock of Uni Precision Industrial       
Limited ("Uni"), a Hong Kong corporation, for a purchase price of approximately 
$6 million in cash and debt assumed: $500,000 was paid at the closing of the    
transaction and an additional $5.5 million was paid upon the provision to the   
Company of audited financial statements as of the acquisition date. An          
additional $4.0 million payment will be made on April 1, 1997 subject to pro    
rata adjustment based upon Uni having net income after tax of $2.5 million      
during the 12-month period ending March 31, 1997.  The Company incurred         
additional costs in connection with the purchase of Uni of $813,000, of which   
$809,000 was paid through the issuance of restricted common shares.             

      ACQUISITION OF SCITEQ ELECTRONICS, INC. - On May 31, 1996, through a
merger with a newly-formed corporation, Sciteq Communications, Inc. ("Sciteq"), 
the Company acquired 100% of Sciteq Electronics, Inc., for $600,000 in cash,    
plus stock and below-market stock options of the Company valued at $2.4         
million.  An additional $2.0 million payment in stock of the Company will be    
made 12 months from closing subject to pro rata adjustment based upon Sciteq    
achieving pre-tax net income of $750,000 during the 12 month period ending      
December 31, 1996.  The Company incurred additional costs in connection with    
the purchase of Sciteq of $579,000, of which $532,000 was paid or will be paid  
through the issuance of common shares.                                          

      The former shareholders of Sciteq have the right to put their shares
to the Company for cash during the 12 days beginning May 31, 1996.  The value   
of the shares issued at closing of $1,993,578 has been reclassified as long     
term debt in the accompanying financial statements.                             

       As a result of the Sciteq acquisition the Company recorded a one-time
charge to earnings for purchased research and development of $1,890,194.  The   
Company analyzed, during and after the close of the acquisition, both the       
projected net cash flows from Sciteq's existing technology base and the status  
of its ongoing research and development program and concluded that the carrying 
value of the assets acquired exceeded the estimated net realizable values       
recorded in the purchase.                                                       

   ACQUISITION OF PACIFIC DATA PRODUCTS, INC. - On May 24, 1996, the
Company, through its newly-created, wholly owned subsidiary PDP Acquisition     
Corp. ("PDPA"), acquired substantially all of the assets of Pacific Data        
Products, Inc. ("PDP").  The Company paid $273,000 in cash and assumed PDP's    
bank indebtedness of approximately $2.4 million in return for substantially all 
of PDP's assets, including cash, accounts receivable, inventory, fixed assets   
and intangibles including patents, trademarks, copyrights, in-process software  
development and certain specified agreements.  The Company incurred additional  
costs in connection with the purchase of PDP's assets of $123,000 of which      
$121,000 was paid through the issuance of common shares.                        

     PDPA entered into an agreement with Coast Business Credit ("Coast")
for a $5.0 million credit facility secured by all of PDPA's newly- acquired     
assets.  The Company provided a $500,000 infusion of working capital to         

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

______________________________________________________________________________  

PDPA, as well as a limited guarantee of $750,000 to effectuate the Coast credit 
facility.                                                                       

     As a result of the asset acquisition by PDPA the Company recorded a
one-time charge to earnings for purchased in-process software development costs 
of $517,865. The Company analyzed, during and after the close of the            
acquisition, both the projected net cash flows from PDPA's existing technology  
base and the status of its ongoing software development program and concluded   
that the carrying value of the assets acquired exceeded the estimated net       
realizable values recorded in the purchase.                                     

        DISCONTINUED OPERATIONS - As of May 31, 1995, the Company disposed its
loss-generating, wholly-owned subsidiary, BWA, Inc., which owned two            
Arkansas-incorporated operating subsidiaries, Builders Warehouse Association,   
Inc. and American Plywood Sales, Inc., both of which were engaged in the        
building supply industry.  Such operations incurred an operating loss of        
approximately $2.4 million during the year ended May 31, 1995 and had a         
consolidated negative book value at that date of $1,143,042.  Accordingly, the  
Company delivered 125,000 post reverse split shares of its common stock with an 
approximate market value of $437,500 at May 31, 1995 to the purchaser of BWA,   
Inc.  In addition the buyer assumed certain future costs and potential losses   
as more fully described in Note 13.                                             

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

       PRINCIPLES OF CONSOLIDATION - The accompanying consolidated financial
statements as of May 31, 1996 include the accounts of BW and RTC from July 1,   
1994 (inception) through May 31, 1996, R-Net International, Inc. ("Rnet") from  
November, 1995 (formation), Sciteq from May 31, 1996, Uni from April 1, 1996    
and PDPA, from May 24, 1996.  (See Note 1).  Immaterial subsidiaries of Uni     
have been accounted for on the equity method.  All significant intercompany     
transactions and balances have been eliminated in consolidation.  The           
consolidated group is referred to individually or collectively as the           
"Company".  For purposes of financial reporting, RTC was treated as purchaser   
in a reverse acquisition of BW and its subsidiary, BWA, Inc.                    

CASH AND CASH EQUIVALENTS - All cash on hand and in banks,    
certificates of deposit and other highly-liquid investments with maturities of  
three months or less, when purchased.                                           

       ACCOUNTS AND NOTES RECEIVABLE - In the normal course of business, the
Company extends unsecured credit to its customers related to the sales of       
various products. Typically credit terms require payment on the tenth day of    
the month following sales.  The Company evaluates and monitors the              
creditworthiness of each customer on a case-by-case basis.                      

     INVENTORY - Inventory consists of goods held for sale valued at the
lower of cost or market.  Inventories at May 31, 1996 consist of:               

                                                                [Download Table]
                                                                  
Raw materials                                        $  4,399,778 
Work in process                                         2,398,294 
Finished goods                                          1,122,802 
                                                     ------------ 
                                                        7,920,874 
Less:  Reserve for obsolescence                        (1,020,570)
                                                     ------------ 
                                                     $  6,900,304 
                                                     ============ 

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

______________________________________________________________________________  

 PROPERTY AND EQUIPMENT - Property and equipment are recorded at
historical cost.  Depreciation and amortization are provided over the estimated 
useful lives of the individual assets or the terms of the leases if shorter     
using accelerated and straight-line methods.  Useful lives for property and     
equipment range from 5 to 15 years.                                             

      Capitalized leases (Uni) are initially recorded at the present value
of the minimum payments at the inception of the contracts, with an equivalent   
liability categorized as appropriate under current or non-current liabilities.  
Such assets are depreciated on the same basis as described above.  Interest     
expense, which represents the difference between the minimum payments and the   
present value of the minimum payments at the inception of the lease, is         
allocated to accounting periods using a constant rate of interest over the      
lease.                                                                          

OTHER INVESTMENTS - Other investments include insignificant   
subsidiaries of Uni accounted for on the equity method, non-marketable          
securities held in other companies and an investment in a joint venture net of  
an allowance for permanent impairment of value.                                 

     EXCESS OF COST OVER NET ASSETS ACQUIRED - Excess of cost over net
assets acquired is being amortized over 5 to 15 years and represents the excess 
of the purchase price over the fair value of net assets acquired.  Accumulated  
amortization was $133,257 and $57,143 at May 31, 1996 and 1995, respectively.   

   FAIR VALUE OF FINANCIAL INSTRUMENTS - The fair value of financial
instruments is determined by reference to various market data and other         
valuation techniques as appropriate.  Management believes that there are no     
material differences between the recorded book values of its financial          
instruments and their estimated fair values.                                    

     REVENUE RECOGNITION - Revenues are recognized when the products are
shipped to the customers.                                                       

     INCOME TAXES - The Company has filed consolidated Federal and State
income tax returns as of its fiscal year end since January 1, 1992.  At May 31, 
1995 there were no deferred taxes or income tax provisions recorded in the      
financial statements.  At May 31, 1996 the deferred taxes and income tax        
provisions recorded in the financial statements relate to Uni's operations in   
China.  (See Note 9)                                                            

  ADVERTISING - The Company's expenses advertising expenditures as
incurred.  Advertising expenses of the Company consist primarily of allowances  
given to customers rather than direct expenditures by the Company.              

       LOSS PER COMMON SHARE - Loss per common share is computed by dividing
net loss by the weighted average number of common shares outstanding during the 
period which was computed based upon the equivalent shares of BW common stock   
issued in the reverse acquisition of RTC adjusted retroactively for all stock   
splits.  Convertible securities outstanding and common stock to be issued are   
not included in the computation of earnings per share as they would be          
anti-dilutive.                                                                  

       FOREIGN CURRENCY TRANSLATION - Foreign operations of the Company have
been translated into U.S. dollars in accordance with principles prescribed in   
Statement of Financial Accounting Standards No. 52, "Foreign Currency           
Translation," (FAS 52).  For the fiscal year ended May 31, 1996 the current     
rate method was used whereby all assets and liabilities are translated at       
year-end exchange rates, and the resultant translation adjustments are included 
as a separate component of stockholders' equity.  Revenues and expenses are     
translated at the average rates of exchange prevailing throughout the year, and 
the resultant gains and losses are included in net earnings.                    

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

______________________________________________________________________________  

3.       PROPERTY AND EQUIPMENT                                                 

        Property and equipment consisted of the following  as of May 31, 1996:

                                                                [Download Table]
                                                                             
Manufacturing, engineering and plant equipment and software  $     7,433,364 
Office furniture and fixtures                                      3,182,281 
Autos                                                                172,781 
Leasehold improvements                                             2,175,270 
                                                             --------------- 
         Total property and equipment                             12,963,696 
Less:  Accumulated depreciation                                 (  4,809,873)
                                                             --------------- 
         Net book value                                      $     8,153,823 
                                                             =============== 

   Leasehold land and buildings of Uni with a cost of $2,173,790 are
pledged to secure Uni's banking facility.  See Notes 4 and 5.  Cost and         
accumulated amortization of assets held under capitalized leases were           
$2,174,000 and $37,000.                                                         

        All the assets of PDPA including its property, plant and equipment are
pledged to secure the credit facility with Coast as more fully described in     
Note 4.  No net book value was ascribed to these assets in the asset purchase   
for financial accounting purposes.                                              

4.       SHORT TERM DEBT                                                        

Short term debt consisted of the following at May 31, 1996:   

                                                                [Download Table]
                                                                              
Floating rate interest loan; a portion of banking facility of                 
  Uni more fully described in Note 5; weighted average                        
  interest rate for the two months ended May 31, 1996 was 9.7%  $    3,648,590
Floating rate interest loan (2% over Coast's prime rate); debt                
  assumed by PDPA in asset acquisition (see Note 1); interest                 
  rate for week ended May 31, 1996 was 10.25%                        2,175,804
Non-interest bearing demand loan                                        10,000
                                                                --------------
        Total short term debt                                   $    5,834,394
                                                                ==============

  In connection with the acquisition of PDP's assets, PDPA assumed
approximately $2.4 million in debt to Coast,  an asset based lender.  The debt  
is collateralized by inventories, accounts receivable, property, plant and      
equipment with a book value of approximately $2.3 million.  The loans bear      
interest at 2% over the prime rate and for the week ended May 31, 1996 the      
interest rate remained constant at 10.25%. The maximum amount outstanding under 
PDPA's banking facility during the period was approximately $2.4 million and    
the average amount outstanding was approximately $2.3 million.  At the end of   
the six month period beginning with the acquisition any unpaid balance of the   
loans assumed in the asset purchase will be converted into a term loan over an  
estimated three years.                                                          

     In addition to the debt assumed in the acquisition of PDP, PDPA and
entered into an agreement with the Lender for a $5 million credit facility      
secured by all of PDPA's acquired assets.  BW provided an injection of $500,000 
working capital to PDPA, as well as a limited guarantee of $750,000.  After     
using approximately $2.2                                                        

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

______________________________________________________________________________  

million outstanding as of May 31, 1996 for the purchase of PDP, $2.8 million is 
available for internal growth and for acquisitions.                             

       At May 31, 1995 short term debt consisted of  a $133,444 non-interest
bearing loan from the former shareholder of RTC due on demand.                  

5.       LONG TERM DEBT                                                         

Long term debt consisted of the following as of May 31, 1996: 

                                                                [Download Table]
                                                                              
Floating rate interest loan; a portion of banking facility of                 
  Uni more fully described below; weighted average interest                   
  rate for the two months ended May 31, 1996 was 9.7%          $    1,651,649 
Obligations under finance leases (Uni)                                811,550 
5% demand loan from an officer and director; refinanced by                    
  the placement of preferred stock shortly after year end                     
  (see Notes 8 and 14)                                              1,237,500 
                                                               -------------- 
                                                                    3,700,699 
Less:  Current portion                                            (   350,010)
                                                               -------------- 
        Total long term debt                                   $    3,350,689 
                                                               ============== 

        As of May 31, 1996, Uni had aggregate loan facilities of approximately
$12.5 million from various banks for overdrafts, loans and trade financing.     
Unused facilities as of the same date were approximately $5.0 million including 
bank overdrafts of $1.1 million and loan and trade financing of $3.9 million.   
These facilities are secured by a priority lien on Uni's leasehold land and     
buildings (Note 3), a pledge of Uni's bank deposits of approximately $3.5       
million, liens on Uni's inventories released under trust receipt loans and      
guarantees by former directors of Uni and a corporation controlled by former    
directors of Uni as well as the directors themselves.  The bank loans require   
Uni to maintain a tangible net worth of not less than $3.75 million.  The       
maximum amount and average amount outstanding including current maturities      
during the period ended May 31, 1996 was approximately $9.4 million and $7.6    
million, respectively.                                                          

        Long term debt including capitalized leases at May 31, 1996 is payable
by year as follows:                                                             

                                                                [Download Table]
                                                   
1997                                $    1,705,165 
1998                                       486,702 
1999                                       443,924 
2000                                       443,924 
2001                                       264,353 
2002 and later                             893,422 
                                    -------------- 
                                         4,237,490 
Less:  Interest portion                (   536,791)
                                    -------------- 
                                    $    3,700,699 
                                    ============== 

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

______________________________________________________________________________  

6.       DEBENTURES PAYABLE                                                     

During the year ended May 31, 1996 the Company began a private
placement of convertible debentures that was subsequently completed after year  
end.  The Company has the right to call the debentures prior to conversion at   
90% of face value.  The debentures bear interest at 8.0% beginning after date of
issue and if converted the interest is payable in common shares.  The debentures
were sold at a 27.5% discount from face value and the Company raised net        
proceeds of $6,580,000 during the period and approximately $3 million after year
end.  Such debentures converted or can convert into common shares at a maximum  
of $18.00 per share or at market or conditions thereof.  $1,375,000 in face     
value of debentures with conversion prices ranging from $6.00 to $9.00 were     
called by the Company prior to conversion with the proceeds of a loan from an   
officer and director (see Note 10).  The debentures were ultimately exchanged   
for convertible preferred stock (see Note 14).                                  

       Debentures with a face value of $3,680,000 plus accrued interest were
converted during the year into 323,100 shares of the Company's common stock.    
After year end additional debentures with a face value of $2,085,000 plus       
accrued interest were converted into 191,141 shares of the Company's common     
stock.  The Company has been notified by the agent for the remaining debenture  
holders that all the outstanding debentures will be converted into common       
shares.                                                                         

7.       LEASES AND OTHER COMMITMENTS                                           

       The Company occupies 322,000 square feet of office, manufacturing and
distribution space; 44,300 square feet in the United States and 279,000 square  
feet in Hong Kong and China.   The lease term for the 6,000 square foot         
office and warehouse space for RTC, in Fremont, California expired on           
July 31, 1996 and RTC is remaining at that location on a month to month basis   
until the business relocates to San Diego, California to an existing facility.  
The Company occupies 37,000 square feet in San Diego with the lease expiring    
for 14,000 square feet occupied by Sciteq, on September 1, 1997 and 23,200      
square feet occupied by PDPA on a month to month basis.  The corporate offices  
of the Company occupy 1,000 square feet which is leased on a month to month     
basis.  The Company's lease of a 21,000 square foot office/warehouse in Hong    
Kong expired May 31, 1996.  Subsequently, the Company  relocated to a           
14,000 square foot facility which is owned by the Company.  Finally the Company 
leases 258,000 square feet in China which is used for primarily manufacturing,  
warehouse and distribution, and administrative offices.                         

 Future minimum operating lease payments for the Company and its
subsidiaries at May 31, 1996 are as follows, by year:                           

                                                                [Download Table]
                                                
1997                                $    364,062
1998                                     211,244
1999                                      64,112
                                    ------------
                                    $    639,418
                                    ============

  As of May 31, 1996, the Company's Hong Kong subsidiary, Uni, had
significant commitments and contingent liabilities for open letters of credit,  
discounted bills and shipping guarantees executed in favor of various banks     
totaling approximately $2,427,000.                                              

   Two officers of Sciteq have three-year employment contracts under
which Sciteq is obligated to make payments of $220,000 per year in total.  The  
Company has the right to terminate these contracts for cause.                   

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

______________________________________________________________________________  

8.       STOCKHOLDERS' EQUITY                                                   

   The Company is authorized to issue the following shares of stock:

   25,000,000 shares of Common Stock ($.008 par value)
     10,000,000 shares of Preferred Stock ($.01 par value)
                10,000,000 shares of Preferred Stock, Series A ($.008 par value)

Series A Preferred Stock has a $.008 par value and a $1,000   
liquidation value.  Holders of Series A Preferred Stock are not entitled to     
vote.  The Series A Preferred Stock bears a cumulative 6% annual dividend       
payable annually on July 31 of each year. Such dividend is payable at the       
Company's option in either cash or common stock at the immediately preceding    
business day's closing price as reported by NASDAQ.  Each share of Series A     
Preferred Stock is convertible into 285.75 shares of Common Stock on a          
post-reverse split basis.  These shares were issued in connection with the      
reverse acquisition (See Note 1) and were fully converted into common stock     
prior to May 31, 1996.                                                          

9.       STOCK OPTIONS AND STOCK AWARD PLAN                                     

    The Company has two stock option plans, the 1994 Stock Option Plan
("94 SOP") and the 1995 Stock Option Plan ("95 SOP") and a Stock Award Plan     
("SAP").  The purpose of these plans is to attract, retain, motivate and reward 
officers, directors, employees and consultants of the Company to maximize their 
contributions towards the Company's success.                                    

  In addition to the activity indicated below, the Company granted
options for 650,000 shares of common stock under the 95 SOP.  Of such options   
granted under the 95 SOP, 325,000 are not exercisable until after May 31, 1997  
and 325,000 until after May 31, 1998.  The Company will register the 95 SOP     
options on Form S-8 with the Securities and Exchange Commission.  All           
options were granted at not less than fair market value at the date of the      
grant.                                                                          

      During the year ended May 31, 1996, the following activity occurred:

                                                        [Enlarge/Download Table]

                                                              Exercise                 
                       Stock Options                        Price Range      Options   
                       -------------                        -----------      -------   
                                                                                       
Options outstanding at May 31, 1995                                                  0 
Options registered January 17, 1996 - 94 SOP               $3.18 to $8.58    1,000,000 
Options granted under 94 SOP                               $3.18 to $8.58     (577,487)
                                                                           ----------- 
        94 SOP options registered and available for grant                      422,513 
                                                                           =========== 

Options granted under 94 SOP                               $3.18 to $8.58      577,487 
Options exercised under 94 SOP                             $3.18 to $8.58     (150,033)
                                                                           ----------- 
        Options outstanding under 94 SOP                                       427,454 
                                                                           =========== 

                     Stock Award Plan                                        Shares    
                     ----------------                                        ------    

Grants outstanding at May 31, 1995                                                   0 
Shares registered under the SAP                                                500,000 
Shares granted and issued under the SAP                                       (359,444)
                                                                           ----------- 
        Options outstanding under SAP                                          140,556 
                                                                           =========== 

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

______________________________________________________________________________  

10.      CAPITAL STOCK TRANSACTIONS AND BUSINESS ACQUISITIONS                   

  REVERSE STOCK SPLITS - In March 1995, approval was granted for a
one-for-six reverse stock split effective April 10, 1995. In June 1995, approval
was granted for a one-for-two reverse split effective June 30, 1995. The effect 
of these changes was reflected in the financial statements retroactively as if  
the reverse splits occurred at the beginning of the reported  period.           

   PRIVATE PLACEMENT - The Company issued 175,824 post-reverse split
Common shares to certain stockholders in exchange for marketable securities of  
a company controlled by them (See Note 11).                                     

      RTC ACQUISITION - Pursuant to an Amended and Restated Stock Purchase
Agreement dated May 31, 1995 (the "Agreement") the Company acquired all the     
outstanding shares of RTC, a California corporation, which began business on    
July 1, 1994 and in which certain shareholders and directors of the Company had 
an ownership interest. The Agreement provided that the Company issue 1,085,798  
post reverse-split Common shares and 4,000 Class A Preferred shares             
(convertible into 1,143,000 common shares). Acquisition costs to the Company in 
this transaction were $250,000.  The acquisition was recorded as a "reverse     
merger" (See Note 1).                                                           

      CONTRIBUTION TO CAPITAL - RTC had a non-interest bearing demand loan
of $100,000 from Jardine Cho, the former owner of RTC, which was contributed to 
the capital of the Company as of May 31, 1995.  No shares were issued in this   
transaction.                                                                    

     MANAGEMENT  FEE - RTC had an agreement through January 1, 1996 with
Jardine Cho which provided compensation of $300,000 per annum or 5% RTC sales,  
whichever is greater, for management services.  Jardine Cho and its             
shareholders had control of the Company immediately following the reverse       
merger.  As of May 31, 1995 Jardine Cho terminated its agreement with RTC and   
accepted payment of its $334,600 obligation in common stock issued by the       
Company.  During the year ended May 31, 1996 the Company issued 95,600 shares   
of common stock in full satisfaction of this liability.                         

  PRIVATE PLACEMENT - The Company issued 65,000 post-reverse split
Common shares during the third quarter of fiscal 1996 for $260,000 cash.        

 SCITEQ ACQUISITION - As described in Note 1, the Company issued
229,646 shares of common stock to the holders of Sciteq's outstanding common    
stock and in payment of costs incurred in connection with the transaction.  In  
addition the Company issued options to acquire an additional 60,205  shares of  
common stock at $5.02 per share.  The additional payment contingent upon the    
net income of Sciteq for the year ended December 31, 1996 will be made in       
common shares at the then market price.                                         

 COVENANT NOT TO COMPETE - In connection with the acquisition of
Sciteq, a former shareholder and officer of Sciteq executed a covenant not to   
compete with the Company and any of its subsidiaries for a period of five       
years.  Shares with a value at issue of $200,000 will be issued in quarterly    
installments over two years.  The initial payment resulted in the issuance of   
1,567 shares of common stock.                                                   

       UNI ACQUISITION - In connection with the Company's acquisition of Uni
on March 31, 1996 the Company issued 142,000 shares of its common stock valued  
at $809,400 in payment of costs incurred in connection with the transaction to  
two officers of RTC (See Note 1).                                               

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

______________________________________________________________________________  

       PDP ACQUISITION - In connection with the Company's acquisition of the
assets of PDP on May 24, 1996 the Company issued 17,200 shares of its common    
stock valued at $120,600 in payment of costs incurred in connection with the    
transaction  (See Note 1).                                                      

11.      OTHER RELATED PARTY TRANSACTIONS                                       

      Summarized below are all material related party transactions entered
into by the Company and its subsidiaries during the year ended May 31, 1996 and 
the period July 1, 1994 (inception) to May 31, 1995 not otherwise disclosed in  
these notes.                                                                    

     In May 1995 the Company issued 175,824 post reverse split shares of
common stock to certain shareholders and directors (see Note 10) in exchange    
for marketable securities in a company controlled by them.  Such securities had 
a market value of $149,091 as of May 31 1996.  These shareholders have agreed   
to indemnify the Company against any decline in value of the marketable         
securities.  As of May 31, 1996 the liability to the Company for this           
indemnification was $178,183 and it is included in other receivables (see Note  
18).                                                                            

      On February 29, 1996 the Company made a 8% demand loan in the amount
of $100,000 to an officer of RTC.  Accrued and unpaid interest at May 31, 1996  
totaled $2,016.                                                                 

      On April 12, 1996 the Company made a 8% demand loan in the amount of
$100,000 to an entity controlled by one of its directors.  Accrued and unpaid   
interest at May 31, 1996 totaled $1,074.                                        

      On March 25, 1996 an entity controlled by an officer and director of
the Company made a 5% demand loan to the Company in the amount of $1,237,500.   
Accrued and unpaid interest at May 31, 1996 totaled $12,494  (See Note 5).      

    Accrued dividends payable are due a former shareholder and current
officer of Uni and were declared prior to the acquisition of Uni by the         
Company.                                                                        

     Uni, as a founding shareholder, holds 35% of the outstanding shares
of Spectra Electronics Systems, Ltd. ("Spectra"), a Hong Kong private company,  
which sells point of sale equipment such as credit card readers for merchants   
in the Asian market.  Spectra had sales (unaudited) of $445,000 and net income  
after tax of $163,000 (unaudited) for the two months ended May 31, 1996.        

    In the ordinary course of business, Uni made sales of $263,000 and
paid marketing research service fees of $129,000 to companies controlled by a   
former director and present officer of Uni.                                     

12.      INCOME TAXES                                                           

   At May 31, 1996 the Company has accumulated federal net operating
losses which may be potentially available to reduce future taxable income.      
However, among potential adjustments which may reduce available loss            
carryforwards, the Internal Revenue Code of 1986, as amended, (IRC), reduces    
the extent to which net operating loss carryforwards may be utilized in the     
event there has been an "ownership change" of a company as defined by           
applicable IRC provisions.  The Company believes that the issuances of its      
equity securities and transfers of ownership of outstanding equity securities   
may have resulted in one or more such ownership changes and intends             

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

______________________________________________________________________________  

to analyze the impact of such transfers on the continued availability, for tax  
purposes, of the Company's net operating losses incurred through 1996.  Further 
ownership changes in the future, as defined by the IRC, may reduce the extent   
to which any net operating losses may be utilized.  The income tax provision    
for the year ended May 31, 1996 is comprised as follows:                        

                                                                [Download Table]

                                    United States  Non-U.S.      Total  
                                    -------------  --------      -----  
                                                                        
Income taxes:                                                           
    Current                           $   2,000    $  38,000  $   40,000
    Deferred                                  0            0           0
                                      ---------    ---------  ----------
        Total income tax provision    $   2,000    $  38,000  $   40,000
                                      =========    =========  ==========

        The reconciliation between income tax expense and a theoretical United
States tax computed by applying a rate of 35% for the fiscal periods ended May  
31, 1996 and 1995, is as follows:                                               

                                                        [Enlarge/Download Table]

                                                                           July 1, 1994
                                                           Year Ended      (inception) 
                                                          May 31, 1996     May 31, 1995
                                                          ------------     ------------
                                                                                       
Earnings before U.S. and non-U.S. income taxes:                                        
    United States                                        $  (3,147,000)  $ (    81,000)
    Foreign                                                    651,000               0 
                                                         -------------   ------------- 
        Total                                            $  (2,496,000)  $ (    81,000)
                                                         =============   ============= 

Theoretical benefit at 35%                               $     874,000   $      28,000 
U.S. loss for which no benefit was recorded as there is                                
    no assurance of realization                             (1,101,000)    (    28,000)
Adjustment for non-U.S. taxes in excess of theoretical                                 
    U.S. tax rate                                              120,000               0 
Foreign permanent differences                                   56,000               0 
Other                                                           11,000               0 
                                                         -------------   ------------- 
        Total                                            $     (40,000)  $           0 
                                                         =============   ============= 

13.      LITIGATION                                                             

      The Company and certain former officers and directors are defendants
in litigation filed in May 1994 seeking unspecified damages for allegedly       
violating sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and   
making a series of positive public statements to the securities market place.   
Management believes the claims to be without merit.  Nevertheless, the ultimate 
outcome of the litigation cannot presently be determined. No provisions for any 
loss that may result upon resolution of this matter has been made in the        
financial statements.  In addition, the Company is indemnified against any loss 
that may result by the buyer of BWA, Inc.                                       

      The Company and its subsidiaries are involved in various other legal
proceedings and claims incident to the normal conduct of its business.          
Although it is impossible to predict the outcome of any outstanding legal       
proceedings, the Company believes that such legal proceedings and claims,       
individually and in the aggregate, are not likely to have a material effect on  
its financial position or results of operations.                                

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

______________________________________________________________________________  

14.      SUBSEQUENT EVENTS                                                      

       MERGER - On June 18, 1996, the Company and  Osicom Technologies, Inc.
("Osicom") entered into a definitive agreement whereby Osicom will acquire      
substantially all of the assets of BW.  Under the terms of the agreement,       
shares of Osicom common stock will be issued to BW for substantially all of     
BW's assets.  The Osicom common stock issued to BW will then be distributed to  
BW's shareholders in a complete liquidation.  BW will receive 0.94 share of     
Osicom common stock for each common share of BW currently outstanding, which    
exchange ratio represents a 10 percent premium to the market value of BW stock  
based on the June 17, 1996 closing prices of $15 and $17.50 for BW and Osicom   
shares, respectively.                                                           

      Osicom is a Santa Monica, California-based company engaged in design
and manufacture of digital video switches and routers for the                   
telecommunications industry and, with its January 31, 1996, acquisition of RNS  
(formerly Rockwell Network Systems), is now an industry leader in providing     
high-speed Local Area Network solutions and connections for the high-growth     
Fast Ethernet, FDDI, and ISDN networking markets.                               

    Following the close of the transaction, Barry Witz, a director and
chief executive officer of BW, will join Osicom's board of directors which will 
be expanded to five members.  Sharon Chadha, the current CEO and Chairman of    
Osicom, Par Chadha and Dr. Xin Cheng will remain on the Board of Osicom. The    
remaining director position will be filled by Leonard N. Hecht, president of    
Chrysalis Capital Group, an investment banking company specializing in mergers  
and acquisitions.  Mr. Hecht has served on the board of directors of many       
public and private companies and was a founding principal of Xerox Development  
Corporation, a wholly-owned subsidiary of the Xerox Corporation.                

       The acquisition will qualify as a tax-free reorganization and will be
completed as soon as practical subject to regulatory clearance and approval by  
the shareholders of both companies.                                             

      DEBENTURE CONVERSIONS - Subsequent to May 31, 1996 debentures with a
face value of $2,085,000 were converted into 191,141 shares of the Company's    
common stock.                                                                   

DEBENTURE PLACEMENTS - Subsequent to May 31, 1996 the Company 
completed its placement of convertible debentures and received net proceeds of  
approximately $3.0 million.                                                     

PRIVATE PLACEMENT OF SECURITIES - On July 2, 1996, the Company
completed a placement of $10.7 million face value of a new class of preferred   
stock ("Class B") which has a cumulative dividend of 8%, redeemable by the      
Company and is convertible into shares of the Company's common stock if not     
previously called.  Dividend payments are scheduled to begin October 1, 1996.   
Holders can convert these preferred shares at a price of $18.50 or under        
certain conditions at market price.  Holders of the preferred shares were also  
issued warrants to purchase 145,310 shares of the Company's common stock at     
$18.50 per share.  Net proceeds received by the Company totaled approximately   
$8.1 million                                                                    

15.      CONCENTRATION OF CREDIT RISK                                           

Financial instruments that potentially subject the Company to 
concentrations of credit risk consist primarily of temporary cash investments   
and trade receivables.  As regards the former, the Company places its temporary 
cash investments with high credit quality financial institutions and limits, by 
policy, the amount of credit exposure to any one institution.  The Company's    
foreign subsidiary, Uni, has one bank account which, at                         

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

________________________________________________________________________________

May 31, 1996 exceeded five percent of current assets: a $1,294,000 account at   
the Bank of China.  As the Bank of China is a large, stable bank, the Company   
does not perceive significant credit exposure regarding this account.           

     Concentrations of credit risk with respect to trade receivables are
limited because there is a large number of customers in the Company's customer  
base spread across many industries and geographic areas.  One customer          
accounted for 35.1% of net sales for the year ended May 31, 1996 and no         
customer accounted for more than 10% of sales during the period ended May 31,   
1995.  The largest single customer receivable at May 31, 1996 was $832,000.  At 
May 31, 1995 no single receivable exceeded 10% of net receivables.              

16.      SUPPLEMENTAL CASH FLOW DISCLOSURES                                     

       Interest expense and taxes paid approximated the related expenses for
the year ended May 31, 1996 and the period ended May 31, 1995.                  

The stock issued to effect, in part, the Uni, Sciteq and PDP  
acquisitions during the year ended May 31, 1996 neither provided nor used cash. 
Accordingly, the stock has been excluded from the statement of cash flows.      

17.      SEGMENT INFORMATION                                                    

        Information in the table below is presented on the same basis utilized
by the Company to manage its business.  Export sales and certain income and     
expense items are reported in the geographic area where the final sale to       
customers is made, rather than where the transaction originates.                

                                                                [Download Table]

                                             July 1, 1994 
                              Year Ended    (inception) to
                             May 31, 1996    May 31, 1995 
                             ------------    ------------ 
                                                          
Net sales:                                                
    United States             $14,144,000     $6,694,000  
    Asia                        2,429,000              0  
    Other                         116,000              0  
    Inter-area eliminations      (286,000)             0  
                              -----------     ----------  
        Total net sales       $16,403,000     $6,694,000  
                              ===========     ==========  

Net income (loss):                                        
    United States             $(2,688,000)    $  (81,000) 
    Asia                          146,000              0  
    Other                           7,000              0  
    Inter-area eliminations        (1,000)             0  
                              -----------     ----------  
        Net income (loss)     $(2,536,000)    $  (81,000) 
                              ===========     ==========  

Total assets:                                             
    United States             $13,810,000     $1,865,000  
    Asia                       21,704,000              0  
    Inter-area eliminations    (4,668,000)             0  
                              -----------     ----------  
        Total assets          $30,846,000     $1,865,000  
                              ===========     ==========  

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

______________________________________________________________________________  

18.      OTHER RECEIVABLES                                                      

Other receivables at May 31, 1996 consisted of the following: 

                                                                [Download Table]
                                                                                
8% demand loan due from entity controlled by director including                 
  accrued interest (see Note 11)                                   $     101,074
8% demand loan due from an officer of RTC including accrued                     
  interest (see Note 11)                                                 102,016
Due to Company under indemnification against loss in value of                   
  marketable securities received in private placement of shares                 
  due from directors (see Note 11)                                       178,183
Due to Company under indemnification of costs related to BWA, Inc.              
  (see Notes 1 and 13)                                                    62,893
8% demand loan due from non-affiliate including accrued interest         244,041
Other miscellaneous trade and non-trade receivables                      107,296
                                                                   -------------
       Total other receivables                                     $     795,503
                                                                   =============

19.      VALUATION AND QUALIFYING ACCOUNTS                                      

Changes in the inventory obsolescence reserve were as follows:

                                                                [Download Table]
                                                                    
Balance at July 1, 1994 (inception)                   $           0 
Additions charged to costs and expenses                       4,656 
Amounts used during year                                          0 
                                                      ------------- 
         Balance at June 1, 1995                              4,656 
 Additions charged to costs and expenses solely from                
   acquisitions (see Note 1)                              1,019,542 
Amounts used (recovered) during year                         (3,628)
                                                      ------------- 
         Balance at May 31, 1996                      $   1,020,570 
                                                      ============= 

       Changes in the accounts receivable reserve for doubtful accounts were
as follows:                                                                     

                                                                [Download Table]
                                                                                
Balance at July 1, 1994 (inception)                               $           0 
Additions charged to costs and expenses                                  33,000 
Amounts used during year                                                      0 
                                                                  ------------- 
         Balance at June 1, 1995                                         33,000 
 Additions charged to costs and expenses solely from                    380,743 
   acquisitions (see Note 1)                                                    
Amounts used (recovered) during year                                    (13,000)
         Balance at May 31, 1996                                  $             
                                                                  ------------- 
                                                                        400,570 
                                                                  ============= 

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

______________________________________________________________________________  

20.      PRO FORMA FINANCIAL INFORMATION (UNAUDITED)                            

     The following unaudited pro forma summary presents the consolidated
results of operations of the Company as if the acquisitions of Uni and Sciteq   
had occurred at the beginning of each period presented.  This pro forma         
presentation does not necessarily reflect the results as they would have been   
had the acquisitions actually occurred at the beginning of the periods          
presented.                                                                      

July 1, 1994 (inception) to May 31, 1995

                                                        [Enlarge/Download Table]

                                       Company                                             Pro Forma                Pro Forma   
                                     consolidated           Uni            SCITEQ        Adjustments     Ref      Consolidated  
                                    --------------------------------------------------------------------------------------------
                                                                                                                                
Revenues                               $6,694,000       $46,315,000     $3,420,000       $1,311,000     (i)         $55,118,000 
Cost of Sales                           5,890,000        41,676,000      1,994,000       (1,201,000)    (i)          48,359,000 
                                    --------------------------------------------------------------------------------------------
     Gross Profit                         804,000         4,639,000      1,426,000          110,000                   6,759,000 
Operating Expenses                        887,000         4,328,000      2,009,000           22,000     (ii)                    
                                                                                            107,000     (iii)                   
                                                                                            164,000     (iv)          7,517,000 
                                    --------------------------------------------------------------------------------------------
     Operating Income (Loss)              (83,000)          311,000       (583,000)        (403,000)                   (758,000)
Other Income (Charges)                      2,000                                          (605,000)    (v)                     
                                                                                            (61,000)    (vi)           (664,000)
                                    --------------------------------------------------------------------------------------------
     Income Before Taxation               (81,000)          311,000       (583,000)      (1,069,000)                 (1,422,000)
Provision for Taxation                                                                                                          
                                    --------------------------------------------------------------------------------------------
     Net Operating Income               $ (81,000)         $311,000      $(583,000)     $(1,069,000)                $(1,422,000)
                                    ============================================================================================

Weighted Average Shares Outstanding       305,285                                           369,556     (vii)           674,841 

Loss Per Share, Primary and Fully                                                                                               
  Diluted                               $   (0.27)                                                                  $     (2.11)

June 1, 1995 to May 31, 1996            

                                                        [Enlarge/Download Table]


                                        Company                                             Pro Forma                Pro Forma    
                                       consolidated            Uni            SCITEQ        Adjustments    Ref      Consolidated  
                                     -------------------------------------------------------------------------------------------- 
                                                                                                                                  
Revenues                                $16,402,000       $47,293,000     $4,213,000         $515,000      (i)       $67,393,000  
Cost of Sales                            14,039,000        40,085,000      2,227,000         (526,000)     (i)        55,825,000  
                                     -------------------------------------------------------------------------------------------- 
     Gross Profit                         2,363,000         7,208,000      1,986,000          (11,000)                11,568,000  
Operating Expenses                        4,730,000         4,814,000      1,575,000           20,000      (ii)                   
                                                                                               97,000      (iii)                  
                                                                                              179,000      (iv)       11,415,000  
                                     -------------------------------------------------------------------------------------------- 
     Operating Income (Loss)             (2,367,000)        2,394,000        411,000         (285,000)                   153,000  
Other Income (Charges)                     (129,000)                                         (550,000)     (v)                    
                                                                                              (66,000)     (vi)         (745,000) 
                                     -------------------------------------------------------------------------------------------- 
     Income Before Taxation              (2,496,000)        2,394,000        411,000         (901,000)                  (592,000) 
Provision for Taxation                      (40,000)                                                                     (40,000) 
                                     -------------------------------------------------------------------------------------------- 
     Net Operating Income              $ (2,536,000)       $2,394,000       $411,000        $(901,000)                $ (632,000) 
                                     =============================================================================================

Weighted Average Shares Outstanding       1,933,764                                           369,556     (viii)       2,303,320  

Loss Per Share, Primary and Fully                                                                                                 
  Diluted                              $      (1.31)                                                                  $    (0.27) 

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BUILDERS WAREHOUSE ASSOCIATION, INC.                                            
AND SUBSIDIARIES                                                                

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

______________________________________________________________________________  

References for pro forma financial information:                                 

(i)      To eliminate sales to RTC by Uni and purchases from Uni by RTC in the  
periods presented.                                            

(ii)     To amortize the increased valuation of fixed assets of $365,000        
      recognized in the Uni acquisition, using an estimated 15 year useful
life.                                                         

(iii)    To amortize the excess cost over net assets of $1,743,000 arising from 
the Uni acquisition, using an estimated 15 year useful life.  

(iv)     To amortize the excess cost over net assets of $895,000 arising from   
the Sciteq acquisition, using an estimated 5 year useful life.

(v)      To recognize interest expense which results from the assumption that   
the Company borrowed $6,000,000 at 11% per annum interest to  
effectuate the Uni acquisition.                               

(vi)     To recognize interest expense which results from the assumption that   
       the Company borrowed $600,000 at 11% per annum interest to effectuate
the Sciteq acquisition.                                       

(vii)    To recognize shares issued in connection with the acquisitions of Uni  
and Sciteq.                                                   

(viii)   To adjust weighted average shares outstanding as if shares issued in   
        connection with the acquisitions of Uni and Sciteq had occurred at the
beginning of the periods presented.                           

F-26

10KSB
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SIGNATURES                                                                      

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

BUILDERS WAREHOUSE ASSOCIATION, INC.                                            

By:  /s/ Par Chadha                    Date: August 7, 1996                     
--------------------------                                                
Par Chadha                                                                      
Chairman and Director                                                           
Secretary                                                                       
Chief Accounting Officer                                                        

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

By: /s/ Barry Witz                     Date: August 7, 1996                     
--------------------------                                                
Barry Witz                                                                      
Director                                                                        
Chief Executive Officer                                                         
Chief Financial Officer                                                         

25

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10KSB’ Filing		Date		First		Last			Other Filings
		5/31/99		11
		5/31/98		45
		9/1/97		11		44
		5/31/97		45
		4/1/97		5		39
		3/31/97		5		39
		12/31/96		5		46
		10/1/96		17		49
Filed on:		8/16/96
		8/7/96		54
		8/5/96		28
		7/31/96		11		44
		7/24/96		26					8-K
		7/12/96		1		30
		7/2/96		49					8-K
		6/20/96		17
		6/18/96		4		49			8-K
		6/17/96		49
		6/12/96		26					8-K
For Period End:		5/31/96		1		52			8-K
		5/24/96		6		47
		4/17/96		25		26
		4/12/96		47
		4/3/96		25
		4/1/96		5		40
		3/31/96		46
		3/25/96		16		47
		3/1/96		13
		2/29/96		47
		2/28/96		13
		1/31/96		49
		1/17/96		45
		1/1/96		46
		12/1/95		13
		11/30/95		13
		11/17/95		25
		11/7/95		25
		10/17/95		23
		9/16/95		31
		9/12/95		26
		9/11/95		25
		9/1/95		13
		8/31/95		13
		8/7/95		23
		6/30/95		13		46
		6/16/95		25		26
		6/1/95		13		52
		5/31/95		2		52
		5/12/95		24
		4/10/95		13		46
		3/30/95		19
		3/1/95		13
		1/28/95		19
		12/1/94		13
		11/30/94		13
		9/1/94		13
		8/31/94		13
		7/1/94		2		52
		6/1/94		13
		5/9/94		12
		4/17/94		12
		5/3/93		13
		3/3/93		12
		1/1/92		41
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