ITEM 1:	BUSINESS (General)
A.	The Company
Merit Diversified International, Inc. ("the Company") currently has no operations and no cash flow or operating capital. The Company is considered to be a develop- ment-stage company, and will continue to be classified as such until the Company initiates business operations.
B.	History of Operations
The Company was incorporated in the State of Utah, in 1983, subsequently rein- corporating in the State of Nevada. Initially, the Company published a telephone directory, but this operation was suspended in 1987 due to lack of operating funds and revenues. Since 1988, the Company has made several attempts to acquire and operate various businesses. All efforts have proven to be unsuccessful.
In 1994, the Company purchased from Phalanx, Ltd., certain rights to molds and designs of exclusive jewelry. These were purchased with 27,000,000 shares of the Company's common stock. Originally valued at $270,000 this investment proved to be worthless. Major shareholders of the Company sued for return of the shares. On February 9, 1995, the Superior Court of the County of Maricopa, Arizona decided that the 27,000,000 were improperly given and denied those shares voting rights. On March 23, 1995, a shareholders meeting was held whereby those shares were rescinded and returned to the Company.
In April, 1996, the Company approved a 20 to 1 reverse stock split. Subsequent to the stock split, the Company approved a merger with a company named NEAT, Inc., a Nevada corporation, through the issuance of 13,000,000 shares of common stock, with the intent of marketing a certain new technology and combining the companies. Both parties chose not to continue the merger; however, NEAT, Inc. returned 13,000,000 shares to the Company. There is no assurance that the potential business will be successful.
During the past five fiscal years, the Company has been dormant. During May 1997, and in anticipation of the acquisition of Global Resources and Technology, Inc., the Company appointed Mr. Mallette as officer and interim director to investigate and facilitate the acquisition of a viable business operation focusing on environmental products and services. During June 1997, the Company identified a business opportunity with Amwest Environmental Group, Inc. (AEG). AEG held contracts to perform environmental reclamation services for certain cities in the Peoples Republic of China and secured property, plant and equipment in those cities to operate recycling and manufacturing facilities. The company issued 25,100,000 shares of no par value Common Stock to Jen Investments Corporation, in trust for the benefit of AEG, pending shareholder approval of the exchange of those shares for AEG's investment in Global Resources & Technology, Inc. (Global). During May 1997, AEG formed Global as a wholly owned subsidiary and transferred certain contracts for enviromental clean-up projects, patents, and proprietary technologies associated with environmental clean-up and protection, and certain assets acquired including property, plant and equipment, including land, that it had acquired by purchase. The property, plant, equipment and land are located in the Peoples Republic of China. However, the merger to this date has not yet been completed and the Company does not anticipate that it will be completed in the future.
As of August 31, 1997, the Company had no employees and no operating assets. The Company continues to meet its organizational obligations through the contribution of capital by major shareholders.
The Company has continued its efforts to acquire, merge with or enter into other forms of business combinations. It is presently unknown whether any transactions will be successfully concluded.
ITEM 2:
ITEM 2:	PROPERTIES
None.
ITEM 3:
ITEM 3:	LEGAL PROCEEDINGS
None.
ITEM 4:
ITEM 4:	SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS None.
ITEM 5:
ITEM 5:	MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the OTC Bulletin Board.
The quote below is from the "Pink sheets: and the OTC bulletin Board. These numbers represent an average. The Company's stock was thinly traded in fiscal year ended August 31, 1997.
Bid			High			1.00			Low			 .25
Ask			High			3.00			Low			 .75
ITEM 6:
ITEM 6:	SELECTED FINANCIAL DATA
The following information is derived from the consolidated financial statements included elsewhere herein. All information presented below should be read in conjunction with the Consolidated Financial Statements and Notes included elsewhere in this Form 10K.
For Year Ended August 31	 1997	 1996 1995 1994 1993 Net Sales	 		 0		 	 0	 	 0	 0	 0
Net Income (Loss)				 0		 	 0 (21,418) (17,650) (247,760)
Earnings (Loss) per Share	 NIL	 NIL	 		 0	 	 0	 (.02)
Cash Dividends per Share	 0		 	 0	 	 0	 	 0	 0
Total Assets			 0	 	 	0	 	 0 16,418 16,300
Long-term Notes Payable	 0		 	0	 0	 	 0	 0 Total Stockholders' Equity 0 0 (109,677) (93,269) (103,464)
ITEM 7:
ITEM 7:	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 	CONDITION RESULTS OF OPERATIONS (Continued)
The information set forth in "Management's Discussion and Analysis of Financial Condition and Results of Operations" below includes "forward- looking statements" within the meaning of Section 27A of the Securities Act, and is subject to the safe harbor created by that section. Factors that could cause actual results to differ materially from these contained in the forward-looking statements are set forth in "Management's Discussion and Analysis of Financial condition and Results of Operations".
Year Ended August 31, 1997 and 1996
The Company has no assets, and has not engaged in any operational activities during the past five (5) years. At present, the Company has no employees. The Company does not expect any changes unless the Company concludes a merger or other business combination.
During the years ended august 31, 1996 and 1997, the Company had no operations. The Company maintained its existence through contributions from its shareholders to satisfy its general and administrative expenses. As detailed on the accompanying consolidated statements of cash flows, there were no significant adjustments between the net loss and net changes in cash.
Due to the nature of the Company's activities, the Company's prospects for the future are dependent on a number of variables which cannot be predicted. Generally, after identifying a potential business opportunity, the Company could incur significant costs in evaluating the desirability of an acquisition or other form of business combination. Should the Company determine to proceed with the business combination, the transaction costs could be significant. Thereafter, results of operation would likely be materially affected by the business acquired or merged with the Company.
The Company has continued its efforts to acquire, merge with or enter into another form of business combination with another entity, and the Company plans to continue these efforts in the future fiscal year. It is presently unknown whether any transaction will be successfully concluded.
Liquidity and Capital Resources
Year Ended August 31, 1997
The Company currently does not have adequate reserves to satisfy its short - -term obligations. The Company is currently seeking private placement funding to maintain its obligation until such time as its operations can generate cash flow. No guarantee can be made that the current development stage search for an operational business or private funding will be successful. The Company is able to continue because the major shareholders continue to cover administrative expenses. No guarantee can be made that the major shareholder will continue to cover these expenses.
ITEM 7:	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION RESULTS OF 	OPERATIONS (Continued)
The Company considers its current cash and cash equivalent balances inadequate to satisfy its cash requirements for the next twelve months. Legal and accounting and other expenses required could increase significantly in connection with any contemplated business combination. The Company may not have the liquidity and capital resources to consummate such business combination. Due to the nature of the Company's present activities, however, the Company is unable to predict its likely expenditure for professional fees and other expenses. The Company has no major capital commitments nor access to mechanisms to fund working or operating capital, and there can be no assurance that it will be successful in its efforts to raise additional capital to maintain its plan of operation.
Balance of Page Left Blank Intentionally
MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental-Stage Company)
ITEM 8
ITEM 8	Financial Statements 	Index to Consolidated Financial Statements
________________________________________________________________________________ _____________________________________________________________________________ 1997, 1996 and 1995 Consolidated Financial Statements:
	Report of Independent Certified Public Accountants
	Balance Sheets as of August 31, 1997 and 1996
	Statements of Operations for the Years Ended August 31, 1997, 	1996 and 1995
	Statements of Stockholders' Equity for the Years Ended August 31, 1997, 	1996 and 1995
	Summary of Accounting Policies and Notes to Consolidated Financial 	 Statements
Schedules --
	II	Valuation and Qualifying Accounts
Andrew M. Smith, CPA 3711 Long Beach Blvd., Suite 809 Long Beach, Ca 90807 (562) 424-8679
To the Board of Directors Merit Diversified International, Inc.:
INDEPENDENT AUDITOR'S REPORT
	I have audited the accompanying balance sheet of Merit Diversified International, Inc., a development-stage company, as of August 31, 1997 and the related statements of operations, stockholders' equity and cash flows for the year ended August 31, 1997. My responsibility is to express an opinion on these financial statements based on my audit. I did not audit the statements prior to the year ended August 31, 1996. Other auditors audited those statements.
I have 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 financcial statement presentation. I believe that my audit and those of other auditors provides a reasonable basis for my opinion.
	In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Merit Diversified International, Inc., as of August 31, 1997 and the results of their operations and their cash flows for the three (3) years ended August 31, 1997 in conformity with generally-accepted accounting principles.
													Andrew M. Smith, CPA
Dated: August 25, 1998
MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental-Stage Company)
CONSOLIDATED BALANCE SHEETS
August 31, 																		1997		 1996
Assets	
Total Assets														 		$ -		 $ -
Liabilities and Shareholders' Equity
	Current Liabilities
		Accounts and Taxes Payable							 	 8,000		 8,000
	Total Current Liabilities											 8,000		 8,000
Commitments and Contingencies
Shareholders' Equity
	Common Stock--No Par Value; 	50,000,000 shares authorized, 	30,042,257 and 16,209,316 	issued and outstanding as of 	1997 and 1996, respectively	 						 1,332,349	 1,332,349
	Additional Paid-in Capital			 					 1,122,215 1,122,215
	Accumulated Deficit--Accumulated 	during the developmental stage			 	 (2,462,564) (2,462,564)
Total Shareholders' Equity						 	 ( 8,000) ( 8,000)
Total Liabilities and Shareholders' Equity		$ -		 $ -
See Notes to Consolidated Financial Statements.
MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental-Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended August 31, 1997, 1996 and 1995 1997				 1996		 1995
Net Revenue									 $ -					 $ -		 $ -
Costs and Expenses
General and Administrative			 -	 					 -		 5,000 Depreciation and Amortization				 	-	 					 -
Income (Loss) from Operations					 -				 			 - ($ 5,000)
Other Income (Expense)						 	 -		 					 -		 -
Income Before Taxes on Income			 	 -	 						 -	 	 -
Taxes on Income				 			 -	 						 -	 	 -
Net Income (Loss)		 						 -	 						 -		 (21,418)
Net Income (Loss) Per Share		 			Nil 					 Nil		 0.0
Weighted Average Number of Shares and Shares Equivalents Outstanding		 23,125,787			19,717,435		 36,525,554	
See Notes to Consolidated Financial Statements.
MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental-Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended August 31, 1997, 1996 and 1995:
				 		 Common Stock			 	 Paid-in		Accumulated 				 		 Shares 		 Amount Capital	 	(Deficit)
Balance, August 31, 1995				 23,225,554		 $1,332,349	 $1,122,215	($2,462,564)
Purchase of Consulting			25,000,000		 Reverse Stock Split	 	(45,814,276) Purchase of Stock			 13,000,000 Purchase of Consulting				 798,038
Net Loss
Balance, August 31, 1996					 16,209,316			$1,332,349 $1,122,215	 ($2,462,564)
Purchase of consulting			 1,186,175 Issuance of shares			 25,646,766 Cancellation of Shares		(13,000,000)
Balance, August 31, 1997					 30,042,257			$1,332,349 $1,122,215	 ($2,462,564)
See Notes to Consolidated Financial Statements.
MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental-stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
Years Ended August 31, 											 1997	 			 	 1996 		 1995		
Operating Activities:
	Net Income (Loss)										 $ -				 		 $ -		 $ -		
	Adjustments to reconcile net loss 	to cash used in operating activities:
	Depreciation Expense 	 	Loss on Devaluation
Changes in Operating Assets and Liabilities:
	Accounts Payable
Cash Provided by (used in) Operating Activities
Investing Activities: 	Net Decrease in Notes Payable			 	Purchase of Fixed Assets 	 Cash Used in Investing Activities															
Financing Activities:																			 	Net Change in Common Stock 	Paid-in Capital
Cash Provided by Financing Activities
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Period
Cash and Cash Equivalents, End of Period
Significant Non-cash Transactions 	Fiscal Year ended August 31, 1997: 		Issuance of 25,100,000 Common Shares to JEN INVESTMENTS CORP.
Fiscal Year ended August 31, 1996: 		Reverse stock split 20 to 1. Issuance of 13,000,000 common shares to NEAT, Inc.
Fiscal Year ended August 31, 1995: Reccission of Phalanx Rights for 27,000,000 Shares of Common Stock
See Notes to Consolidated Financial Statements.
MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental-Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1.	General Company Information and Summary of 		Significant Accounting Policies
The Company was organized August 23, 1983, in the State of Utah. Initially, the Company published and attempted to market a telephone directory, but this operation was suspended in 1987 due to lack of operating funds and revenues. Since 1988, the Company has made several attempts to acquire and operate various businesses. These have proven thus far to be unsuccessful. Note 2 (below) lists some of the attempted acquisitions and the results. The Company continues to pursue a path of merger with an operating business.
The Company has incurred significant losses since its inception and as of August 31 1997, has no source of revenue. The Company has no cash, and has maintained its existence and paid ongoing expenses through the issuance of common stock.
The Company has been able to continue because major shareholders have continued to invest in the Company to meet its expenses.
The Company is considered a development-stage company, and will remain in this status until operations begin. There can be no assurance that the Company will be able to merge with an operating company, acquire an ongoing business, or that the major shareholders will continue to pay the expense of the Company.
Basis of Presentation
The accompanying consolicated financial statements have been prepared in accordance with United States generally accepted accounting principles.
Property and Equipment
As of August 31, 1997 the Company had no fixed assets. Previously the Company depreciated its fixed assets over their estimated useful lives on a straight line bases.
Development Stage Company
The Company has had no revenue or operations during the previous five years, and because of this has considers itself a development stage company. It will remain in this status until such time as it initiates or merges with operations of some kind. In the early years, the Company generated nominal revenues from the sale of its telephone directory. These minimal revenues have been netted with general and administrative expenses of those years.
MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental-Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Net Loss Per Share
Loss per share is computed based on the average number of shares outstanding during each year.
Revenue Recognition
The Company has had no revenue during the past five years.
Provision for Income Taxes
The provision for income taxes is the total of the current taxes payable and the net of the change in the deferred income taxes. Provision is made for deferred income taxes where differences exist between the period in which transactions affect current taxable income and the period in which they enter into the determination of net income in the financial statements. The Company has a net operating loss carry forward of approximately $2,000,000 available to offset future taxable income. The last of the carry forward expires in 2009. No benefit has been recorded on the face of the balance sheet for this benefit.
Note 2.	Investments and Acquisitions
Marketable securities at August 31, 1997 and 1996 had an original cost basis of $240,000. The stock is currently considered worthless.
Purchase of Phalanx, Ltd. Rights:
In 1994, the Company purchased from Phalanx, Ltd. certain rights to molds and designs of exclusive jewelry. These were purchased with 27,000,000 shares of the Company's common stock. Originally valued at $270,000 this investment proved to be worthless. Major shareholders of the Company sued for return of the shares. On February 9, 1995, the Superior Court of the County of Maricopa, Arizona decided that the 27,000,000 shares were improperly given and denied those shares voting rights. On March 23, 1995, a shareholders' meeting was held wherein those shares were rescinded and returned to the Company.
Proposed Merger:
As part of a proposed merger, the Company issued 1,250,000 shares to various parties for consulting. This merger was not successful; however, the shares of stock for consulting are still outstanding. Similarily, there were 25,100,000 shares issued in association with the proposed acquisition of Global Resources and Technology, Inc. During June 1997, the Company identified a business opportunity with Amwest Environmental Group, Inc. (AEG). AEG held contracts to perform environmental reclamation services for certain cities in the Peoples Republic of China and secured property, plant, and equipment in those cities to operate recycling and manufacturing facilities. The Company issued 25,100,000 shares of no par value Common Stock to Jen Investments Corporation, in trust, for the benefit of AEG, pending shareholder approval of the exchange of those shares of AEG's investment in Global Resources & Technology, Inc. (Global). During May 1997, AEG formed Global as a wholly owned subsidiary and transferred certain contracts for environmental clean-up projects, patent and proprietary technologies associated with environmental clean-up and including land, that it had acquired by purchase. The property, plant, equipment, and land are located in the Peoples Republic of China. However, the merger to this date has yet been completed and the Company does not anticipate that it will be completed in the future.
Note 3.	Related Party Transactions
The Company has been able to continue in existence and to remove most of its debts because some of the major shareholders have continued to cover the administrative expenses and to pay outstanding debts. There is no guarantee that these shareholders will continue to fund the Company.
There are no outstanding obligations due to or from related parties as of August 31, 1997.
Note 4.	Commitments and Contingencies
The Company has no commitments or contingencies as of August 31, 1997
Note 5. Going Concern
The Company has incurred significant losses since its inception and as of August 31, 1997, had no source of revenue. The Company also had no cash, and has paid for all of its ongoing expenses with the issuance of its common stock.
The Company has been able to continue because the major stockholders have been willing to continually invest in the Company to cover expenses. The Company is to be considered a development-stage company, and will remain in this status until operations have been established. No guarantee can be made that the Company will be able to merge with an operational company or that the major stockholders will continue to pay the expenses of the Company. As of August 31, 1997 and 1996, the Company had no assets.
Due to the nature of the Company's activities, the Company's prospects for the future are dependent on a number of variables which cannot be predicted. Generally, after identifying a potential business opportunity, the Company could incur significant costs in evaluating the desirability of an acquisition or other form of business combination. Should the Company determine to proceed with the business combination, the transaction costs could be significant. Thereafter, results of operation would likely be materially affected by the business acquired or merged with the Company.
In February 1997, major stockholders contributed $8,000 to pay old payables.
Note 6. Subsequent Events
The Company is currently seeking additional funding through debt and equity financing. The Company is also seeking a suitable merger candidate. No guarantees can be made that the company will be successful in its attempts to obtain funding or acquire or start an operational business.
MERIT DIVERSIFIED INTERNATIONAL, INC. (A Developmental-Stage Company)
SCHEDULE 11 - VALUATION AND QUALIFYING ACCOUNTS
NONE.
ITEM 9:
ITEM 9:	CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON 		ACCOUNTING AND FINANCIAL DISCLOSURES
The Company has changed it's accountant to Andrew M. Smith CPA.
ITEM 10:
ITEM 10:	DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
		The officers and directors of the Company were the following:
	Name				 Age									Title
	Dwight Mallette		 64								 Sec./Treasurer/Director
Mr. Dwight Mallette, age 64, has been a Director and Secretary and Treasurer of the Company since May 1997. Mr. Mallette has held positions including Director of Allstar Entertainment, Inc., Director of Largo Vista International, Inc. and Director of Astral Ventures & Tours, Inc.
ITEM 11:
ITEM 11:	EXECUTIVE COMPENSATION
No officer or director receives compensation for services rendered except that the directors are authorized to receive 100 shares of R-144 Company stock for each directors meeting that they attend. No such stock has been issued.
ITEM 12:
ITEM 12:	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of August 31, 1997, the following were beneficial owners of more than five percent of the Company's common stock.
		Stock			 Name and Address						 Ownership
		Common		 JEN INVESTMENTS CORP.			 	 25,100,000 c/o Allstar 4750 Campus Dr. #2 Newport Beach, Ca 92660 					 	 	 Total as a Group: 25,100,000
The table below sets forth those directors and officers who own shares of Company stock.
		Common		 Dwight Mallette							 NONE
ITEM 13:
ITEM 13:	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No director or officer, directly or indirectly, in indebted to the Company in an amount in excess of $60,000 as of the close of the fiscal year August 31, 1997.
ITEM 14:
ITEM 14:	EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS
a.	Audited Financial Statements.
SIGNATURES
The signature below is that of Mr Dwight Mallette. Mr. Mallette did not become involved with the Company until May 1997. Mr. Mallette disclaims any knowledge of, or liability for any transaction prior to this time. Mr. Mallette signs below as a current officer and director.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Merit Diversified International, Inc. (Registrant)
		____________/s/_____________________________ Dwight Mallette, Chief Accountant, Secretary
Dated: October 10, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
	Signature					 										Title
			______________________/s/___________________ 	 Dwight Mallette													Chief Accountant