UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.

                                   FORM 10-KSB

                _X_ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended: December 31, 1996

                                       OR

              ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

           For the transition period from ____________ to ___________

                         Commission file number: 0-18864

                      DEBBIE REYNOLDS HOTEL & CASINO, INC.
             (Exact name of Registrant as specified in its charter)

            Nevada                                             88-0335924
(State or other jurisdiction of                           (IRS Employer
incorporation or organization)                            Identification Number)

      305 Convention Center Drive
            Las Vegas, Nevada                                     89109
(Address of principal executive offices)                        (Zip Code)

               Registrant's telephone number, including area code:
                                 (702) 734-0711

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

           Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $.0001 par value

     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,  and (2) has been  subject to such filing
requirements for the past 90 days.

                                   (1) Yes _X_ No ___
                                   (2) Yes _X_ No ___

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B, and no  disclosure  will 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  amendments to
this Form 10-KSB. [X]

     The Company's revenues for its most recent fiscal year were $6,421,000. The
aggregate market value of the voting stock held by nonaffiliates (based upon the
average of the bid and



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asked price of these shares on the over-the-counter market) as of March 31, 1997
was approximately $2,272,000.

Class                                              Outstanding at March 31, 1997

Common Stock, $.0001 par value                     12,620,207 shares

                    Documents incorporated by reference: None

     Transitional Small Business Disclosure Format:

                                                   Yes ___      No _X_


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                      DEBBIE REYNOLDS HOTEL & CASINO, INC.

                                   FORM 10-KSB

                                     PART I

Item 1. Description of Business.

     (a) Business  Development.  Debbie Reynolds Hotel & Casino,  Inc., formerly
Halter Venture  Corporation (the "Company" or the  "Registrant")  originally was
incorporated  on January  10,  1986  under the laws of the State of Texas.  From
inception  until late 1992,  the Company  engaged in the  business of  breeding,
training  and  racing  thoroughbred  race  horses.  The  Company  acquired  SWTV
Production Services,  Inc. ("SWTV"), a mobile television  production company, on
May 3, 1993 and its  operations  from that date through March 22, 1994 consisted
solely of the direct operations of SWTV.

     Effective  March 22, 1994, the Company  acquired Maxim  Properties  Company
("Maxim"), a privately held Colorado corporation, and Debbie Reynolds Management
Company,  Inc.,  formerly  Debbie  Reynolds  Hotel & Casino,  Inc.  ("DRHC") and
Hamlett  Production,  Ltd.  ("HPL"),  both privately  held Nevada  corporations.
Pursuant  to  several  mergers,  HPL  Acquisition  Corporation,  a  wholly-owned
subsidiary  of the  Company,  merged  with  and into  DRHC,  formerly  HPL,  the
surviving  corporation  (the  "DRHC  Merger").  In  addition,   MPC  Acquisition
Corporation,  another  wholly-owned  subsidiary of the Company,  merged with and
into Maxim, the surviving  corporation (the "Maxim Merger".) The DRHC Merger and
the  Maxim  Merger  are  referred  to  herein  collectively  as the  "DRHC/Maxim
Mergers."  Pursuant to the DRHC/Maxim  Mergers,  the Company acquired all of the
outstanding  securities  of DRHC  and  Maxim in  exchange  for the  issuance  of
2,850,833  shares of the Company's  Common Stock to the Maxim  shareholders  and
2,350,833  shares to the DRHC  shareholder.  In connection  with the  DRHC/Maxim
Mergers the Company also issued 565,000  shares to others.  Prior to the closing
of the  mergers,  DRHC  merged  with and into HPL,  and HPL  changed its name to
Debbie Reynolds Hotel & Casino, Inc.

     In  connection  with the  DRHC/Maxim  Mergers,  the  Company  divested  its
wholly-owned subsidiary, SWTV Production Services, Inc., to the Company's former
President,  Lawrence E. Meyers,  in exchange for the 2,126,540  shares of Common
Stock of the  Company  owned by Mr.  Meyers  which  have  been  canceled  by the
Company.

     In November  1994,  the Company  reincorporated  in the State of Nevada and
changed its name from Halter  Venture  Corporation  to Debbie  Reynolds  Hotel &
Casino, Inc. In connection with the reincorporation,  the Company's wholly-owned
subsidiary,  Debbie  Reynolds  Hotel & Casino,  Inc.  changed its name to Debbie
Reynolds Management Company, Inc. ["DRMC"].

     The Company's  operations consist primarily of the hotel operations of DRMC
and the timeshare  operations  of Debbie  Reynolds  Resorts,  Inc.  ("DRRI"),  a
wholly-owned  subsidiary  of DRMC.  DRMC owns and operates  the Debbie  Reynolds
Hotel & Casino (the "Hotel"),  a gift shop, the Hollywood Motion Picture Museum,
a restaurant  and bar and a showroom  located on Convention  Center Drive in Las
Vegas,  Nevada.  As an  accommodation  to DRMC,  Celebrity  Restaurant,  Inc., a
company  wholly-owned  by Ms.  Reynolds,  leased the restaurant  from DRMC until
August 1, 1996 at which time DRMC was granted a liquor license from Clark County
and commenced  operating the bar and the restaurant.  The Company's  operations,
through DRRI, also consist of the sale of timeshare units in the Debbie Reynolds
Hotel.  DRRI  obtained  a  permanent  timeshare  license  on June 28,  1994.  In
addition,  DRMC and its management have pending  applications filed for a gaming
license from the Nevada Gaming Authorities;  however,  there can be no assurance
that such license will be granted.  Due to the Company's poor capital  structure
and acting on the advice of counsel, the Company requested the Nevada Gaming


                                                                               3


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Authorities to place a hold on processing its pending gaming  applications until
its capital  structure  substantially  improves.  Prior to March 31,  1996,  the
Company leased space to a third party for the operation of a casino. The Company
served the operator with a termination notice in February 1996,  pursuant to the
terms of the lease  agreement.  Under the lease agreement the Company was losing
money on a monthly basis. The Company requested the operator to cease operations
as of June 30,  1996.  On March 31, 1996 the  operator  discontinued  its gaming
operations on the property, removed all of its gaming equipment and subsequently
filed a lawsuit against DRHC. The Company  believes that the operator  committed
material breaches of the lease agreement. [See Item 3 - Legal Proceedings]

On October 30, 1996 the Company  entered into an Agreement for Purchase and Sale
with ILX Incorporated ("ILX") under which ILX would purchase the Debbie Reynolds
Hotel & Casino (the  "Hotel"),  including  all of the Hotel's  real and personal
property and the Hotel's timeshare  operations (the "ILX  Agreement").  ILX is a
publicly-held  corporation  based in Phoenix,  Arizona which  principally  owns,
operates and markets resort properties in Arizona,  Florida, Indiana and Mexico.
On May 15, 1997 ILX elected to cancel and terminate this Agreement.  The Company
and ILX continue to negotiate an alternative transaction.  There is no guarantee
that an alternative agreement will be reached.

     The  Company's  recurring  losses  from  operations,  its  working  capital
deficiency,  its shareholders  equity  deficiency,  its significant debt service
obligations and its default with respect to various agreements raise substantial
doubt about the Company's ability to continue as a going concern. The ability of
the Company to continue as a going concern is dependent on its ability to obtain
additional  financing to finance its working  capital deficit until such time as
cash flows from  operations are sufficient to finance the Company's  operations,
including the Company's proposed casino operations. The Company may need to seek
protection under the Federal bankruptcy laws in order to complete its plans.

     The Company's  principal  executive  offices are located at 305  Convention
Center  Drive,  Las  Vegas,  Nevada  89109  and its  telephone  number  is (702)
734-0711.

     (b) Business of the Issuer.

     (b)(1),(2)  Principal  Products  or  Services;   Markets  and  Distribution
Methods.

     Background.  The Hotel began  gaming  operations  in 1957,  under the trade
names "The Royal" and later "The Paddle Wheel Hotel & Casino."  Debbie  Reynolds
purchased  the  Paddle  Wheel at  auction  in 1992 and  renamed  it the  "Debbie
Reynolds  Hotel & Casino".  The Debbie  Reynolds  Hotel & Casino is located on a
6.13-acre  site just off of Las Vegas  Boulevard and is located close to the Las
Vegas  Convention  Center.  Las Vegas  Boulevard,  more  commonly  known as "The
Strip," is currently the center of gaming activity in Las Vegas.

     Hotel.  The Debbie Reynolds Hotel includes 193 hotel rooms (of which 43 are
being converted into timeshare units), approximately 6,000 square feet of vacant
casino space which is currently filled with Hollywood memorabilia, the Hollywood
Movie Museum, a 500 seat showroom, a full-service  restaurant, a cocktail lounge
and bar, one  swimming  pool and several  hundred  parking  spaces.  The Company
offers its hotel rooms at modest prices (as of March 15, 1997,  the average room
rate was  approximately  $63.53).  The  Hotel's  average  occupancy  rates  were
approximately  82%,  74% and 58% for the  1994,  1995  and  1996  fiscal  years,
respectively.

     Showroom. Ms. Reynolds' performances in the Company's 500-seat showroom are
the primary draw for the Company's  facilities and its timeshare sales.  Through
the   Company's   approximately   $1,000,000   renovation,   the   showroom  has
state-of-the-art  sound, staging and lighting.  When Ms. Reynolds performs,  she
performs Monday through Friday in the early


                                                                               4


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evenings.  Generally other Las Vegas acts perform Monday through  Saturday after
Ms. Reynolds' show. When Ms. Reynolds is not performing,  the showroom  attracts
other  well-known Las Vegas  entertainers.  For the year ended December 31, 1996
the showroom  averaged 82% occupancy for Ms.  Reynolds' show with a ticket price
of $39.95. When Ms. Reynolds does not perform,  the showroom averages 30% to 50%
occupancy at ticket prices ranging from $12.95 to $29.95.

     Museum.  The Debbie  Reynolds  Hollywood  Movie Museum is unique in that it
houses two world class  collections  of authentic  Hollywood  movie  memorabilia
owned separately by Ms. Reynolds and the Hollywood Motion Picture and Television
Museum, a non-profit organization, "Hollywood". The Museum is a highly technical
multimedia  presentation which combines the charm of a historical museum and the
drama of a  modern  Hollywood  screening  room.  The  Museum  has  five  stages,
including  three  revolving  stages,  in a  surrounding  similar to a  Hollywood
screening  room. The Museum has a walk-through  portion where guests are able to
see up close many pieces from Hollywood classics, such as Marilyn Monroe's dress
from the "Seven Year Itch", among many others. Both collections are so extensive
that the Museum is only able to display  approximately 10% of the collections at
any one time.  The Company  acquired  the  exclusive  licenses  to display  both
extensive  collections  of movie  memorabilia  pursuant  to license  agreements;
however,  both Ms. Reynolds License Agreement and Hollywood's  License Agreement
have been  terminated  for default  (See below).  Both  continue on an "at will"
basis terminable at any time. Under  Hollywood's  License  Agreement the Company
also  licensed the rights to over 200 film clips from classic  Hollywood  films,
most of which have received an Academy Award in some category.  The Museum has a
seating capacity of 79 people and runs 14 shows a day at an average ticket price
of $7.95. The total costs to complete the Museum were approximately  $2,700,000.
See Part  III,  Item 10.  "Executive  Compensation,"  for a  description  of the
license agreements.

     Restaurant  and Bar.  The  restaurant  and bar  located  in the Hotel  were
previously  operated by Celebrity  Restaurants,  Inc.  ("Celebrity"),  a company
wholly-owned  by  Ms.  Reynolds,  pursuant  to an  oral  lease  agreement  which
commenced  in  August  1994.  This  lease  was  undertaken  by  Celebrity  as an
accommodation  to the Company  because  Celebrity  held a liquor license and the
Company did not.  Under the lease  agreement,  Celebrity was required to pay the
Company 8% of net income  for the lease of the  restaurant  and bar and DRMC was
obligated to cover the operating cash shortfalls of Celebrity's  operations.  On
August 1, 1996 DRMC received a liquor  license from Clark County and  terminated
the oral lease agreement. The restaurant and bar are currently operated by DRMC.
The restaurant seats 150 people and is open for breakfast,  lunch and dinner. As
with its hotel  accommodations,  the food and beverage  services provided by the
restaurant and bar are  moderately  priced.  The  restaurant  operations are not
intended to be a profit center for the Company but the  restaurant  services are
intended to be an  attraction  for the  timeshare  sales,  the  showroom and the
museum  and as a  convenience  for the  hotel  guests.  See Part  III,  Item 12.
"Certain Relationships and Related Transactions- Transactions of Debbie Reynolds
Hotel & Casino, Inc. and Hamlett Production, Ltd.

     Gift Shop. Hollywood-themed souvenirs,  collectibles and logoed merchandise
are currently  available in the gift shop. The gift shop occupies  approximately
640 square feet of space on the property.

     Timeshare.  The Company's timeshare operations are conducted through Debbie
Reynolds Resorts,  Inc.  ("DRRI"),  a subsidiary of DRMC. The operations of DRRI
consist  of the sale of  timeshare  units in the  Debbie  Reynolds  Hotel.  DRRI
obtained  a  permanent  timeshare  license  on June 28,  1994 and since then has
aggressively  pursued timeshare sales and the conversion of the timeshare units.
Timeshares  are sold in units of one week and entitle the  purchaser  thereof to
use the hotel room for the period of time  purchased  each year.  Each timeshare
room in the  hotel  has 52 units,  representing  each  week of the  year.  As of
December 31, 1996,  approximately  1,186 (53%)  timeshare  units have been sold.
Unit prices have ranged


                                                                               5


<PAGE>

from $6,000 to $10,000 depending upon the size and location of the hotel room. A
minimum of 10% of the unit purchase  price must be paid in cash, and the Company
will  arrange  financing  for  qualified  purchasers.  The  rooms  that  are not
converted  to  timeshare  units will  continue  to be used as hotel  rooms.  The
Company is in the process of restructuring its timeshare  division and currently
is not actively selling timeshare units.

     The Company's  timeshare units are listed with Interval  International,  an
internationally-known  timeshare  network.  The Company has a five-star red-room
rating  that  it  has  been  given  by  Interval  International.  The  timeshare
renovations  include  extending the balconies and enclosing  them in glass.  The
rooms  are  decorated  with new  furniture  and new color  schemes.  The cost of
timeshare  conversion  is  approximately  $18,500  per  room.  The  Company  was
marketing its timeshare  units through on-site tours,  telemarketing  and an off
premises preview center.

     Casino. Until March 31, 1996 the gaming operations of the casino were owned
and  operated  by Jackpot  Enterprises,  Inc.  ("Jackpot"),  pursuant to a lease
agreement.  Under the lease,  Jackpot  paid a fixed  monthly rent to the Company
based on the  number of slot and  video  poker  machines  and  blackjack  tables
located in the casino.  Prior to March 31, 1996 the casino consisted of 183 such
machines  located in the casino and two  blackjack  tables.  Under the lease the
Company had the option to buy-out the  remaining  term of the lease based on the
value of the  machines  and  other  considerations.  . The  Company  served  the
operator with a termination  notice in February  1996,  pursuant to the terms of
the lease agreement. Under the lease agreement the Company was losing money on a
monthly basis. The Company requested the operator to cease operations as of June
30, 1996. On March 31, 1996 the operator  discontinued its gaming  operations on
the  property,  removed all of its gaming  equipment  and  subsequently  filed a
lawsuit against DRHC. The Company believes that the operator  committed material
breaches of the lease agreement.  [See Item 3 - Legal Proceedings].  Since March
31, 1996 there have been no gaming operations on the property.

     In  connection  with the leased  casino's  gaming  activities,  the Company
adhered to a policy of stringent  controls in compliance  with the standards set
by the Nevada Gaming  Authorities.  See "Regulation and Licensing"  under (b)(9)
below.

     The Company  and its  management  have  pending  applications  for a gaming
license  filed  with the Nevada  Gaming  Authorities;  however,  there can be no
assurance  that such license will be granted.  Due to the Company's poor capital
structure and acting on the advice of counsel,  the Company requested the Nevada
Gaming Authorities to place a hold on processing its pending gaming applications
until its capital structure  substantially improves. If the Company is unable to
secure its own gaming license,  the Company will consider  entering into another
lease  agreement with a licensed  casino  operator.  See "Need for  Governmental
Approval" under (b)(8) below.

     Consulting Agreements.

     During 1995, the Company  extended the business  consulting  agreement with
MBL, an unaffiliated  company,  under which the consultant agreed to provide the
Company with business and strategic planning  consulting services for a total of
12 months in  consideration  of the  issuance a total of  250,000  shares of the
Company's  Common Stock under a Registration  Statement on Form S-8 filed by the
Company.

     During 1995, the Company entered into a business consulting  agreement with
Miron Lesham,  an  unaffiliated  person,  under which the  consultant  agreed to
provide the Company with business and  strategic  planning  consulting  services
which contract extended for 12 months in


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consideration  of the issuance of 35,000  shares of the  Company's  Common Stock
under a Registration Statement on Form S-8 filed by the Company.

     During 1995, the Company entered into a business consulting  agreement with
Pacific  Consulting Group,  ("PCG"),  an unaffiliated  company,  under which PCG
agreed to provide the Company with  business and strategic  planning  consulting
services for twelve months in  consideration of the issuance of 50,000 shares of
the Company's  Common Stock under a Registration  Statement on Form S-8 filed by
the Company.

     In December 1995, the Company entered into consulting agreements with Peter
Bistrian Consulting, Inc. and Robert C. Brehm Consulting, Inc., ("Consultants"),
unaffiliated  companies,  under  which the  consultants  agreed to  provide  the
Company with business,  strategic  marketing and strategic  planning  consulting
services for eight months.  In consideration  for the consulting  services,  the
Company  issued  options to purchase up to an aggregate of 750,000 shares of the
Company's common stock over a period of twenty-four  months at an exercise price
of $.75 per share.  In late 1995 the Company filed a  Registration  Statement on
Form S-8  registering  the 750,000  shares of Common Stock  underlying the stock
options issued to the Consultants. The options were exercised by the Consultants
through the issuance of two short-term  promissory  notes payable to the Company
in the principal  amounts of $364,000 and $198,000  (collectively  the "Notes").
Subsequent  to the  issuance of the shares,  the  Consultants  defaulted  on the
payments of the Notes.  The Company  intends to pursue its remedies  against the
Consultants, their principals and others with respect to these shares.

     In January 1996, the Company entered into a business  consulting  agreement
with Baron Marney,  ("Baron"), an unaffiliated company, under which Baron agreed
to provide the Company with business and strategic planning  consulting services
for twelve  months in  consideration  of the  issuance  of 50,000  shares of the
Company's  Common Stock under a Registration  Statement on Form S-8 filed by the
Company.

     On August 27, 1996,  the Company  retained  Royce Warren as an  independent
contractor to render  services on an advisory and consultant  basis with respect
to  various  matters  relating  to  future  casino  operations  of the  Company.
Compensation and expenses are paid in a flat fee of $2,000 per month.

     (b)(3)  Status  of   Publicly-Announced   New  Product  or  Services.   Not
applicable.

     (b)(4)  Competition.  There is intense  competition  among companies in the
resort industry,  many of which have significantly  greater financial  resources
than the Company.  The Debbie Reynolds Hotel & Casino faces competition from all
other hotels in the Las Vegas area. The Company competes  directly with a number
of other  operations  targeted  to local  residents.  In the event  the  Company
obtains a gaming license and opens a gaming facility,  the Debbie Reynolds Hotel
& Casino's  operations  will compete  generally with gaming  operations in other
parts of the  State of  Nevada,  such as Reno,  Laughlin  and Lake  Tahoe,  with
facilities  in Atlantic  City,  New Jersey and other parts of the world and with
state-sponsored  lotteries, on- and off-track wagering, card parlors,  riverboat
and Native American gaming ventures and other forms of legalized gaming. Certain
states  have  recently  legalized,   and  several  other  states  are  currently
considering  legalizing,  casino gaming in designated  areas.  Legalized  casino
gaming in other states and on Native American reservations represents additional
competition  to the Company and could  adversely  affect the Company's  proposed
gaming  operations,  particularly if such gaming were to occur in areas close to
the Company's  operations.  The Company  competes  directly with Grand Flamingo,
Polo Towers, Jockey Club and the Hilton Hotel, all timeshare projects located in
Las Vegas.


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     The Company's business strategy emphasizes  attracting and retaining older,
upper-middle  class  customers  who  are  familiar  with  Debbie  Reynolds,  her
collection of memorabilia and who have a reasonable level of disposable  income.
A  significant  attraction  to the Hotel  itself is the  Hollywood  Movie Museum
featuring Ms. Reynolds'  extensive  collection of movie memorabilia which is one
of the largest of its kind in the world. Also, families attracted by Las Vegas's
new emphasis on theme resorts and attractions may want to spend time at a resort
and museum with an authentic  Hollywood  theme.  The Company  believes  that Ms.
Reynolds is a significant draw for the showroom,  and the Museum,  which enables
the  Company to attract  customers  staying at other  hotels in Las Vegas to its
facilities.

     (b)(5) Raw Materials and Principal Suppliers. Not applicable.

     (b)(6) Significant Customers. Not applicable.

     (b)(7) Patents and Licenses. The Company previously licensed the exclusive,
perpetual,  non-transferable  rights to display Ms.  Reynolds'  and  Hollywood's
extensive  collection  of movie  memorabilia  and to use the  name,  photograph,
likeness and signature of Ms.  Reynolds for the promotion of the Company and its
operations.  Both of these licenses are  significant to the Company's  business;
however, both of these licenses have been terminated by the respective licensors
and are  currently in effect on an "at will" basis  terminable  at any time.  No
assurances  can be made that the licensor  will not  terminate at any time.  See
Part III, Item 10, "Executive Compensation" for a description of these licenses.

     (b)(8) Need for Governmental  Approval. The Company and its affiliates have
obtained  all required  permits and  licenses  required to conduct its hotel and
restaurant  operations.  Debbie  Reynolds  Resorts,  Inc.  ("DRRI"),  obtained a
permanent timeshare license to conduct its timeshare  operations from the Nevada
Real  Estate  Board on June 28,  1994.  Pursuant  to Nevada  state law and Clark
County  ordinances,  prior to the Company  receiving any gaming revenues,  other
than revenues which it might receive under a lease  agreement,  the Company must
obtain state and county  approval for gaming  activities.  The Company is in the
process of filing the appropriate  gaming  applications on behalf of the Company
and its officers and directors with the Nevada Gaming  Control  Board;  however,
there can be no  assurance  that a gaming  license  will be granted.  See (b)(9)
below.

     (b)(9) Effect of Governmental Regulations.

     As of the date of this report,  the Company does not have a gaming  license
and no gaming activities are conducted on its properties; however, the following
discussion is included since the Company has pending  applications  for a gaming
license filed with the Nevada  Gaming  Authorities.  Due to the  Company's  poor
capital structure and acting on the advice of counsel, the Company requested the
Nevada  Gaming  Authorities  to place a hold on  processing  its pending  gaming
applications until its capital structure substantially improves.

     The  ownership  and  operation of casino  gaming  facilities  in Nevada are
subject to: (i) the Nevada Gaming  Control Act and the  regulations  promulgated
thereunder (collectively,  "Nevada Act"); and (ii) various local regulation. Las
Vegas gaming  operations are subject to the licensing and regulatory  control of
the Nevada  Gaming  Commission  ("Nevada  Commission"),  the Nevada State Gaming
Control Board ("Nevada Board"), and the Clark County Commission and/or the Clark
County Liquor and Gaming License Board. The Nevada Commission,  the Nevada State
Gaming Control Board, the Clark County Commission and/or the Clark County Liquor
Gaming  License Board  ("CCLGLB")  are  collectively  referred to as the "Nevada
Gaming Authorities."


                                                                               8


<PAGE>



     The laws,  regulations  and  supervisory  procedures  of the Nevada  Gaming
Authorities  are based upon  declarations  of public  policy which are concerned
with, among other things:  (i) the prevention of unsavory or unsuitable  persons
from having a direct or indirect  involvement  with gaming at any time or in any
capacity;  (ii) the  establishment  and  maintenance of  responsible  accounting
practices and procedures;  (iii) the maintenance of effective  controls over the
financial  practices  of  licensees,  including  the  establishment  of  minimum
procedures  for  internal  fiscal  affairs  and the  safeguarding  of assets and
revenues, providing reliable record keeping and requiring the filing of periodic
reports with the Nevada Gaming Authorities;  (iv) the prevention of cheating and
fraudulent  practices;  and (v) to provide a source of state and local  revenues
though  taxation  and  licensing  fees.  Changes in such laws,  regulations  and
procedures  could  have an  adverse  effect  on the  Company's  proposed  gaming
operations.

     The  Company  has  pending   applications  filed  with  the  Nevada  Gaming
Authorities for various registrations,  approvals, permits and licenses required
in order to engage in gaming  activities  in  Nevada;  however,  there can be no
assurance  that a gaming  license  will be granted.  Due to the  Company's  poor
capital structure and acting on the advice of counsel, the Company requested the
Nevada  Gaming  Authorities  to place a hold on  processing  its pending  gaming
applications  until its capital  structure  substantially  improves.  The gaming
license requires the periodic payment of fees and taxes and is not transferable.
The Company,  if licensed,  will be  registered  by the Nevada  Commission  as a
publicly traded corporation  ("Registered  Corporation") and as such, it will be
required  periodically to submit detailed financial and operating reports to the
Nevada  Commission and furnish any other information which the Nevada Commission
may require.  Individuals  may have to obtain  licenses and  approvals  from the
Nevada Gaming  Authorities  becoming a stockholder of, or receive any percentage
of profits from, the Company.

     The Nevada Gaming  Authorities  may  investigate  any  individual who has a
material  relationship  to, or  material  involvement  with,  the Company or its
affiliates  or  subsidiaries  in order to determine  whether such  individual is
suitable or should be licensed as a business  associate of a gaming  licensee or
its affiliates or subsidiaries. Officers, directors and certain key employees of
the Company must file applications with the Nevada Gaming Authorities and may be
required  to be licensed or found  suitable  by the Nevada  Gaming  Authorities.
Officers,  directors  and key  employees of the Company who will be actively and
directly involved in the Company's proposed gaming activities may be required to
be  licensed  or found  suitable by the Nevada  Gaming  Authorities.  The Nevada
Gaming  Authorities  may deny an  application  for licensing for any cause which
they deem reasonable.  A finding of suitability is comparable to licensing,  and
both require submission of detailed personal and financial  information followed
by a  thorough  investigation.  The  applicant  for  licensing  or a finding  of
suitability  must pay all the costs of the  investigation.  Changes in  licensed
positions must be reported to the Nevada Gaming  Authorities  and in addition to
their  authority  to  deny  an  application  for a  finding  of  suitability  or
licensure,  the Nevada  Gaming  Authorities  have  jurisdiction  to disapprove a
change in a corporate position.

     If the Nevada Gaming  Authorities were to find an officer,  director or key
employee   unsuitable   for  licensing  or  unsuitable  to  continue   having  a
relationship  with the Company,  the companies  involved would have to sever all
relationships  with such person. In addition,  the Nevada Commission may require
the  Company to  terminate  the  employment  of any  person who  refuses to file
appropriate   applications.   Determinations  of  suitability  or  of  questions
pertaining to licensing are not subject to judicial review in Nevada.

     As a licensee,  the Company would be required to submit detailed  financial
and  operating  reports to the Nevada  Commission.  Substantially  all  material
loans,  leases,  sales of securities and similar  financing  transactions by the
Company would need to be reported to, or approved by, the Nevada Commission.


                                                                               9


<PAGE>



     If it were determined that the Nevada Act was violated by the Company,  its
gaming licenses could be limited, conditioned,  suspended or revoked, subject to
compliance with certain statutory and regulatory  procedures.  In addition,  the
Company and the persons involved could be subject to substantial  fines for each
separate violation of the Nevada Act at the discretion of the Nevada Commission.
Further, a supervisor could be appointed by the Nevada Commission to operate the
Company's gaming properties and, under certain circumstances, earnings generated
during the supervisor's  appointment  (except for the reasonable rental value of
the  Company's  gaming  properties)  could be  forfeited to the State of Nevada.
Limitation,  conditioning or suspension of any gaming license or the appointment
of a supervisor  could (and  revocation of any gaming license would)  materially
adversely affect the Company's proposed gaming operations.

     Any beneficial holder of the Company's voting securities, regardless of the
number of shares owned, may be required to file an application, be investigated,
and  have  his  suitability  as a  beneficial  holder  of the  Company's  voting
securities  determined if the Nevada  Commission has reason to believe that such
ownership  would  otherwise be  inconsistent  with the declared  policies of the
State of Nevada.  The applicant must pay all costs of investigation  incurred by
the Nevada Gaming Authorities in conducting any such investigation.

     The Nevada Act requires any person who acquires more than 5% of a company's
voting securities to report the acquisition to the Nevada Commission. The Nevada
Act  requires  that  beneficial  owners of more than 10% of a  company's  voting
securities  apply to the Nevada  Commission for a finding of suitability  within
thirty  days after the  Chairman of the Nevada  Board  mails the written  notice
requiring such filing. Under certain circumstances, an "institutional investor,"
as defined in the Nevada Act,  which  acquires  more than 10%, but not more than
15%, of a company's voting  securities may apply to the Nevada  Commission for a
waiver of such finding of suitability if such  institutional  investor holds the
voting securities for investment purposes only. An institutional  investor shall
not be deemed to hold  voting  securities  for  investment  purposes  unless the
voting  securities were acquired and are held in the ordinary course of business
as an  institutional  investor  and not for the purpose of causing,  directly or
indirectly,  the election of a majority of the members of the board of directors
of a company, any change in a company's corporate charter,  bylaws,  management,
policies or operations  of a company,  or any of its gaming  affiliates,  or any
other action which the Nevada Commission finds to be inconsistent with holding a
company's voting securities for investment  purposes only.  Activities which are
not deemed to be  inconsistent  with holding  voting  securities  for investment
purposes only include: (i) voting on all matters voted on by stockholders;  (ii)
making  financial and other inquiries of management of the type normally made by
securities analysts for informational  purposes and not to cause a change in its
management,  policies  or  operations;  and (iii) such other  activities  as the
Nevada Commission may determine to be consistent with such investment intent. If
the  beneficial  holder of voting  securities  who must be found  suitable  is a
corporation,  partnership  or  trust,  it  must  submit  detailed  business  and
financial  information  including a list of beneficial  owners. The applicant is
required to pay all costs of investigation.

     Any person who fails or refuses to apply for a finding of  suitability or a
license within thirty days after being ordered to do so by the Nevada Commission
or  the  Chairman  of the  Nevada  Board,  may be  found  unsuitable.  The  same
restrictions apply to a record owner if the record owner,  after request,  fails
to identify the  beneficial  owner.  Any  stockholder  found  unsuitable and who
holds, directly or indirectly, any beneficial ownership of the common stock of a
Registered  Corporation  beyond such period of time as may be  prescribed by the
Nevada Commission may be guilty of a criminal  offense.  A company is subject to
disciplinary  action if, after it receives notice that a person is unsuitable to
be a  stockholder  or to have  any  other  relationship  with a  company  or its
affiliates  or  subsidiaries,  a company  (i) pays that  person any  dividend or
interest  upon  voting  securities  of the  Company,  (ii) allows that person to
exercise,


                                                                              10


<PAGE>



directly or indirectly,  any voting right conferred  through  securities held by
that  person,  (iii) pays  remuneration  in any form to that person for services
rendered  or  otherwise,  or (iv) fails to pursue all lawful  efforts to require
such  unsuitable  person to relinquish  his voting  securities  for cash at fair
market  value.  Additionally,  the CCLGLB has taken the position that it has the
authority  to  approve  all  persons  owning  or  controlling  the  stock of any
corporation controlling a gaming license.

     The Nevada  Commission  may, in its  discretion,  require the holder of any
debt security of a Registered Corporation to file applications,  be investigated
and be found suitable to own the debt security of a Registered  Corporation.  If
the  Nevada  Commission  determines  that a  person  is  unsuitable  to own such
security,  then pursuant to the Nevada Act, the  Registered  Corporation  can be
sanctioned,  including the loss of its approvals,  if without the prior approval
of the Nevada  Commission,  it: (i) pays to the unsuitable  person any dividend,
interest,  or any distribution  whatsoever;  (ii) recognizes any voting right by
such  unsuitable  person in  connection  with such  securities;  (iii)  pays the
unsuitable  person  remuneration  in any form;  or (iv) makes any payment to the
unsuitable  person  by  way  of  principal,  redemption,  conversion,  exchange,
liquidation, or similar transaction.

     A gaming  licensee is required to maintain a current stock ledger in Nevada
which may be  examined  by the Nevada  Gaming  Authorities  at any time.  If any
securities are held in trust by an agent or by a nominee,  the record holder may
be required  to disclose  the  identity  of the  beneficial  owner to the Nevada
Gaming Authorities. A failure to make such disclosure may be grounds for finding
the record  holder  unsuitable.  A company is also  required  to render  maximum
assistance  in  determining  the identity of the  beneficial  owner.  The Nevada
Commission  has the power to require a company's  stock  certificates  to bear a
legend indicating that the securities are subject to the Nevada Act. However, to
date, the Nevada Commission has not imposed such a requirement on the Company.

     A Company  may not make a public  offering  of its  securities  without the
prior  approval  of the Nevada  Commission  if the  securities  or the  proceeds
therefrom  are  intended  to be used to  construct,  acquire or  finance  gaming
facilities  in  Nevada,  or to retire or extend  obligations  incurred  for such
purposes. Such approval, if given, does not constitute a finding, recommendation
or approval by the Nevada  Commission  or the Nevada Board as to the accuracy or
adequacy of the  prospectus  or the  investment  merits of the  securities.  Any
representation to the contrary is unlawful.

     Changes in control of a company  through  merger,  consolidation,  stock or
asset acquisitions,  management or consulting agreements,  or any act or conduct
by a person whereby he obtains control, may not occur without the prior approval
of the Nevada  Commission.  Entities  seeking to acquire control of a Registered
Corporation must satisfy the Nevada Board and Nevada  Commission in a variety of
stringent  standards prior to assuming  control of such Registered  Corporation.
The Nevada  Commission  may also  require  controlling  stockholders,  officers,
directors and other persons having a material  relationship or involvement  with
the entity proposing to acquire control, to be investigated and licensed as part
of the approval process relating to the transaction.

     The  Nevada  legislature  has  declared  that some  corporate  acquisitions
opposed by management,  repurchases of voting  securities and corporate  defense
tactics affecting Nevada gaming licensees,  and Registered Corporations that are
affiliated  with those  operations,  may be injurious  to stable and  productive
corporate  gaming.  The Nevada Commission has established a regulatory scheme to
ameliorate the  potentially  adverse  effects of these  business  practices upon
Nevada's  gaming  industry  and to  further  Nevada's  policy to: (i) assure the
financial  stability of corporate  gaming operators and their  affiliates;  (ii)
preserve the beneficial  aspects of conducting  business in the corporate  form;
and (iii) promote a neutral environmental for the orderly


                                                                              11


<PAGE>



governance  of  corporate  affairs.  Approvals  are,  in certain  circumstances,
required  from the  Nevada  Commission  before a  company  can make  exceptional
repurchases  of voting  securities  above the current  market price  thereof and
before a corporate  acquisition  opposed by management can be  consummated.  The
Nevada Act also requires prior approval of a plan of  recapitalization  proposed
by a company's Board of Directors in response to a tender offer made directly to
the Registered Corporation's  stockholders for the purposes of acquiring control
of the Registered Corporation.

     License fees and taxes,  computed in various ways  depending on the type of
gaming or  activity  involved,  are  payable  to the State of Nevada  and to the
counties and cities in which the Nevada  licensee's  respective  operations  are
conducted.  Depending upon the  particular  fee or tax involved,  these fees and
taxes are payable  either  monthly,  quarterly  or  annually  and are based upon
either:  (i) a percentage  of the gross  revenues  received;  (ii) the number of
gaming devices operated;  or (iii) the number of table games operated.  A casino
entertainment  tax is also  paid by casino  operations  where  entertainment  is
furnished  in  connection  with  the  selling  of food or  refreshments.  Nevada
licensees  that  hold  a  license  as  an  operator  of  a  slot  route,   or  a
manufacturer's or distributor's  license, also pay certain fees and taxes to the
State of Nevada.

     Any person who is licensed, required to be licensed,  registered,  required
to be registered,  or is under common  control with such persons  (collectively,
"Licensees"), and who proposes to become involved in a gaming venture outside of
Nevada is required to deposit with the Nevada Board, and thereafter  maintain, a
revolving fund in the amount of $10,000 to pay the expenses of  investigation of
the Nevada Board of their  participation  in such foreign gaming.  The revolving
fund is  subject  to  increase  or  decrease  in the  discretion  of the  Nevada
Commission.  Thereafter, Licensees are required to comply with certain reporting
requirements  imposed  by  the  Nevada  Act.  A  Licensee  is  also  subject  to
disciplinary  action by the Nevada Commission if it knowingly  violates any laws
of the foreign jurisdiction pertaining to the foreign gaming operation, fails to
conduct the foreign gaming operation in accordance with the standards of honesty
and integrity required of Nevada gaming  operations,  engages in activities that
are  harmful to the State of Nevada or its ability to collect  gaming  taxes and
fees, or employs a person in the foreign operation who has been denied a license
or finding of suitability in Nevada on the ground of personal unsuitability.

     (b)(10)Research and Development. None.

     (b)(11)Compliance  with Environmental Laws. Compliance with federal,  state
and local provisions  regulating the discharge of materials into the environment
or otherwise relating to the protection of the environment will have no material
effect on the capital  expenditures,  earnings and  competitive  position of the
Company.

     (b)(12)Employees. As of March 31, 1997, the Company employed a total of 103
employees;  85 of  whom  are  full-time  employees,  including  its 2  executive
officers, 10 managers and 9 security personnel. The Company occasionally employs
part-time  workers as needed.  None of the  Company's  employees  are  currently
covered by any  collective  bargaining  agreement,  although  the  International
Alliance Theatrical Stage Employees ("IATSE") is attempting to organize the Star
Theater and Movie Museum stage crew..

Item 2. Description of Properties.

     The Debbie  Reynolds  Hotel & Casino is situated on a 6.13 - acre site just
off of the Las  Vegas  Strip  between  the  Stardust  Hotel  and  the Las  Vegas
Convention  Center.  It includes  193 hotel rooms (43 of which are  licensed for
timeshare  sales),  approximately  6,000 square feet of vacant casino  space,  a
500-seat showroom, a 79-seat museum, a full-service restaurant, a


                                                                              12


<PAGE>



cocktail  lounge and bar, one swimming pool and several  hundred parking spaces.
These facilities total approximately 210,380 square feet.

     As of March 29, 1997 the Company had a total of approximately $7,194,000 in
mortgages  encumbering its real and personal  property,  including the Hotel and
real property  located at 305 Convention  Center Drive, Las Vegas,  Nevada.  See
Part II, Item 6 "Management's Discussion and Analysis or Plan of Operations" for
a description of these mortgages.

     The Company  believes that these  facilities  are suitable and adequate for
its current needs.

Item 3. Legal Proceedings.

     In January  1994,  Edward  Stambro,  an  unaffiliated  individual,  filed a
lawsuit  against one of the  Company's  subsidiaries  and others in the District
Court of Clark  County,  Nevada,  alleging  breach  of  brokers  agreement.  The
Company's  subsidiary  filed an answer to the  allegations on February 28, 1994.
Management  and  legal  counsel  for the  Company  are of the  opinion  that the
plaintiff's claim is without merit and the Company will prevail in defending the
suit.

     On April 28, 1995, Ronald D. Nitzberg and Ron Nitzberg Associates, Inc., an
unaffiliated corporation,  filed a lawsuit against the Company and others in the
District Court of Clark County, Nevada, alleging breach of contract, slander and
other claims,  relating to his employment with the Company.  The plaintiffs seek
damages in the amount of  approximately  $245,000 and an  unspecified  amount of
money  damages.  The Company  has filed a  counterclaim  against  the  plaintiff
alleging  breach of fiduciary duty and breach of contract asking for declaratory
relief from consulting and stock agreements.

     On April 14, 1995,  Edward S. Coleman  filed a lawsuit  against the Company
and others in the District  Court of Clark County,  Nevada,  alleging  breach of
covenant of good faith and fair dealing based on certain services. The plaintiff
seeks unspecified money damages in excess of $10,000.

     On January 26, 1995, American Interval Marketing,  Inc., filed a lawsuit in
the  District  Court of Clark  County,  Nevada,  against the Company and others,
alleging  breach of contract and  reasonable  value of services.  The  plaintiff
seeks damages of approximately $45,000.

     On July 14, 1995, Grand Nevada Hotel Corp., filed a lawsuit in the District
Court of Clark County, Nevada, against the Company,  alleging breach of contract
and breach of implied duty of good faith.  The plaintiff seeks damages in excess
of $10,000.

     On July 27, 1995, Norman Eugene Watson, filed a lawsuit against the Company
and others in the District  Court of Clark County,  Nevada,  alleging  breach of
contract,  fraud and  misrepresentation  and other claims.  The plaintiff  seeks
damages in excess of $10,000.

     On August 10, 1995,  Fiduciary Trust Company  International,  as Trustee of
the  Taylor-Made  Ltd.  Defined  Benefit  Pension  Plan,  filed a lawsuit in the
District Court of Clark County, Nevada, against the Company and others, alleging
breach of contract and unjust enrichment.  The plaintiff seeks damages in excess
of  $10,000.  The  Company is  negotiating  a  settlement  with  respect to this
lawsuit.

     On September 1, 1995,  Young Electric Sign Company,  filed a lawsuit in the
District Court of Clark County, Nevada, against the Company and others, alleging
breach of contract. The plaintiff is seeking damages in excess of $10,000.


                                                                              13


<PAGE>



     On April  11,  1996  Jackpot  Enterprises,  Inc.,  filed a  lawsuit  in the
District Court of Clark County, Nevada, against the Company and others, alleging
breach of  contract,  specific  judgment,  unjust  enrichment  and breach of the
implied  covenant  of good  faith and fair  dealing.  The  plaintiff  is seeking
damages in excess of $10,000.

     On April 21, 1997 Maxim Financial  Profit Sharing Plan,  filed a lawsuit in
the United States District Court, District of Colorado,  against the Company and
others,  alleging breach of contract,  intentional fraud,  Securities Violations
and Recission. The plaintiff is seeking damages in excess of $75,000.

     In addition  to the above  mentioned  lawsuits,  their are  numerous  other
lawsuits  filed  against  the  Company  by  certain  of its  vendors  and  other
creditors.  The Company  believes that these  lawsuits may be satisfied  through
payment of the indebtedness to the extent the Company's cash flow permits.

     Except as otherwise set forth above,  the Company is unable to predict,  at
this time,  the  likelihood  of the Company  prevailing  in the above  lawsuits.
However,  the  Company  has  recorded a  provision  for  estimated  losses  from
litigation of $890,000.

Item 4. Submission of Matters to a Vote of Security Holders.
        Not Applicable.

                                     PART II

Item 5.  Market  for the  Registrant's  Common  Stock  and  Related  Stockholder
         Matters.

     (a)(1)  The  principal  market on which the  Registrant's  Common  Stock is
traded is the  over-the-counter  market  and the  Registrant's  Common  Stock is
quoted on the National Quotation Bureau Inc.'s Electronic Bulletin Board.

     (a)(1)(i) Not applicable.

     (a)(1)(ii) The range of high and low bid  quotations  for the  Registrant's
Common Stock for the last two fiscal years are provided  below and were obtained
from tradeline.  These  over-the-counter  market quotations reflect inter-dealer
prices without retail markup,  markdown or commissions  and may not  necessarily
represent actual transactions.

                                            High bid            Low bid
                                            ---------------------------
  1/1/95 -   3/31/95                         $4.50                1.13
  4/1/95 -   6/30/95                          3.00                1.75
  7/1/95 -   9/30/95                          3.00                2.63
 10/1/95 -  12/31/95                          2.75                 .63

  1/1/96 -   3/31/96                          1.44                 .75
  4/1/96 -   6/30/96                          1.19                 .54
  7/1/96 -   9/30/96                          1.13                 .57
 10/1/96 -  12/31/96                           .94                 .35

     On March 19, 1997,  the reported bid and asked prices for the  Registrant's
Common Stock were $.16 and .19, respectively.

     (a)(2) Not applicable.


                                                                              14


<PAGE>



     (b) On March 27,  1997 the  Registrant  had  approximately  579  holders of
record of its Common Stock which does not include holders whose shares were held
in street name.

     (c)(1) The  Registrant  has paid no  dividends  with  respect to its Common
Stock.

     (c)(2)  The  Registrant's   outstanding  8  3/4%  Convertible  Subordinated
Debentures  prohibit the  Registrant  from paying  dividends,  other than Common
Stock dividends on its preferred stock, while the Debentures are outstanding.

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

     The  following   discussion   should  be  read  in  conjunction   with  the
consolidated  financial  statements and notes thereto included elsewhere in this
report.

Liquidity and Capital Resources:

     As of December  31,  1996,  the Company  had a working  capital  deficit of
$13,790,000 compared to a working capital deficit of $10,059,000 at December 31,
1995.  As of December 31, 1996,  the Company had a  stockholder's  deficiency of
$6,329,000 as compared to a stockholder's  deficiency of $884,000 as of December
31, 1995. In addition, as of December 31, 1996, the Company is in default in the
payment of the  following  indebtedness:  principal  and  interest  payments  on
mortgages,  principal  and  interest  payment on  debentures,  payroll  taxes of
approximately $1,063,000,  and property taxes, operating taxes, equipment leases
and  various  other  accounts  payable  and  accrued   liabilities   aggregating
approximately $3,643,000. During the year ended December 31, 1996, cash and cash
equivalents decreased by $172,000.

Financings

     During 1996, the Company's  long-term  debt  increased  from  $8,328,000 at
December 31, 1995 to $8,688,000 at December 31, 1996.

     In  March  1994  the  Company  obtained  a  $2,500,000  loan  from  Bennett
Management & Development Corp.  ("Bennett"),  the proceeds of which were used to
replace an existing mortgage on the Debbie Reynolds Hotel & Casino of $2,090,000
and the  balance  of  $410,000  was used for  working  capital.  The loan  bears
interest  at 13% per  annum  and is due on March  15,  1997.  The loan  requires
monthly  payments of interest and payments of $1,200 per timeshare  unit sold to
be applied to accrued  interest and principal.  In consideration of the loan the
Company  issued to Bennett  25,000  shares of its  Common  Stock.  Ms.  Reynolds
executed a personal  guarantee with respect to the loan. As of December 31, 1996
the principal amount outstanding was reduced to approximately  $2,249,000.  This
loan has matured and is in default.

     In June 1994 the Company and its  subsidiaries  obtained a $1,000,000  loan
from TPM Holdings, Inc. ("TPM"), and Source Capital Corporation ("Source"), both
unaffiliated  with the Company.  The loan bore interest at 13% per annum and was
due on June 7, 1996. The loan required monthly payments of interest and payments
of $1,000  per  timeshare  unit  sold to be  applied  to  accrued  interest  and
principal.  The loan was secured by the  Company's  real and personal  property,
including  the Debbie  Reynolds  Hotel & Casino.  As of  December  31,  1995 the
principal amount outstanding was reduced to approximately  $151,000 and the loan
was paid off in July 1996.

     In December 1994 TPM Holdings,  Inc. and Source Capital  Corporation loaned
the Company an additional $1,100,000. The loan bears interest at a rate equal to
the greater of four  percent over the prime rate or 12%, and was due on November
15, 1996. The loan requires


                                                                              15


<PAGE>



monthly  payments  of  interest  and  payments  of  between  $100 and $1,500 per
timeshare unit sold, depending on the actual number of units sold, to be applied
to accrued interest and principal. The loan is secured by the Company's real and
personal  property,  including the Debbie Reynolds Hotel & Casino. The principal
amount  outstanding  on the  loan as of  December  31,  1996  was  approximately
$511,000. This loan was paid off in February 1997.

     The  Company  allows  purchasers  to finance a  significant  portion of its
timeshare  sales.  To facilitate the sale of timeshares  the Company  obtained a
$25,000,000 (increased to $35,000,000 at March 31, 1995) commitment from Bennett
Funding  International,  Ltd.  ("Bennett")  whereby Bennett purchases  timeshare
paper from the  Company  with  recourse,  subject to its  credit  criteria,  and
advances the Company 85% of the amount financed. Generally, the Company receives
at least a 10% down payment from the  purchaser  and finances the  remaining 90%
with Bennett. At December 31, 1996 the Company had utilized and was contingently
liable for approximately $2,824,000 of this commitment.

     In January 1995, World Venture Trust, an unaffiliated  company,  loaned the
Company $250,000.  The loan bore interest at 10% and was due April 26, 1995 with
a principal balance of $275,000.  The loan was secured by the Company's real and
personal property. The loan was convertible,  at the option of the holder, after
maturity,  into 200,000 shares of the Company's  common stock.  The Company paid
off this loan in September  of 1995 with  $275,000 in cash and issued the holder
15,745 restricted shares of the Company's common stock.

     In January 1995,  Realecon,  a California  Corporation,  loaned the Company
$125,000  and  advanced  an  additional  $75,000  in March  1995.  The Loan bore
interest  at 12% and was due July 16,  1995.  The  amount  due at  maturity  was
$235,000.  The loan was secured against  certain  receivables of the Company and
required  principal and interest payments equal to $1,000 per timeshare interval
sold. In consideration of the loan the Company issued Realecon 10,000 restricted
shares of the Company's  common stock. The Company paid off this loan in June of
1995.

     In February  1995, the Company  obtained a $525,000 loan from Bennett,  the
proceeds of which were  principally  used in the  construction of the museum and
for  general  corporate  purposes.  The  loan  bears  interest  at 13%  and  was
originally  due and payable March 22, 1997. The loan is secured by the Company's
real and personal property.

     In March 1995,  the Company  obtained a $245,000  loan from an  independent
third party,  the proceeds of which were principally used in the construction of
the museum.  The loan bore  interest at 6% and was due March 31, 1996.  The loan
was convertible,  at the holder's option,  into the Company's  restricted common
stock at a rate of $1.00 per  share.  In August  1995 the holder  converted  the
indebtedness into 245,000 shares.

     In  April   1995,   the   Company   obtained  a  $500,000   loan  from  TPM
Financial/Source  Capital,  the proceeds of which were  principally  used in the
construction  of the museum and for general  corporate  purposes.  The loan bore
interest at 13% and was due June 25,  1996.  This loan was issued as an addition
to the lender's second  mortgage.  The Company paid off this loan in November of
1995.

     In May 1995,  the  Company  obtained  a  $340,000  loan from  Bennett,  the
proceeds of which were principally used for general corporate purposes. The loan
bears  interest at 13% and was  originally  due and payable March 22, 1997.  The
loan is secured by the Company's real and personal property.

     In August 1995, the Company obtained a $2,865,000 loan from Bennett Funding
International,  LTD.,  the  proceeds of which were  principally  used to pay off
existing debt and for


                                                                              16


<PAGE>



general corporate purposes,  which included the $340,000 advanced to the Company
in May of 1995  and  $525,000  advanced  in  February  of 1995.  The loan  bears
interest at 14% and is due August 23, 1999. The loan is secured by the Company's
real and personal property. This loan is personally guaranteed by Ms. Reynolds.

     In  October  1995,  the  Company  raised  additional  financing  through  a
Regulation S offering under the Securities Act of 1933 (the "Act").  The Company
sold 300,000  shares of the  Company's  common stock  totalling  net proceeds of
approximately  $225,000.  The offering of shares was directed  solely to persons
who were not residents of the United  States.  The Company  offered a maximum of
2,666,666 shares at $.75 per share. The shares were not registered under the Act
and may not be offered or sold in the United  States absent  registration  or an
applicable exemption from registration. In addition the shares were subject to a
minimum six month restriction on transfer.

     In December 1995,  the Company  commenced a Regulation D offering under the
Securities Act of 1933 (the "Act"). The Company sold 200,000 units, at $1.00 per
unit,  consisting of 200,000  shares of the  Company's  common stock and 200,000
warrants to purchase one share of common stock at $1.00,  totalling net proceeds
of approximately $182,000. The offering of shares was directed solely to persons
who met the  definition  of  "Accredited  Investor"  set forth in rule 501(A) of
Regulation  D  promulgated  under the Act.  The  Company  offered  a maximum  of
3,000,000 Units, (the "Unit"), each unit consisting of one share of Common Stock
and one warrant to purchase one share of common stock at $1.00 per share.

     In August 1995 the  Company  offered  all  holders of the  Company's  units
issued  pursuant to the Company's  private  placement  memoranda dated March 25,
1994 and  November 17, 1994 the  opportunity  to convert the Series AA Preferred
Stock and Debentures  constituting  part of the units into restricted  shares of
the  Company's  common  stock.  Each  Series AA  Preferred  Stock and  Debenture
converted into one share of the Company's common stock at the reduced conversion
prices of $2.00 and $2.25,  per share,  respectively.  The total  dollar  amount
converted from Series AA Preferred  Stock and  Debentures  was $2,954,500  which
converted into  1,392,240  shares of the Company's  common stock.  As additional
consideration,  the Company  also offered the unit holders the right to exercise
each Class A Warrant to purchase two shares of Common Stock  (instead of one) at
an  exercise  price of $1.00 per share  (instead  of $5.50) for 60 days from the
date of the offer.  Pursuant to the Warrant offer,  the Company received $93,120
from the  exercise of warrants to purchase  93,120  shares of Common  Stock.  As
additional  consideration to the Company, the unit holders waived the delinquent
interest and dividend payments owed.

     In May 1996, the Company  offered all holders of the Company's units issued
pursuant to the Company's private placement  memorandum dated March 25, 1994 the
opportunity to convert the Series AA Preferred Stock and Debentures constituting
part of the units into  restricted  shares of the Company's  common stock.  Each
Series  AA  Preferred  Stock  and  Debenture  converted  into  one  share of the
Company's common stock at the reduced  conversion prices of $1.10 per share. The
total dollar amount  converted from Series AA Preferred Stock and Debentures was
$884,000 which  converted into 803,637 shares of the Company's  common stock. As
additional  consideration,  the Company  reduced the  conversion  price for each
Series AA Preferred Stock and Debenture issued pursuant to the Private Placement
Memorandum dated November 17, 1994 to $2.25. As additional  consideration to the
Company,  the unit holders waived the delinquent  interest and dividend payments
owed.

     In August 1996, the Company  obtained a $500,000 loan from Gregory Orman, a
third party,  the proceeds of which were principally used to reduce past due tax
obligations,  reduce  trade  payable debt and also allowed the Company to engage
its auditors.  The loan bears interest at 12% and has $550,000 principal balance
due  November  1,  1996.  This loan is  secured  with a fourth  mortgage  on the
Company's property and with certain of the Company's receivables. In


                                                                              17


<PAGE>



connection  with the  financing the Company  granted  Orman  warrants to acquire
260,000  shares of the Company's  common stock at an exercise  price of $.70 per
share. On October 18, 1996, Orman agreed to extend the maturity date to February
1, 1997. In consideration for the extension the Company reduced Orman's exercise
price on the warrants to acquire  260,000  shares of the Company's  common stock
from $.70 per share to $.22 per share. This loan is personally guaranteed by Ms.
Reynolds and Todd Fisher.

     In February 1997, the Company obtained a $1,100,000 loan from Galt Capital,
an affiliate of Gregory Orman, an independent third party, the proceeds of which
were  principally  used to pay-off the  TPM/Source  second  mortgage that was in
default,  reduce past due tax  obligations,  reduce  trade  payable debt and the
balance will fund the Company's  operations  until  additional  financing can be
arranged.  The loan bears interest at 12% and has $1,100,000  principal  balance
due June 5, 1997. This loan is secured pursuant to an assignment of TPM Holding,
Inc.  second Deed of Trust,  Loan Agreement and  Promissory  Note dated December
1994 and is secured  by a  $573,000  first  deed of trust  placed  against  real
property owned by Selden Enterprises,  ("Selden"),  an affiliate of Ms. Reynolds
and Todd Fisher.  In addition,  Debbie  Reynolds and Todd Fisher have personally
guaranteed this loan. The Company will issue Selden 500,000 shares of its common
stock as  consideration  for allowing the deed of trust to be placed on its real
property.  The Company will also issue Ms. Reynolds 500,000 shares of its common
stock in consideration of her personal  guarantee and in recognition of numerous
past uncompensated  guarantees provided by Ms. Reynolds as well as Ms. Reynolds'
continued efforts on behalf of the Company. In connection with the financing the
Company  has  issued a warrant to  purchase  approximately  2% of the  Company's
outstanding  common  stock,  as  calculated  pursuant  to the  agreement,  at an
exercise price of $.22 per share, the estimated fair market value, which expires
February 5, 2000.

     As of January 1997, the Company is currently in default under:  the Bennett
Management & Development  ("BMD")  mortgage due to  non-payment of principal and
interest and the holder has the right to accelerate the mortgage immediately and
make demand on the entire outstanding  principal balance; the BMD mortgage had a
principal balance of approximately  $2,249,000 plus accrued interest outstanding
at December 31, 1996; the Bennett Funding  International,  Ltd. ("BFI") mortgage
is in default due to  non-payment  of  interest  and the holder has the right to
accelerate the mortgage  immediately  and make demand on the entire  outstanding
principal  balance;  the BFI mortgage had a principal  balance of  approximately
$3,066,000  plus accrued  interest  outstanding  at December  31, 1996;  and the
Company  is  in  default  on  its  unsecured  subordinated   debentures  due  to
non-payment of monthly interest and delinquent  principal payments,  the holders
have  the  right  to  accelerate  immediately  and  make  demand  on the  entire
outstanding principal balance.

On October 30, 1996 the Company  entered into an Agreement for Purchase and Sale
with ILX Incorporated ("ILX") under which ILX would purchase the Debbie Reynolds
Hotel & Casino (the  "Hotel"),  including  all of the Hotel's  real and personal
property and the Hotel's timeshare  operations (the "ILX  Agreement").  ILX is a
publicly-held  corporation  based in Phoenix,  Arizona which  principally  owns,
operates and markets resort properties in Arizona,  Florida, Indiana and Mexico.
On May 15, 1997 ILX elected to cancel and terminate this Agreement.  The Company
and ILX continue to negotiate an alternative transaction.  There is no guarantee
that an alternative agreement will be reached.

     The  Company's  recurring  losses  from  operations,  its  working  capital
deficiency,  its shareholders  equity  deficiency,  its significant debt service
obligations and its default with respect to various agreements raise substantial
doubt about the Company's ability to continue as a going concern. The ability of
the Company to continue as a going concern is dependent on its ability to obtain
additional  financing to finance its working  capital deficit until such time as
cash flows from  operations are sufficient to finance the Company's  operations,
including the


                                                                              18


<PAGE>



Company's  proposed casino  operations.  The Company may need to seek protection
under the Federal bankruptcy laws.

     In addition to pursuing an alternative  transaction with ILX, management is
seeking additional sources of financing to reduce its debt service  obligations,
complete  certain  capital  projects  and fund its  working  capital  needs.  In
addition,  management has implemented  cost control measures to improve the cash
flow of the Company.  There can be no assurance  that the  additional  financing
will be obtained.

Revenues:

     Revenues for fiscal 1996 totaled  $6,421,000 as compared to $9,790,000  for
fiscal 1995. This decrease is attributed to the timeshare  department having cut
back to minimal sales and operations during the fiscal year 1996.  Revenues from
timeshare  sales were $1,340,000 and from hotel rooms were $2,325,000 for fiscal
year 1996 as compared to respective  revenues of $3,839,000  and  $2,444,000 for
fiscal year 1995.  Showroom revenues totaled  $1,226,000 for 1996 as compared to
$1,938,000 in 1995.  This decrease is attributed to Ms.  Reynolds  performing 20
weeks as compared to 32 weeks during 1995.  Restaurant revenues totaled $695,000
for 1996 as compared  to  $297,000  for the  approximate  four month  period the
Company operated the restaurant  during 1995. This increase is attributed to the
1996  operations  including a full year of  operations  as compared to only four
months  operations of the restaurant during 1995. Rental income for 1996 totaled
$96,000 all of which was from casino  rental as compared to casino rental income
which  totaled  $502,000 for 1995.  This  decrease is  attributed  to the casino
operating  only  three  months  during  1996  as  compared  to a  whole  year of
operations  during 1995. The Company's  gift shop produced  revenues of $176,000
for 1996  compared to $123,000  for 1995.  Museum  revenues for fiscal year 1996
totaled  $404,000 as compared to museum  revenue of $416,000 for 1995. See "Part
1, Item 1 Description of Business."

     The loss  from  operations  for 1996  totaled  $4,910,000  as  compared  to
$6,002,000  for 1995.  The decrease in the loss from  operations for 1996 can be
attributed  to the  following  expenses  incurred  during  1995  which  were not
incurred in 1996:  approximately  $460,000 relating to the conversion of certain
of the company's  debts into equity,  the issuance of common stock and write-off
of prepaid  consulting  services totaling  approximately  $960,000,  the Company
reserving  an  allowance  of  $450,000  relating  to certain  of its  contingent
liabilities,  and  $126,500  expense  relating to the  forgiveness  of a certain
account  receivable.  During 1996, the Company  reserved an additional  $440,000
relating to certain of its contingent  liabilities.  During 1996, the restaurant
operation contributed a loss from operations of $718,000. The restaurant loss is
attributed to the  competitive  food & beverage market in Las Vegas. In response
to the  significant  loss  incurred  from the  restaurant,  in November 1996 the
Company replaced the full-service style restaurant with a self-service deli. The
Company believes the change to a deli will reduce the restaurant operating loss.
During 1996, management reduced staff,  restructured  operations and implemented
cost  cutting  controls.  Although the Company  continues  to incur  significant
operating  losses,   during  1996  management's   actions  reduced  General  and
Administrative   expenses   approximately   $2,014,000   and  reduced   property
operations,  maintenance and energy expenses  approximately $909,000 as compared
to 1995. The net loss for 1996 totaled  $6,464,000 as compared to $8,603,000 for
1995.

Interest Expense:

     Interest  expense  decreased from $2,601,000 in 1995 to $1,554,000 in 1996.
This decrease is attributed to costs associated with the conversion of debt into
shares of its  common  stock  which  were  incurred  during  1995,  but were not
incurred during 1996.


                                                                              19


<PAGE>



Item 7. Financial Statements.

     The following financial  statements are filed as a part of this Form 10-KSB
and are included immediately following the signature page.

     Independent Auditor's Report

     Consolidated Balance Sheet - December 31, 1996

     Consolidated  Statements of Operations - Years ended  December 31, 1996 and
     1995

     Consolidated  Statements of Shareholders' Equity (Deficiency) - Years ended
     December 31, 1996 and 1995

     Consolidated  Statements of Cash Flows - Years ended  December 31, 1996 and
     1995

     Notes to Consolidated Financial Statements

Item 8.  Changes  in  and  Disagreements  With  Accountants  on  Accounting  and
         Financial Disclosure. (Not Applicable)

                                    PART III

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

     (a)(1),(2),(3) Identification of Directors and Executive Officers.


                                                                     Date first
                                                                     appointed
                                                                     to such
Name                    Age     Position with the Company            position
--------------------------------------------------------------------------------
Debbie Reynolds         64      Chairman, Director                   March 1994
                                Secretary                            May 1995

Todd Fisher             38      Chief Executive Officer, President,  May 1995
                                Chief Financial Officer, Treasurer
                                Director                             March 1994

     (a)(4) The business  experience of the Registrant's  officers and directors
is as follows:

     Debbie  Reynolds.  Ms.  Reynolds'  49-year  business career has made her an
internationally  known star of more than 30 motion pictures,  two Broadway shows
and hundreds of television  appearances.  In December 1996,  Paramount  Pictures
released a feature film  entitled  "Mother",  starring  Ms.  Reynolds and Albert
Brooks.  Hamlett  Productions,  Ltd.,  a  company  owned  50% by  Ms.  Reynolds,
purchased  the old  Paddle  Wheel  Hotel and Casino in Las Vegas at auction as a
site for a movie  museum  to house  her  collection  of  Hollywood  memorabilia,
believed  to be the  largest  privately  held  in  the  world.  The  extensively
renovated   property   reopened   in   July   1993   as  the   Debbie   Reynolds
Hotel/Casino/Hollywood   Movie  Museum.  The  unique,   high-tech,   multi-media
Hollywood  Movie Museum opened in early 1995. Ms. Reynolds also is secretary and
a director of Debbie Reynolds Management Company,  Inc. ("DRMC"), a wholly-owned
subsidiary  of the  Company,  is  secretary  and a director  of Debbie  Reynolds
Resorts, Inc., a wholly-owned


                                                                              20


<PAGE>



subsidiary of DRMC, and is president and sole shareholder of Raymax  Production,
Ltd.,  an  entertainment  company,  and  Celebrity  Restaurants,  Inc, a service
company.

     Todd  Fisher.  Mr.  Fisher  has more than  twenty  years of  technical  and
creative  experience  in  television  and film.  He has designed and built sound
stages,  recording studios and TV facilities.  Mr. Fisher designed the Company's
state-of-the-art,  500-seat  showroom  which  doubles as a  complete  television
production  studio.  He  also  conceived  and  designed  the  Company's  unique,
high-tech,  multi-media  Hollywood Movie Museum, which is one of the first sites
in the country to exhibit high-definition  television.  In May 1995 the Board of
Directors of the Company  appointed Mr. Fisher as the Company's  Chief Executive
Officer,  President,  Chief Financial Officer and Treasurer.  Mr. Fisher also is
president,  treasurer and a director of DRMC and is  president,  treasurer and a
director of Debbie Reynolds Resorts, Inc.

     The Board of Directors has no committees at this time.

     (a)(5) Directorships Held in Other Reporting Companies. None.

     (b) Identification of Certain Significant Employees. None.

     (c) Family Relationships.  Ms. Reynolds is the mother of Todd Fisher. Other
than this relationship,  there are no family relationships  between any director
or executive officer of the Company.

     (d) Involvement in Certain Legal Proceedings.

     During the past five years,  no director,  executive  officer,  promoter or
control person of the Company has:

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

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

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

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

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

     Section 16 of the Securities Exchange Act of 1934, as amended, requires the
Company's  officers,  directors  and  persons  who  own  greater  than  10% of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership  with the  Securities  and Exchange  Commission.  Based
solely on a review of the forms it has received  and on written  representations
from  certain  reporting  persons,  the  Company  believes,  to the  best of its
knowledge, that during 1996 all Section 16 filing requirements applicable to its
officers,  directors  and  10%  beneficial  owners  were  complied  with by such
persons.


                                                                              21


<PAGE>



Item 10. Executive Compensation.

(a) General.

     During the 1994 fiscal year and in connection with the DRMC/Maxim  mergers,
the Company  entered into various  compensation  agreements  with certain of its
executive  officers.  During 1995,  some of these  compensation  agreements were
amended. See (g) "Employment Contracts and Arrangements" below.

(b) Summary Compensation Table.

     The  following   table  sets  forth  certain   information   regarding  the
compensation  paid  or  accrued  by the  Company  to or for the  account  of the
executive  officers of the  Company  whose total  annual  compensation  exceeded
$100,000 during the fiscal years ended December 31, 1994, 1995 and 1996.


<TABLE>
<CAPTION>


                                             Compensation Table
                                             ------------------
                    Annual Compensation                                  Long - Term Compensation
                    -------------------                                  ------------------------
                                                                                       Securit.
Name and                                                                 Restrctd.    Underly.
Principal                                               Other Annual      Stock        Options/   LTIP
position            Year     Salary          Bonuses    Compensation      Awards       SARs (#)   Payout     Other
--------            ----     ------          -------    ------------      ------       --------   ------     -----
<S>                 <C>       <C>               <C>                           <C>      <C>           <C>       <C>
Debbie Reynolds     1996      $825,000[1]       -0-           N/A             -0-      100,000[2]    -0-       -0-
Chairman of the     1995      $965,000[1]       -0-           N/A             -0-         -0-        -0-       -0-
Board, Secretary    1994      $600,000[1],[3]   -0-           N/A             -0-                    -0-       -0-
                                                                                        50,000[4]


Todd Fisher         1996       $155,769         -0-           N/A             -0-      100,000[2]    -0-       -0-
CEO, President,     1995       $127,615         -0-           N/A             -0-         -0-        -0-       -0-
Treasurer, CFO      1994       $128,000         -0-           N/A             -0-       50,000[4]    -0-       -0-

Henry Ricci         1996       $68,963          -0-           N/A             -0-       25,000[5]    -0-       -0-
Former President    1995       $129,038         -0-           N/A             -0-      275,000[6]    -0-       -0-
                    1994       $131,250         -0-           N/A             -0-         -0-        -0-       -0-

Donald Granatstein  1996         -0-            -0-           N/A             -0-         -0-        -0-       -0-
Former CFO,         1995       $ 39,000         -0-        $164,060[7]        -0-         -0-        -0-       -0-
Executive Vice      1994       $120,000         -0-        $103,500[8]        -0-      300,000[9]    -0-       -0-
President, and
Treasurer

</TABLE>


[1] Represents  amounts paid or accrued to Raymax  Productions,  Inc., a Company
wholly-owned by Ms. Reynolds ("Raymax") and Ms. Reynolds individually,  pursuant
to an agreement  among  Raymax,  Ms.  Reynolds  and the Company.  For the salary
indicated  above for the year ended  December 31, 1995 Raymax was actually  paid
only $170,000 and is owed $795,000 in accrued showroom performance fees. For the
year ended December 31, 1996,  Raymax  Productions and Ms. Reynolds were paid $0
and are owed $825,000 in accrued showroom performance fees. As of


                                                                              22


<PAGE>



December  31,  1996,  Raymax  Productions  and Ms.  Reynolds are owed a total of
$1,620,000 in accrued showroom  performance fees. See (g) "Employment  Contracts
and Arrangements" below.

[2] Represents  shares  underlying  stock options  exercisable at $.80 per share
until  February 16, 2001.  The fair market value of the Common Stock on the date
of grant was $1.00 per share.

[3] Does not include  $455,000  advanced to Raymax during fiscal year 1994.  See
(g) " Employment Contracts and Arrangements" below.

[4] Represents  shares  underlying stock options  exercisable at $4.00 per share
until October 10, 1999. The fair market value of the Common Stock on the date of
grant was $5.00 per share.

[5] Represents  shares  underlying stock options  exercisable at $1.00 per share
until March 22,  1999.  The fair market value of the Common Stock on the date of
grant was $1.00 per share.

[6] Represents  shares  underlying stock options  exercisable at $3.00 per share
until March 22,  1999.  The fair market value of the Common Stock on the date of
grant was $5.70 per share.

[7] Represents  timeshare  commissions  and advances paid to Roebling  totalling
$37,560 and $126,500. See (g) "Employment Contracts and Arrangements."

[8]  Represents  timeshare  commissions  paid to Roebling.  See (g)  "Employment
Contracts and Arrangements."

[9] Represents  shares  underlying stock options  exercisable at $3.00 per share
until March 22,  1999.  The fair market value of the Common Stock on the date of
grant was $5.70 per share.

N/A: Disclosure is not applicable under the Securities and Exchange Commission's
rules.



(c) Option/SAR Grants Table.

                      Option/SAR Grants in Last Fiscal Year
                                Individual Grants

<TABLE>
<CAPTION>



                                Number of           % of Total
                                Securities         Options/SARs
                                Underlying          Granted to                                              Market Price
                               Options/SARs        Employees in        Base Price       Expiration               on
Name                            Granted (#)         Fiscal Year          ($/Sh)            Date             Date of Grant
----                            -----------         -----------          ------            ----             -------------
<S>                               <C>                   <C>             <C>               <C>  <C>            <C>
Debbie Reynolds                   100,000               44.4%           $    .80          2/16/01             $   1.00
Todd Fisher                       100,000               44.4%           $    .80          2/16/01             $   1.00
Henry Ricci                        25,000               11.1%           $   1.00          3/22/99             $   1.00

</TABLE>


     1994 Stock Option Plan. During 1994 the Company adopted a Stock Option Plan
for officers, directors and key employees (the "Plan"). The Company has reserved
a maximum of 2,000,000  shares of Common Stock to be issued upon the exercise of
options  granted  under the Plan.  The Plan  includes:  (i) options  intended to
qualify as "incentive  stock options" under Section 422 of the Internal  Revenue
Code of 1986, as amended; (ii) non-qualified options which are not


                                                                              23


<PAGE>



intended to qualify as "incentive stock options"; and (iii) formula plan options
which are  non-discretionary  and will be granted annually to the  disinterested
directors  of the Company.  As of March 1997,  options to purchase up to 425,000
shares  have been  granted  under the Plan.  The 1994 Stock  Option Plan and the
190,000  options  previously  granted  thereunder were approved by the Company's
shareholders at the 1994 Stockholders Meeting.

     1994 Employee Stock  Compensation Plan. The Company adopted in June 1994 an
Employee Stock  Compensation  Plan for employees,  officers and directors of the
Company and  consultants  and  advisors  to the  Company  (the "1994 ESC Plan").
Employees will recognize  taxable income upon the grant of Common Stock equal to
the fair market value of the Common  Stock on the date of the grant.  The shares
of Common Stock  issuable under the 1994 ESC Plan have been  registered  under a
registration statement on Form S-8. The ESC Plan is administered by the Board of
Directors.  Of the  1,000,000  shares  reserved  under the Plan 707,710 had been
granted as of December 31, 1996.  During 1997 an  additional  30,000 shares were
granted under the Plan.


                                                                              24


<PAGE>


(d) Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table.

     Aggregated  Option/SAR  Exercises in Last Fiscal Year and FY-End Option/SAR
Values


<TABLE>
<CAPTION>


                                                                                Number of
                                                                                Securities              Value of
                                                                                Underlying            Unexercised
                                                                                Unexercised           In-the-Money
                                                                              Options/SARs at       Options/SARs at
                                                                                FY-End (#)             FY-End($)
                                 Shares Acquired                              -------------          -------------
                                      on                   Value               Exercisable/          Exercisable/
        Name                      Exercise (#)           Realized ($)         Unexercisable          Unexercisable
        ----                      ------------           ------------         -------------          -------------
<S>                                    <C>                   <C>                <C>                   <C>
   Debbie Reynolds                     -0-                   -0-                 150,000               $ -0-
                                                                               exercisable

   Todd Fisher                         -0-                   -0-                 150,000               $ -0-
                                                                               exercisable

   Donald Granatstein                  -0-                   -0-                 300,000               $ -0-
                                                                               exercisable

   Henry Ricci                         -0-                   -0-                 300,000               $ -0-
                                                                               exercisable
</TABLE>

(e) Long-Term Incentive Plan Awards Table. None.

(f) Compensation of Directors.  Directors of the Company are not compensated for
their  services as such but are  reimbursed  for expenses  incurred in attending
Board meetings.

(g) Employment Contracts and Arrangements.

     Agreement with Raymax Production,  Ltd. DRMC entered into an agreement with
Debbie  Reynolds  and  Raymax   Production,   Ltd.,  a  California   corporation
wholly-owned  by Debbie  Reynolds  ("Raymax")  as of January  25,  1994,  and as
amended on March 9, 1995. Under the agreement Raymax provided the entertainment,
management and promotional services of Ms. Reynolds on an exclusive basis in Las
Vegas,  Nevada  during her  lifetime.  The  agreement  was  terminable  upon Ms.
Reynolds'  death or a default.  Under the agreement Ms.  Reynolds was to provide
performance  in the  showroom at the Debbie  Reynolds  Hotel for a minimum of 30
weeks per year and other managerial and promotional activities.  As compensation
for  her  performance  services,  Raymax  was  to  receive  $25,000  per  weekly
performance (the "Weekly  Performance Fee"). Under the agreement Raymax also was
to  receive  annually  10% of the  Company's  net  profits  (as  defined  in the
agreement) for her  non-entertainment  services.  Raymax had the right to take a
non-refundable  monthly  draw  against the net profits  equal to the  difference
between $60,000 and the Weekly  Performance Fees for such month, up to a maximum
draw of $1,000,000.  If the draw taken for any year exceeded the 10% net profits
for such year, such excess would be carried forward as a non-refundable  advance
against  future net  profits  earned  under the  agreement.  Raymax  also was to
receive  reimbursement  of reasonable  business and travel  expenses.  Under the
agreement,  DRMC is  required  to carry life  insurance  on Ms.  Reynolds in the
amount  of  $10,000,000  for the  benefit  of DRMC.  During  1994 and  under the
original  terms of the  agreement  prior to its  amendment  in March  1995,  Ms.
Reynolds  was to receive  compensation  of $50,000  per month for her  services.
During 1994 the Company had advanced  $455,000 to Raymax  against future amounts
owing under this agreement, all of which was outstanding at


                                                                              25


<PAGE>



December  31,  1995.  As of  December  31,  1995  the  Company  was  in  arrears
approximately  $795,000 pursuant to the weekly  performance fee and monthly draw
of this  agreement.  As of  December  31,  1996,  the amount the  Company was in
arrears to Raymax and Ms.  Reynolds  was  $1,620,000  plus  $162,000  in accrued
interest. The Company and Raymax have agreed to net the $455,000 advance against
the $1,620,000 in arrears as of December 31, 1996. In September, 1996 Raymax and
Ms.  Reynolds  served the Company a written  notice that this  agreement  was in
default due to non-payment.  In November 1996,  Raymax delivered a notice to the
Company  terminating this agreement.  Ms. Reynolds has agreed to render showroom
and other  services on an "at will"  basis,  terminable  at any time.  The terms
relating to Ms.  Reynolds'  current "at will" services are the same as specified
in the  terminated  agreement  except that as to all unpaid past and future sums
due Ms. Reynolds, the Company shall pay interest at a rate of prime plus 2%.

     Exclusive  License  Agreement  Effective  March 9, 1995 the Company entered
into an agreement with Ms.  Reynolds and Raymax under which Ms.  Reynolds was to
grant the Company the exclusive,  perpetual,  non-transferable  license:  (i) to
display  Ms.  Reynolds'  extensive  Hollywood  memorabilia   collection  at  the
Company's Hollywood Movie Museum; and (ii) to use the name, photograph, likeness
and  signature  of Ms.  Reynolds  for  the  promotion  of the  Company  and  its
operations.  In consideration for the license, the Company was to agree to issue
400,000 shares of restricted Common Stock to Raymax and to insure,  maintain and
house the memorabilia.  As additional  consideration  for the license,  upon Ms.
Reynolds' death, the Company would pay to her heirs and/or assigns annually, 10%
of the net profits of the Company (as defined in the  agreement) in  perpetuity.
The Company is in default of the agreement with Ms. Reynolds.  In November 1996,
Ms.  Reynolds  delivered  a  written  notice  to the  Company  terminating  this
agreement.

     Exclusive  License  Agreement  Effective  March 9, 1995 the Company entered
into a license agreement with Hollywood Motion Picture and Television  Museum, a
non-profit  organization  ("Hollywood"),  which also owns an extensive Hollywood
memorabilia collection. Under the agreement with Hollywood, the Company has been
granted  the  license  to  display  Hollywood's  memorabilia  in its  Museum  in
consideration for the Company's annual payment to Hollywood of $50,000 until the
construction  costs of the Museum has been recouped from the Museum profits,  at
which time the annual  payment will  increase to $100,000.  On December 27, 1996
Hollywood  sent a default  and 30-day  termination  notice to the Company due to
non-performance  on the  contract  terminating  the  agreement as of January 26,
1997.

     Employment  Contract with Henry Ricci. Henry Ricci,  formerly the President
of the Company, had entered into an Employment Contract with DRMC as of February
14, 1994. Under the contract,  Mr. Ricci served as general manager of the Debbie
Reynolds Hotel for a term of five years and received annual base compensation of
$150,000.  In  addition,  Mr.  Ricci would  receive an annual bonus equal to two
percent of the Hotel's net profits,  as defined in the contract.  Mr. Ricci also
was granted stock  options to purchase  275,000  shares of the Company's  Common
Stock,  vesting  ratably  per diem and  exercisable  at $3.00 per share for five
years from the vesting dates.  Mr. Ricci was also  furnished with a vehicle.  In
May 1995, the Company terminated this contract with Mr. Ricci and entered into a
modified  contract.  The modified contract with DRMC was dated June, 1995. Under
this  contract Mr. Ricci served as Chief of Operations  for the Debbie  Reynolds
Hotel for a term of one year and received  annual base  compensation of $80,000.
Mr. Ricci also received a $30,000 payment as additional  consideration  from the
new contract. As of this date, Mr. Ricci has fully vested into his stock options
to purchase  275,000 shares of the Company's  Common Stock  exercisable at $3.00
per share.  During 1996, the Company granted to Mr. Ricci options to purchase an
additional  25,000 shares of the Company's Common Stock exercisable at $1.00 per
share.  In September  1996,  Mr. Ricci and the Company  mutually  terminated his
employment.


                                                                              26


<PAGE>



     Consulting  Arrangement  with Roebling.  The Company had an oral consulting
arrangement with Roebling Investments (Canada),  Inc.  ("Roebling"),  a Canadian
company  wholly-owned  by M. Donald  Granatstein,  formerly the  Executive  Vice
President,  Chief Financial Officer, Treasurer and a director of the Company. In
May 1995, the Company and Roebling mutually terminated this consulting agreement
through a  severance  agreement.  Under the  severance  arrangement  the Company
agreed  to  continue  to defend  Mr.  Granatstein,  to the  extent  required  by
paragraph  3 of  Section  78.751  of the  Nevada  Revised  Statutes  in  certain
litigation. The Company also waived its rights to collect certain debts due from
Mr.  Granatstein  totalling $126,500 and issued a limited release of claims from
Debbie Reynolds Hotel & Casino,  Inc.,  Debbie Reynolds  Management  Company and
Debbie Reynolds Resorts, Inc. The Company also indemnified Mr. Granatstein as to
his personal loan  guarantee on the Renaldi loan and the $250,000 bond issued in
favor  of  the  Nevada  Department  of  Real  Estate  Timeshare  Division.   Mr.
Granatstein  warranted and agreed to pay and/or  defend,  indemnify,  secure and
hold the Company  harmless from costs,  assessments,  penalties,  damage,  fees,
attorney fees,  interest,  employee withholding or other losses arising from any
federal or state tax  obligations  to which the  Company is or may be subject by
reason of any debts forgiven or payments made by the Company to Mr. Granatstein.
Mr. Granatstein also agreed to assist the Company in any matters relating to the
business while the consultant was under contract with the Company.

     Consulting Agreement with Peter D. Bistrian Consulting, Inc. On December 7,
1995, the Company entered into a Management  Consulting  Agreement with Peter D.
Bistrian Consulting, Inc. ("consultant") pursuant to which the Company agreed to
issue to the consultant Options to purchase up to an aggregate of 486,000 shares
of Common Stock of the Company in  consideration  for consulting  services to be
provided to the Company over an anticipated  eight-month period commencing as of
the date of the agreement.  The option price to exercise the consultants  option
to purchase  486,000  shares of Common  Stock was $.75 per share and each option
was exercisable from December 10, 1995 until its expiration date of December 10,
1997. The Company filed a  Registration  Statement on Form S-8  registering  the
486,000 shares of Common Stock  underlying  the stock options.  The Options were
exercised by the consultant through the issuance of a short-term promissory note
payable in the  principal  amount of $364,500  (the  "Note").  Subsequent to the
issuance of the shares, the consultant defaulted on the payment of the note. The
Company plans to pursue its remedies  against the consultant,  its principal and
others with respect to these shares.

     Consulting Agreement with Robert. C. Brehm Consulting,  Inc. On December 7,
1995, the Company entered into a Management  Consulting Agreement with Robert C.
Brehm Consulting,  Inc.  ("consultant")  pursuant to which the Company agreed to
issue to the consultant Options to purchase up to an aggregate of 264,000 shares
of Common Stock of the Company in  consideration  for consulting  services to be
provided to the Company over an anticipated  eight-month period commencing as of
the date of the agreement.  The option price to exercise the consultants  option
to purchase  264,000  shares of Common  Stock was $.75 per share and each option
was exercisable from December 10, 1995 until its expiration date of December 10,
1997. The Company filed a  Registration  Statement on Form S-8  registering  the
264,000 shares of Common Stock  underlying  the stock options.  The Options were
exercised by the consultant through the issuance of a short-term promissory note
payable in the  principal  amount of $198,000  (the  "Note").  Subsequent to the
issuance of the shares, the consultant defaulted on the payment of the note. The
Company plans to pursue its remedies  against the consultant,  its principal and
others with respect to these shares.

     (h) Report on Repricing of Options/SARs. Not applicable.


                                                                              27


<PAGE>


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

     (a),  (b) Security  Ownership  of  Beneficial  Owners and  Management.  The
following table sets forth  information as of March 27, 1997 with respect to the
ownership  of  the  Company's  Common  Stock  for  all  directors  and  officers
individually,  all officers and directors as a group, and all beneficial  owners
of more than five percent of the Common Stock.

Name and Address                       Amount & Nature                 Percent
 of Beneficial                          of Beneficial                     of
   Owner                                  Ownership                     Class

Debbie Reynolds                          3,545,833[1]                   25.7%
305 Convention Center Drive
Las Vegas, NV  89109

Kennedy Capital                          1,852,679[2]                   13.8%
425 N. New Ballas Rd.
St. Louis, MO.  63141

Michael Weiner                             735,056[3]                    5.8%
1035 Pearl Street, #402
Boulder, Colorado  80302

Todd Fisher                                252,593[4]                    2.0%
305 Convention Center Drive
Las Vegas, NV  89109

All officers and directors               3,798,426[5]                   27.3%
as a group (2 persons)
----------------------------
     [1]  Includes:(i)  2,395,833  shares held of record by the Debbie  Reynolds
     Trust dated February 11, 1986, a revocable  trust of which Ms.  Reynolds is
     the sole trustee; (ii) 50,000 and 100,000 shares issuable upon the exercise
     of  presently  outstanding  options  exercisable  at $4.00  per  share  and
     expiring on October  10, 1999 and $0.80 per share and  expiring on February
     16,  2001,  respectively;  (iii)  500,000  shares  to be  issued  to Selden
     Enterprises, "Selden", an affiliate of Ms. Reynolds and Todd Fisher and 57%
     owned by Ms. Reynolds;  and (v) 500,000 shares to be issued to Ms. Reynolds
     as consideration of Ms. Reynolds  personal  guarantee of the Orman loan and
     in recognition of numerous past  uncompensated  guarantees  provided by Ms.
     Reynolds.  See  Part  III,  Item  12  "Certain  Relationships  and  Related
     Transactions"  for a description of the transaction  relating to the shares
     to be issued to Selden and Ms. Reynolds.

     [2]  Includes:(i)  245,000 shares owned by a principal of Kennedy  Capital;
     (ii) 772,727  shares  owned by clients of Kennedy  Capital for whom Kennedy
     Capital serves as an investment advisor; (iii) 581,188 shares issuable upon
     conversion of Series AA Preferred Stock and Debentures  owned by clients of
     Kennedy  Capital;  and (iv) 253,764  shares of the  Company's  common stock
     issuable  upon  exercise of Class A  Warrants,  owned by clients of Kennedy
     Capital, at an exercise price of $1.00.

     [3]  Includes  100,000  shares  issuable  upon the  exercise  of  presently
     outstanding  options  exercisable at $3.50 per share and expiring on August
     6, 2000.

     [4]  Includes:  50,000 and 100,000  shares  issuable  upon the  exercise of
     presently  outstanding  options exercisable at $4.00 per share and expiring
     on October  10,  1999 and


                                                                              28


<PAGE>



     $0.80 per share  and  expiring  on June 30,  2000,  respectively.  Does not
     include shares owned by Selden, a Company affiliated with Mr. Fisher, since
     he does not control the voting power over such shares.

     [5]  Includes  300,000  shares  issuable  upon the  exercise  of  presently
     outstanding options.

     (c) Changes in Control.

     The Registrant  knows of no  arrangement,  the operation of which may, at a
subsequent date, result in change in control of the Registrant.

Item 12. Certain Relationships and Related Transactions.

Transactions  of Debbie  Reynolds Hotel & Casino,  Inc. and Hamlett  Production,
Ltd.

     In December 1992, Debbie Reynolds Hotel & Casino,  Inc. was incorporated as
a Nevada corporation  ("DRMC"). At the time of its formation DRMC issued 500,000
shares of its common  stock to Debbie  Reynolds in  consideration  of $500.  Ms.
Reynolds made subsequent capital  contributions to DRMC totalling  $50,000.  Ms.
Reynolds is an officer and director of DRMC.

     In  March  1989,  Hamlett  Production  Ltd.  was  incorporated  as a Nevada
corporation  ("HPL").  At the time of its formation HPL issued 250,000 shares of
its common stock to Debbie Reynolds and 250,000 shares to Richard Hamlett,  each
in  consideration  of  $250.  Subsequently,  Ms.  Reynolds  acquired  all of Mr.
Hamlett's shares in HPL.

     In March 1994,  DRMC merged with and into HPL, the surviving  company,  and
HPL  changed  its name to DRMC.  At the time of the merger of DRMC with and into
HPL,  Ms.  Reynolds  was the  sole  shareholder  of DRMC  and HPL and she was an
officer and director of both companies.

     As of  December  31,  1993 DRMC and HPL had loans  payable to Ms.  Reynolds
totalling $2,160,000. The loans were unsecured,  noninterest-bearing obligations
and were due on demand.  The  proceeds  of the loans were used to pay  operating
expenses  for  DRMC,  HPL and  Raymax  Production,  Ltd.  ("Raymax"),  a company
wholly-owned  by Ms.  Reynolds.  During the  quarter  ended  March 31,  1994 Ms.
Reynolds  converted  $1,761,000 of these  obligations  into  additional  capital
contributions  to the Company and $149,000  was repaid.  As of April 8, 1994 the
remaining obligations of $250,000 were repaid.

     During the 1993 fiscal year Ms.  Reynolds  and Mr.  Hamlett  negotiated  on
behalf of DRMC and HPL to obtain financing for such companies from  unaffiliated
third parties. Although the loans were negotiated on behalf of DRMC and HPL, Ms.
Reynolds and Mr. Hamlett signed various notes personally and deposited the money
to the respective  companies.  All payments on the respective  obligations  have
been  made by DRMC and HPL  directly  to the  lenders.  However,  because  these
individuals  signed certain notes personally,  these obligations are included in
the  combined  financial  statements  of DRMC and HPL as amounts  due to related
parties.  The amount outstanding under these obligations totalled $100,000 as of
December 31, 1994.  During the 1995 fiscal year the $100,000 was converted  into
equity in exchange for 80,000 shares of the Company's restricted common stock.

     A company affiliated with a former officer, director and shareholder of HPL
loaned HPL $201,000 during 1993, all of which was outstanding as of December 31,
1994.  The  obligation  was  unsecured,  non-interest  bearing and payable  upon
demand. During 1995, the Company wrote-off this obligation.


                                                                              29


<PAGE>



     As of  December  31,  1993,  DRMC had an  operating  lease with HPL for the
Debbie  Reynolds  Hotel  &  Casino,   payable  $75,000  monthly,  with  $525,000
outstanding  on the  obligation  as of December  31, 1993.  In  addition,  as of
December  31,  1993 DRMC and HPL were  obligated  under  certain  capital  lease
obligations for certain hotel furniture and equipment totalling  $984,000,  some
of which  obligations have been paid by one company on behalf of the other. As a
result  of the  merger of DRMC with and into HPL in March  1994,  the  operating
lease between DRMC and HPL and the obligations  thereunder have terminated.  See
"Part I, Item 1. Description of Business."

     Up until August 1, 1996,  the  restaurant  and bar operations of the Debbie
Reynolds Hotel & Casino were leased to Celebrity Restaurants, Inc. ("Celebrity")
under an oral lease.  Celebrity is wholly-owned by Ms. Reynolds.  This lease was
undertaken by Celebrity as an  accommodation  to the Company  because  Celebrity
held a liquor  license  and the  Company  did not.  Under the  lease  agreement,
Celebrity  was required to pay the Company 8% of net income for the lease of the
restaurant and bar and DRMC was obligated to cover the operating cash shortfalls
of Celebrity's operations. During the years ended December 31, 1995 and 1996 the
amount  DRMC  funded to  Celebrity  was  approximately  $461,000  and  $136,000,
respectively.  No money was  received  under  this  lease  for the  years  ended
December 31, 1996,  1995 and 1994,  respectively,  because the  operation of the
restaurant produced a net loss. On August 1, 1996 DRMC received a liquor license
from Clark County and  terminated the oral lease  agreement.  The restaurant and
bar are currently operated by DRMC.

     The showroom  operations were leased to Raymax under a five-year  operating
lease which  commenced in June 1993.  All revenues from the showroom  operations
were received directly by DRMC, therefore, no lease payments were made by Raymax
to DRMC. As a result of the DRMC/Maxim Mergers,  the lease was canceled and DRMC
operates the showroom  directly.  During the year ended December 31, 1993 Raymax
made $388,000 in leasehold  improvements  and  furniture,  fixture and equipment
purchases for the showroom,  all of which were transferred to DRMC as additional
capital contributions by Ms. Reynolds as of December 31, 1993.

     In February 1997, the Company borrowed $1,100,000 from Galt Capital secured
by a first deed of trust in the amount of $573,000  placed against real property
owned by Selden Enterprises,  ("Selden"),  an affiliate of Ms. Reynolds and Todd
Fisher. In addition,  Debbie Reynolds and Todd Fisher have personally guaranteed
this loan.  The Company will issue Selden  500,000 shares of its common stock as
consideration  for allowing the deed of trust to be placed on its real property.
The Company will also issue Ms.  Reynolds  500,000 shares of its common stock in
consideration  of her personal  guarantee and in  consideration of numerous past
uncompensated  guarantees  provided  by Ms.  Reynolds  as well as Ms.  Reynolds'
continued  efforts on behalf of the  Company.  See "Part III,  Item 11  Security
Ownership of Certain Beneficial Owners and Management".

     During  the year ended  December  31,  1994 the  Company  loaned M.  Donald
Granatstein,  the  then  Chief  Financial  Officer,  Executive  Vice  President,
Treasurer  and a director of the Company,  an  aggregate of $115,900,  and as of
December 31, 1994 $126,500 in accrued  interest and  principal was  outstanding.
The loan bore  interest at nine percent and was due on December  31,  1996.  The
loan was secured by all consulting  fees,  commissions and all other amounts due
Mr. Granatstein from the Company pursuant to his consulting arrangement with the
Company.  Pursuant to a severance agreement entered into in May 1995 the Company
forgave this indebtedness. See Part III, Item 10. "Executive Compensation" for a
description of Mr. Granatstein's  consulting arrangement and severance agreement
with the Company.

     During 1996, Ms. Reynolds  loaned the Company  approximately  $105,000,  of
which,  all is still  outstanding  as of December 31, 1996 and bears interest at
12% per annum.  During 1997,


                                                                              30


<PAGE>



Ms. Reynolds loaned the Company $125,000 and bears interest at a rate of 12% per
annum.  During 1997, the Company repaid Ms. Reynolds $125,000.  During 1997, Mr.
Fisher  also loaned the Company  61,000  accruing  interest at a rate of 12% per
annum. The loan was repaid in 1997.

     During the year ended  December 31, 1994 and since such time Ms.  Reynolds,
Mr. Fisher and Mr. Granatstein have personally  guaranteed various borrowings of
the  Company  and its  subsidiaries.  The  amounts  guaranteed  by such  persons
totalled  approximately  $8,725,000  as of December  31,  1996.  The Company has
entered  into  a  written   indemnification   agreement  with  Mr.   Granatstein
indemnifying  him  from  these  personal  guarantees.  See  Part  III,  Item 10,
"Executive Compensation".

Transactions of Maxim Properties Company

     Maxim  Properties   Company   ("Maxim")  was  incorporated  as  a  Colorado
corporation  in  November  1993.  At the  time  of its  formation  Maxim  issued
1,500,000  shares of its common  stock  each to Maxim  Financial  Corp.  ("Maxim
Financial") and Stephen Cherner in consideration  of a total of $100,000.  Maxim
Financial and Mr. Cherner subsequently  transferred all of their shares to other
persons, including several of their affiliates. Maxim Financial is controlled by
Stephen Cherner.

     Joe Kowal,  a principal  shareholder of Maxim at the time of the DRMC/Maxim
Mergers, transferred 705,000 of the 830,277 shares of the Company's common stock
which he was to  receive  in  exchange  for his Maxim  shares in the  DRMC/Maxim
Merger to four entities who he has represented are not affiliated with him.

     Commencing  in  September  1993 the Maxim  Profit  Sharing Plan (the "Maxim
Plan")  loaned  a total  of  $800,000  to DRMC to pay for the  build-out  of the
showroom  and  working  capital.  The loan bore  interest  at 10% and was due on
demand.  During  1994 a portion  of the loan was  repaid.  In  October  1994 the
Company  agreed to issue  150,000  shares of the  Company's  common stock to the
Maxim Plan as full and complete  consideration for the remaining balance owed to
it,  including  principal and  interest.  The Company has agreed to register the
150,000  shares issued to the Maxim Plan under the next  available  registration
statement  filed by the  Company.  These  shares were  issued in November  1994.
Stephen Cherner,  the beneficial  owner of  approximately  4.1% of the Company's
outstanding  common stock  (including  the 150,000  shares),  and a principal of
Maxim, is the primary beneficiary of the Maxim Plan.

Transactions of Halter Venture Corporation

     SWTV owed Southwest TNT, Inc. ("SWTNT"), a corporation owned by Lawrence E.
Meyers,  a former  officer,  director and principal  shareholder of the Company,
approximately  $2,602  and  $254,996  at  December  31,  1993  and  1992 for the
construction of a mobile  television  production unit. SWTV had made advances to
SWTNT of  approximately  $29,232 at December 31, 1991. These amounts were offset
against  the  amounts  owed for the  construction  of the new mobile  television
production unit during 1992.  During 1993, SWTV  renegotiated  the  construction
price with SWTNT resulting in a reduction in the amount due to SWTNT of $209,264
and a corresponding  reduction in the basis of the mobile television  production
unit to $142,080. Additionally,  during 1993, part of the remaining balance due,
including  additional  advances  made by SWTNT  during 1993 in  connection  with
construction  of the mobile  television  unit,  totalling  $59,743,  were offset
against amounts due to a majority shareholder.

     The Company had advances  receivable  from Lawrence E. Meyers in the amount
of $119,495 at December 31, 1992.  The advances bore interest at the  applicable
Federal rates for long-term  obligations,  accrued  quarterly on the outstanding
balance.  The amount was partially offset against the amount due to SWTNT,  with
the balance being settled during 1993.


                                                                              31


<PAGE>



     Pursuant to a Divestiture Agreement dated March 23, 1994, after the closing
of the DRMC/Maxim  Mergers,  the Company divested its  wholly-owned  subsidiary,
SWTV Production Services,  Inc., to the Company's former President,  Lawrence E.
Meyers,  in exchange  for the  2,126,540  shares of common  stock of the Company
owned by Mr. Meyers, effective March 31, 1994. Mr. Meyers' 2,126,540 shares were
canceled by the Company on March 31, 1994. Subsequent to the divestiture, Mr.
Meyers was a minority shareholder of the Company.



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


                                                                              32


<PAGE>



     (a) Exhibits.  The following is a complete list of exhibits filed as a part
of this Report on Form 10-KSB and are incorporated herein by reference.

Exhibit Number                  Title of Exhibit
--------------                  ----------------

  2.1          Agreement of Merger and Plan of Reorganization dated February 11,
               1994 (1)

  2.2          Amended   and   Restated   Agreement   of  Merger   and  Plan  of
               Reorganization dated March 10, 1994 (2)

  3.1          Articles of Incorporation of Debbie Reynolds Hotel & Casino,Inc.,
               as filed with the Nevada  Secretary  of State on  November  17,
               1994 (4)

  3.4          Bylaws (4)

  4.1          Specimen common stock certificate (4)

  10.1         1994 Employee Stock Compensation Plan (4)

  10.2         1994 Stock Option Plan (4)

  10.4         Divestiture  Agreement  dated March 30, 1994 between the Company,
               Lawrence Meyers and SWTV (3)

  10.5         Management Agreement dated January 8, 1994 between DRHC and Grand
               Nevada Hotel  Corporation,  as amended and terminated on February
               17, 1994 (3)

  10.6         Lease Agreement dated April 5, 1993 between DRHC and Grand Nevada
               Hotel Corporation (3)

  10.7         Lease  Termination  Agreement dated January 10, 1994 between DRHC
               and Grand Nevada Hotel Corporation (3)

  10.8         Agreement of Sublease  between John  Neumeyer,  Edward Haddad and
               DRHC dated April 27, 1993 (3)

  10.9         Termination of Sublease Agreement dated February 11, 1994 between
               Hollywood Restaurants, Inc. Hamlett Productions,  Ltd., and DRHC.
               (3)

  10.10        Amended  and  Restated  Space Lease  Agreement  dated May 7, 1993
               between DRHC,  Debbie's Casino Inc., Jackpot  Enterprises,  Inc.,
               Richard R. Hamlett and Debbie Reynolds (3)

  10.11        Agreement  dated  January 25, 1994 between  Hamlett  Productions,
               Ltd., Raymax Productions, Inc. and Debbie Reynolds (3)

  10.12        Employment  contract  dated  February  14, 1994  between DRHC and
               Henry Ricci (3)

  10.13        Employment  contract  dated February 16, 1994 between the Company
               and Steve Schiffman, as amended (3)

  10.14        Agreement  of Sublease  between DRHC and  Celebrity  Restaurants,
               Inc. dated April, 1993 (3)


                                                                              33


<PAGE>



  10.15        Loan  Agreement  between  DRHC and Hamlett  Production  Ltd.  and
               Bennett  Management & Development  Corp. and Promissory  Note and
               Guarantee and Subordination  Agreement,  all dated March 7, 1994.
               (3)

  10.16        Contract of Sale Membership  Agreements and Installment  Purchase
               Agreements with Recourse  between Debbie Reynolds  Resorts,  Inc.
               and Resort Funding, Inc. dated March 7, 1994 (3)

  10.17        Amendment  dated  March 9, 1995 to  Agreement  dated  January 25,
               1994 between Hamlett Productions,  Ltd., Raymax Productions, Inc.
               and Debbie Reynolds (4)

  10.18        Termination  Agreement among Registrant,  TPM Holdings and Source
               Capital Corporation dated February 10, 1995.(4)

  10.19        Consulting  Agreement  between the Registrant and MBL Investments
               dated August 3, 1994. (4)

  10.20        Loan Agreement  between the  Registrant  and TPM Holdings,  Inc.,
               and Promissory Note, dated June 10, 1994. (4)

  10.21        Loan   Agreement   between  the  Registrant  and  Source  Capital
               Corporation, and Promissory Note, dated December 1, 1994. (4)

  10.22        Loan  Agreement  between  DRMC  and  World  Ventures  Trust,  and
               Promissory Note, all dated April 26, 1995. (5)

  10.23        Loan  Agreement   between  the   Registrant  and  RealEcon,   and
               Promissory Note, dated January 16, 1995. (5)

  10.24        Loan  Agreement   between  the  Registrant  and  Bennett  Funding
               International Ltd., and Promissory Note, dated July 27, 1995. (5)

  10.25        Loan  Agreement  between the  Registrant  and Source  Capital/TPM
               Holding, Inc., and Promissory Note, dated March 1995. (5)

  10.26        Consulting  Agreement  between the  Registrant  and Miron  Leshem
               dated November 6, 1995. (5)

  10.27        Amendment to  Consulting  Agreement  between the  Registrant  and
               Miron Leshem dated December 12, 1995. (5)

  10.28        Consulting   Agreement   between  the   Registrant   and  Pacific
               Consulting Group dated September 1, 1995. (5)

  10.29        Consulting  Agreement  between  the  Registrant  and Telex,  Inc.
               dated March 27, 1995. (5)

  10.30        Consulting  Agreement  between the  Registrant and Peter Bistrian
               Consulting, Inc., ("Consultant"). (5)

  10.31        Consulting  Agreement  between the Registrant and Robert C. Brehm
               Consulting, Inc., ("Consultant"). (5)

  10.32        ILX  Incorporated  definitive  agreement  dated October 30, 1996.
               (5)


                                                                              34


<PAGE>



  10.33        Roy Warren Consulting Agreement dated August 27, 1996.

  10.34        Cancellation  of the ILX  Agreement  for  Purchase and Sale dated
               May 15, 1997.

  10.35        Financing agreement with Galt Capital,LTD dated February 4, 1997

  23.1         Consent of KPMG Peat Marwick LLP,  Independent  Certified  Public
               Accountants.

(1)  Incorporated  by reference  from the like  numbered  exhibit filed with the
Registrant's Form 8-K dated February 11, 1994.

(2)  Incorporated  by reference  from the like  numbered  exhibit filed with the
Registrant's Form 8-K dated March 22, 1994.

(3)  Incorporated  by reference  from the like  numbered  exhibit filed with the
Registrant's Form 10-KSB for the year ended December 31, 1993.

(4)  Incorporated  by reference  from the like  numbered  exhibit filed with the
Registrant's Form 10-KSB for the year ended December 31, 1994.

(5)  Incorporated  by reference  from the like  numbered  exhibit filed with the
Registrant's Form 10-KSB for the year ended December 31, 1995.

     (b) Reports on Form 8-K.  During the last  quarter  period  covered by this
report the Registrant filed no Reports on Form 8-K.


                                                                              35


<PAGE>


SIGNATURES

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


                              DEBBIE REYNOLDS HOTEL & CASINO, INC.



                              By:/s/ Todd Fisher
                                 ----------------------
                                 Todd Fisher, President


Date: May 29, 1997


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


/s/ Debbie Reynolds           Chairman of the                    May 29, 1997
    ---------------           Board, Secretary
    DEBBIE REYNOLDS           and Director

/s/ Todd Fisher               Chief Executive Officer,
    ----------------          Chief Financial Officer,
    TODD FISHER               Treasurer, and Director            May 29, 1997


                                                                              36


<PAGE>


                      DEBBIE REYNOLDS HOTEL & CASINO, INC.
                      AND SUBSIDIARIES

                      Consolidated Financial Statements

                      December 31, 1996

                      (With Independent Auditors' Report Thereon)



                                      F-1
<PAGE>


              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES



                          Index to Financial Statements




                                                                           Page

Independent Auditors' Report                                               F-3

Consolidated Balance Sheet                                                 F-4

Consolidated Statements of Operations                                      F-5

Consolidated Statements of Shareholders' Equity (Deficiency)               F-6

Consolidated Statements of Cash Flows                                      F-8

Notes to Consolidated Financial Statements                                F-10









                                      F-2
<PAGE>


                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
Debbie Reynolds Hotel & Casino, Inc.:

We have audited the accompanying  consolidated  balance sheet of Debbie Reynolds
Hotel & Casino,  Inc. and  subsidiaries as of December 31, 1996, and the related
consolidated  statements of operations,  shareholders' equity (deficiency),  and
cash flows for each of the years in the two year period ended December 31, 1996.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of Debbie  Reynolds
Hotel & Casino,  Inc. and  subsidiaries as of December 31, 1996, and the results
of their  operations  and their cash flows for each of the years in the two year
period ended December 31, 1996, in conformity with generally accepted accounting
principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 7 to the
consolidated  financial  statements,  the Company has suffered  recurring losses
from operations,  has a working capital deficiency,  has a shareholders'  equity
deficiency, significant debt service obligations, and is in default with respect
to  various  agreements,  that  raise  substantial  doubt  about its  ability to
continue as a going concern.  Management's  plans in regard to these matters are
described  in  Notes 7 and 10.  The  consolidated  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.

/s/ KPMG Peat Marwick LLP


April 4, 1997, except for
notes 7 & 8 which are
as of May 16, 1997
Las Vegas, Nevada



                                      F-3
<PAGE>


              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheet

                                December 31, 1996

<TABLE>

<S>                                                                                           <C>
Assets

Current assets:
    Restricted cash                                                                           $      2,000
    Accounts receivable, net of allowance of $103,000                                              985,000
    Inventories (note 3)                                                                           541,000
    Prepaid expenses and deposits                                                                  303,000
                                                                                              ------------
              Total current assets                                                               1,831,000
                                                                                              ------------
Property and equipment (notes 4, 5, 7 and 10):
    Land and building                                                                            6,576,000
    Furniture and equipment                                                                      4,010,000
                                                                                              ------------
                                                                                                10,586,000
    Less accumulated depreciation and amortization                                              (3,219,000)
                                                                                              ------------
              Net property and equipment                                                         7,367,000
                                                                                              ------------

Deposits and other assets                                                                           94,000
                                                                                              ------------

              Total assets                                                                    $  9,292,000
                                                                                              ============
                Liabilities and Shareholders' Equity (Deficiency)

Current liabilities:
    Bank overdraft                                                                            $    103,000
    Current maturities of long-term debt  and capital lease obligations (note 4)                 8,688,000
    Accounts payable and accrued liabilities (note 8)                                            5,381,000
    Due to affiliates (note 2)                                                                   1,447,000
    Timeshare deposits                                                                               2,000
                                                                                              ------------
              Total current liabilities                                                         15,621,000

Commitments  and  contingencies  (notes 5,7, 8, 9 and 10)  Shareholders'  equity
(deficiency) (notes 4, 8, 9 and 10):
    Preferred stock, $.0001 par value.  Authorized 50,000,000 shares;  2,000,000 designated
      as Series AA, 215,844 issued and outstanding ($863,000 liquidation preference)                    --
    Common stock, $.0001 par value.  Authorized 25,000,000 shares; issued and outstanding
      12,615,417 shares                                                                              1,000
    Additional paid-in capital                                                                  15,160,000
    Accumulated deficit                                                                        (21,490,000)
                                                                                              ------------
              Total shareholders' equity (deficiency)                                           (6,329,000)
                                                                                              ------------

              Total liabilities and shareholders' equity (deficiency)                         $  9,292,000
                                                                                              ============
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>


              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations

                     Years ended December 31, 1996 and 1995

<TABLE>
<CAPTION>
                                                            1996            1995
                                                       ------------    ------------

<S>                                                    <C>                <C>
Revenue:
    Timeshare sales                                    $  1,340,000       3,839,000
    Rooms                                                 2,325,000       2,444,000
    Showroom                                              1,226,000       1,938,000
    Museum                                                  404,000         416,000
    Restaurant                                              695,000         297,000
    Casino lease                                             96,000         502,000
    Other                                                   335,000         354,000
                                                       ------------    ------------
              Total revenue                               6,421,000       9,790,000
                                                       ------------    ------------

Operating costs and  expenses:
    Timeshares                                              833,000       2,876,000
    Rooms                                                 1,176,000       1,591,000
    Showroom                                              2,176,000       2,352,000
    Museum                                                  325,000         314,000
    Restaurant                                            1,413,000         374,000
    Other                                                   193,000         263,000
    General and administrative                            2,597,000       4,611,000
    Depreciation and amortization                         1,223,000       1,107,000
    Property operations, maintenance and energy           1,395,000       2,304,000
                                                       ------------    ------------
              Total operating costs and expenses         11,331,000      15,792,000
                                                       ------------    ------------

              Loss from operations                       (4,910,000)     (6,002,000)
                                                       ------------    ------------

Other income (expense):
    Interest expense                                     (1,554,000)     (2,601,000)
                                                       ------------    ------------
              Total other income (expense)               (1,554,000)     (2,601,000)
                                                       ------------    ------------

              Net loss                                 $ (6,464,000)     (8,603,000)
                                                       ============    ============


Loss per common share                                  $       (.53)           (.99)
                                                       ============    ============


Weighted-average number of common shares outstanding     12,286,279       8,734,362
                                                       ============    ============
</TABLE>


See accompanying notes to consolidated financial statements



                                      F-5
<PAGE>


              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

          Consolidated Statements of Shareholders' Equity (Deficiency)


                     Years ended December 31, 1996 and 1995


<TABLE>
<CAPTION>

                                                   Preferred Stock                  Common Stock           Additional
                                             ----------------------------   ---------------------------     Paid-in
                                                 Shares          Amount        Shares           Amount      Capital
                                             ------------    ------------   ------------   ------------   ------------

<S>                                               <C>        <C>              <C>          <C>            <C>
Balance at December 31, 1994, brought
    forward                                       667,904    $         --      8,083,904   $      1,000   $  9,547,000
Shares issued for consulting and other
    services                                           --              --        414,061             --        876,000
Shares issued in consideration of
    obtaining loans                                    --              --        400,745             --        419,000
Regulation S offering, shares issued for
    cash                                               --              --        300,000             --        225,000
Regulation D offering, shares issued for
    cash                                               --              --         50,000             --         50,000
Shares issued through conversion of
    preferred shares to common shares            (348,060)             --        696,120             --             --
Shares issued through conversion of debt
                                                       --              --        696,120             --      2,158,000
Shares issued through exercise of warrants
                                                       --              --         93,120             --         93,000
Shares issued through exercise of options
                                                       --              --        750,000             --        563,000
Uncollected receivable for shares issued
    through exercise of options                                                                               (563,000)
Stock subscribed  pursuant to a future
    services contract                                  --              --             --             --             --
Options issued for services                            --              --             --             --        773,000
Net loss                                               --              --             --             --             --
                                             ------------    ------------   ------------   ------------   ------------

Balance at December 31, 1995                      319,844    $         --     11,484,070   $      1,000   $ 14,141,000
                                             ============    ============   ============   ============   ============

<CAPTION>
                                                                                               Total
                                               Accumu-                       Deferred      Share-holders'
                                               lated             Stock        Compen-         Equity
                                               Deficit       Subscribed       sation       (deficiency)
                                            ------------    ------------   ------------    ------------

<S>                                         <C>             <C>            <C>             <C>
Balance at December 31, 1994, brought
    forward                                 $ (6,423,000)   $         --   $         --    $  3,125,000
Shares issued for consulting and other
    services                                          --              --             --         876,000
Shares issued in consideration of
    obtaining loans                                   --              --             --         419,000
Regulation S offering, shares issued for
    cash                                              --              --             --         225,000
Regulation D offering, shares issued for
    cash                                              --              --             --          50,000
Shares issued through conversion of
    preferred shares to common shares                 --              --             --              --
Shares issued through conversion of debt
                                                      --              --             --       2,158,000
Shares issued through exercise of warrants
                                                      --              --             --          93,000
Shares issued through exercise of options

Uncollected receivable for shares issued
    through exercise of options                       --              --             --         563,000
Stock subscribed  pursuant to a future
    services contract                                 --         300,000       (300,000)             --
Options issued for services                           --              --             --         773,000
Net loss                                      (8,603,000)             --             --      (8,603,000)
                                            ------------    ------------   ------------    ------------

Balance at December 31, 1995                $(15,026,000)   $    300,000   $   (300,000)   $   (884,000)
                                            ============    ============   ============    ============
</TABLE>

See accompanying notes to consolidated financial statements.  (Continued)


                                      F-6
<PAGE>


              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

     Consolidated Statements of Shareholders' Equity (Deficiency), Continued

                     Years ended December 31, 1996 and 1995

<TABLE>
<CAPTION>

                                         Preferred Stock              Common Stock           Additional       Accumu-
                                    -----------------------   ---------------------------     Paid-in          lated
                                         Shares      Amount       Shares         Amount       Capital         Deficit
                                    ------------    -------   ------------   ------------   ------------   ------------
<S>                                      <C>        <C>         <C>          <C>            <C>            <C>
Balance at January 1, 1996               319,844    $    --     11,484,070   $      1,000   $ 14,141,000   $(15,026,000)
Shares issued to employees for
    services rendered                         --         --         33,750             --         17,000             --
Shares issued as deposit for
    insurance                                 --         --         33,960             --         20,000             --
Shares issued through conversion
    of debt                                   --         --        425,455             --        628,000             --
Shares issued through conversion
    of preferred shares to common
    shares                              (104,000)        --        378,182             --             --             --
Shares issued for consulting and
    other services                            --         --        110,000             --        204,000             --
Shares issued for cash                        --         --        150,000             --        150,000             --
Cancellation of stock subscribed
    pursuant to cancellation of
    future services contract (See
    note 2)                                   --         --             --             --             --             --
Net loss                                      --         --             --             --             --     (6,464,000)
                                    ------------    -------   ------------   ------------   ------------   ------------

Balance at December 31, 1996             215,844         --     12,615,417          1,000     15,160,000    (21,490,000)

<CAPTION>
                                                                              Total
                                                            Deferred       Share-holders'
                                             Stock           Compen-         Equity
                                           Subscribed        sation       (deficiency)
                                          ------------    ------------    ------------
<S>                                       <C>             <C>             <C>
Balance at January 1, 1996                $    300,000    $   (300,000)   $   (884,000)
Shares issued to employees for
    services rendered                               --              --          17,000
Shares issued as deposit for
    insurance                                       --              --          20,000
Shares issued through conversion
    of debt                                         --              --         628,000
Shares issued through conversion
    of preferred shares to common
    shares                                          --              --              --
Shares issued for consulting and
    other services                                  --              --         204,000
Shares issued for cash                              --              --         150,000
Cancellation of stock subscribed
    pursuant to cancellation of
    future services contract (See
    note 2)                                   (300,000)        300,000              --
Net loss                                            --              --      (6,464,000)
                                          ------------    ------------    ------------

Balance at December 31, 1996                        --              --      (6,329,000)
</TABLE>


See accompanying notes to consolidated financial statements.


                                      F-7
<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                     Years ended December 31, 1996 and 1995



<TABLE>
<CAPTION>
                                                                                      1996           1995
                                                                                  -----------    -----------
<S>                                                                               <C>             <C>
Cash flows from operating activities:
    Net loss                                                                      $(6,464,000)    (8,603,000)
    Adjustments to reconcile net loss to net cash used in operating activities:
        Depreciation and amortization                                               1,223,000      1,107,000
        Amortization of debt discount                                                 340,000        275,000
        Amortization of consulting fees                                                    --        297,000
        Donation to non-profit organization                                           105,000             --
        Forgiveness of debt from affiliate                                                 --        108,000
        Forgiveness of debt to affiliate                                                   --       (201,000)
        Expense associated with conversion of debt to equity                          160,000        592,000
        Common stock issued for services rendered                                     241,000        876,000
        Options issued for services                                                        --        773,000
        Shares issued as consideration for loans                                           --        419,000
        Changes in assets and liabilities:                                                 --
          (Increase) decrease in accounts receivable                                  466,000       (494,000)
          (Increase) in other receivables                                                  --          5,000
          Decrease (increase) in inventories                                           74,000             --
          (Increase) in prepaid expenses and deposits                                (189,000)       (13,000)
          Decrease in deposits and other assets                                       348,000        473,000
          Increase in accounts payable and accrued expenses                         1,964,000      1,613,000
                                                                                  -----------    -----------
                  Net cash used in operating activities                            (1,732,000)    (2,773,000)
                                                                                  -----------    -----------

Cash flows from investing activities:
    Capital expenditures                                                             (257,000)      (676,000)
                                                                                  -----------    -----------
                  Net cash used in investing activities                              (257,000)      (676,000)
                                                                                  -----------    -----------

Cash flows from financing activities:
    Increase in bank overdraft                                                        103,000             --
    Proceeds from borrowings from affiliates                                        1,076,000        838,000
    Payments on amounts due to affiliates                                                  --        (54,000)
    Proceeds from issuance of stock                                                   150,000        368,000
    Proceeds from issuance of long-term debt                                          965,000      3,215,000
    Principal payments on long-term debt and capital lease obligations               (477,000)      (758,000)
                                                                                  -----------    -----------
                  Net cash provided by financing activities                         1,817,000      3,609,000
                                                                                  -----------    -----------

                  Net increase (decrease) in cash and cash equivalents               (172,000)       160,000

Cash and cash equivalents at beginning of year                                        172,000         12,000
                                                                                  -----------    -----------

Cash and cash equivalents at end of year                                          $        -0-       172,000
                                                                                  ===========    ===========
</TABLE>


                                   (Continued)


                                      F-8
<PAGE>


              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

                Consolidated Statements of Cash Flows (Continued)

                     Years ended December 31, 1996 and 1995


                                                              1996        1995
                                                           ---------    --------

Supplemental disclosure of cash flow information:
    Cash paid for interest                                 $ 847,000     821,000
                                                           =========    ========


Supplemental disclosures of noncash investing and financing activities:

     During 1995,  the Company issued 814,806 shares of common stock with a fair
       market  value  of  approximately  $1,233,000  for  consulting  and  other
       services rendered.

     During 1995, the Company  completed the construction of its timeshare units
       and transferred all unsold units with a cost of $557,000 into inventory.

     During 1995,  the Company  issued  696,120  shares of common stock  through
       conversion of 348,060 shares of preferred stock.

     During 1995,  the Company  issued  696,120 shares of common stock valued at
       $1,566,000 through conversion of debt.

     InMay 1996,  the Company  issued  378,182  shares of common  stock  through
       conversion of 104,000 shares of preferred stock.

     InMay 1996,  the Company  issued  425,455  shares of common stock valued at
       $628,000 through conversion of debt.

See accompanying notes to consolidated financial statements



                                      F-9
<PAGE>


              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 1996

(1)  Summary of Significant Accounting Policies


     (a)  Corporate Organization

          The accompanying consolidated financial statements include the
          accounts of Debbie Reynolds Hotel & Casino, Inc., formerly Halter
          Venture Corporation (Halter) and its wholly-owned subsidiaries Debbie
          Reynolds Management Company, Inc. (DRMC), formerly Debbie Reynolds
          Hotel & Casino, Inc. (DRHC) and Debbie Reynolds Resorts, Inc. (DRRI)
          (collectively the Company).


     (b)  Description of Business

          The Company's  operations consist primarily of the hotel operations of
          DRMC and the timeshare  operations of Debbie  Reynolds  Resorts,  Inc.
          ("DRRI"),  a wholly-owned  subsidiary of DRMC.  DRMC owns and operates
          the Debbie  Reynolds  Hotel & Casino (the  "Hotel"),  a gift shop, the
          Hollywood  Motion Picture Museum,  a restaurant and bar and a showroom
          located on Convention Center Drive in Las Vegas,  Nevada.  DRMC leased
          the restaurant to Celebrity Restaurants,  Inc., a company wholly-owned
          by Ms. Reynolds, until August 1, 1996 at which time DRMC was granted a
          liquor  license from Clark County and commenced  operating the bar and
          the restaurant. Until the Company received approval for its own liquor
          license,   Celebrity   accommodated   the  Company  by  operating  the
          restaurant and bar under its liquor license. The Company's operations,
          through  DRRI,  also  consist  of the sale of  timeshare  units in the
          Debbie Reynolds Hotel. DRRI obtained a permanent  timeshare license on
          June 28, 1994.  In addition,  DRMC and its  management  have a pending
          application  filed  for  a  gaming  license  from  the  Nevada  Gaming
          Authorities; however, there can be no assurance that such license will
          be granted.  Due to the Company's poor capital structure and acting on
          the  advice of  counsel,  the  Company  requested  the  Nevada  Gaming
          Authorities   to  place  a  hold  on  processing  its  pending  gaming
          applications until its capital structure substantially improves. Prior
          to March 31, 1996,  the Company  leased space to a third party for the
          operation  of a  casino.  The  Company  served  the  operator  with  a
          termination  notice in  February  1996,  pursuant  to the terms of the
          lease  agreement.  Under the lease  agreement  the  Company was losing
          money on a monthly basis. The Company  requested the operator to cease
          operations  as of June 30,  1996.  On  March  31,  1996  the  operator
          discontinued its gaming operations on the property, removed all of its
          gaming equipment and  subsequently  filed a lawsuit against DRHC. This
          case  is  currently   pending  and  the  outcome  is  not   reasonably
          determinable at this time.

     (c)  Cash Equivalents

          The Company considers all highly liquid debt instruments with original
          maturities  of three  months  or less at date of  purchase  to be cash
          equivalents.


     (d)  Restricted Cash

          Restricted Cash is cash deposits made by timeshare  purchasers to hold
          their units.



                                      F-10
<PAGE>


              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES


              Notes to Consolidated Financial Statements, Continued

     (e)  Property and Equipment

          Property and equipment are stated at cost. Property and equipment held
          under capital  leases are stated at the present value of minimum lease
          payments at the inception of the lease.

          Depreciation   on  property  and   equipment  is   calculated  on  the
          straight-line  method over the estimated useful lives of the assets as
          follows:

          Building                                               20 years
          Building improvements                                  10 years
          Furniture and equipment                                 5 years

          Property  and  equipment  held  under  capital  leases  and  leasehold
          improvements are amortized straight-line over the shorter of the lease
          term  or  estimated  useful  life  of the  asset  and is  included  in
          depreciation and amortization.

          Debt issuance  costs are  amortized on a  straight-line  basis,  which
          approximates the effective interest method, over the life of the debt.

     (f)  Self Insurance

          Between September 1995 and July 1996, the Company was self-insured for
          losses  and  liabilities  relating  to health  care  coverage  for its
          employees.   Losses  were  accrued  based  upon  the  Company's  prior
          experience  and  estimates  using  historical  information.  The total
          estimated  liability for the period  between  September  1995 and July
          1996 was $467,000 and is included in accrued expenses.

     (g)  Long-Lived Assets

          During  fiscal  1996,  the  Company  adopted  Statement  of  Financial
          Accounting  Standards No. 121, Accounting for impairment of Long-Lived
          Assets and for Long-Lived  Assets to be Disposed of (SFAS 121),  which
          establishes  accounting  standards for the recognition and measurement
          of impairments of long-lived assets, certain identifiable  intangibles
          and  goodwill  either of which to be held or disposed of. The adoption
          of SFAS 121 did not have a material impact on the Company's  financial
          position or results of operations.

     (h)  Stock Based Compensation

          Prior to January 1, 1996,  the Company  accounted for its stock option
          plan in accordance with the provisions of Accounting  Principles Board
          (APB) Opinion No. 25.  Accounting  for Stock Issued to Employees,  and
          related  interpretations.  As  such,  compensation  expense  would  be
          recorded  on the  date  of  grant  only  if the  market  price  of the
          underlying  stock exceeded the exercise price. On January 1, 1996, the
          Company adopted SFAS No. 123, Accounting for Stock Based Compensation,
          which permits entities to recognize as expense over the vesting period
          for the fair  value of all  stock-based  awards  on the date of grant.
          Alternatively,  SFAS No. 123 also allows entities to continue to apply
          the  provisions of APB Opinion No. 25 and provide pro forma net income
          and pro forma earnings per share disclosures for employee stock option
          grants made in 1995 and future years as if the fair-value-based method
          defined in SFAS No. 123 had been  applied.  The Company has elected to
          continue to apply the provisions of APB Opinion No. 25 and provide the
          pro forma disclosure provisions of SFAS No. 123.

     (i)  Recognition of Timeshare Revenue


                                      F-11
<PAGE>


              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

          Revenue from sales of timeshare  interests is recognized in accordance
          with the Financial Accounting Standards Board's Statement of Financial
          Accounting  Standards No. 66,  Accounting for Sales of Real Estate. No
          sales  are  recognized  until  such  time as a  minimum  of 10% of the
          purchase  price has been  received in cash,  the buyer is committed to
          continued  payments of the remaining  purchase price,  the Company has
          been released of all future obligations for the timeshare interest and
          the recession period has past.

     (j)  Earnings Per Share

          Earnings  per  common and  common  equivalent  share is based upon the
          weighted average of common and common  equivalent  shares  outstanding
          during the year.  Primary and fully diluted earnings per share are the
          same.

          In February 1997, the Financial  Accounting  Standards  Board issued a
          Statement  of Financial  Accounting  Standards  No. 128,  Earnings Per
          Share,  ("Statement 128"),  which established  standards for computing
          and  presenting   earnings  per  share,   ("EPS").   It  replaces  the
          presentation  of primary and fully diluted EPS with a presentation  of
          basic and  diluted  EPS.  Statement  128 is  effective  for  financial
          statements  for both interim and annual  periods ending after December
          15, 1997.  Earlier  application is not  permitted.  After adoption all
          prior period EPS data should be restated to conform to Statement  128.
          The Company does not expect the  implementation  of  Statement  128 to
          have a material  effect on the  earnings  per share  calculation  when
          implemented.

     (k)  Use of Estimates

          Management  of  the  Company  has  made  a  number  of  estimates  and
          assumptions  relating to the reporting of assets and  liabilities  and
          the disclosure of contingent assets and liabilities at the date of the
          financial  statements and the reported amounts of revenue and expenses
          during the reporting  period to prepare these financial  statements in
          conformity  with  generally  accepted  accounting  principles.  Actual
          amounts could differ from these estimates.

     (l)  Inventories

          Inventory of food and  beverage is accounted  for at the lower of cost
          (first-in   first-out  basis)  or  net  realizable  value.   Timeshare
          inventory is stated at the lower of cost or estimated fair value, less
          costs to sell.

     (m)  Fair Value of Financial Instruments

          The carrying amount of cash  equivalents,  receivables and all current
          liabilities approximates fair value because of the short term maturity
          of these instruments.  The fair value of a financial instrument is the
          amount  at which  the  instrument  could  be  exchanged  in a  current
          transaction  between willing parties.  (See note 4 for additional fair
          value disclosure).


                                      F-12
<PAGE>


              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

     (n)  Income Taxes

          Under the asset and liability method of SFAS 109,  deferred tax assets
          and  liabilities  are  recognized  for  the  future  tax  consequences
          attributable to differences  between the financial  statement carrying
          amounts of existing assets and  liabilities  and their  respective tax
          bases.  Deferred tax assets and liabilities are measured using enacted
          tax rates  expected  to apply to taxable  income in the years in which
          those  temporary  differences are expected to be recovered or settled.
          Under SFAS 109, the effect on deferred tax assets and liabilities of a
          change in tax rates is  recognized  in the period  that  includes  the
          enactment date.

(2)  Related Party Transactions

     In March 1993,  the Company  entered into an agreement with an affiliate to
     lease the bar and any liquor  operations,  for a five-year period with five
     five-year renewal options.  Payments to the Company under the agreement are
     equal to 8% of net liquor  income  and are  payable  monthly.  On August 1,
     1996, DRMC received a liquor license and terminated this lease.

     Due to affiliates at December 31, 1996 consists of the following:

    Accrued performance fees payable to the Chairman of the
        Board of Directors of the Company plus interest        $ 1,782,000
    Unsecured loans payable, without interest, due on demand       120,000
                                                               -----------
                                                                 1,902,000

    Less:  Advance to Chairman of the board                       (455,000)
                  Total due to affiliates                      $ 1,447,000
                                                               ===========

     On January 25, 1994, DRHC entered into an agreement with Raymax Production,
     Ltd.  (Raymax),  a company  wholly  owned by the  chairman  of the board of
     directors,  to provide  entertainment  services  for the  remainder  of the
     chairman's life for $50,000 per month. On March 9, 1995, this agreement was
     amended.  Under the agreement,  the chairman was to perform in the showroom
     at the  Property  for a  minimum  of 30 weeks  per year and  perform  other
     managerial and promotional  services.  As compensation  for her performance
     services Raymax was to receive $25,000 per weekly  performance  (the Weekly
     Performance  Fee).  Under the agreement Raymax also was to receive annually
     10% of the  Company's  net profits (as  defined in the  agreement)  for her
     non-entertainment  services.  Raymax had the right to take a non-refundable
     monthly  draw  against  the net  profits  equal to the  difference  between
     $60,000 and the Weekly  Performance  Fees for such  month,  up to a maximum
     outstanding draw of $1,000,000.  If the draw taken for any year exceeds the
     10% net profits for such year,  such excess  would be carried  forward as a
     non-refundable   advance  against  future  net  profits  earned  under  the
     agreement.  Raymax also was to receive reimbursement of reasonable business
     and travel expenses.  Under the agreement, the Company is required to carry
     life insurance on the chairman in the amount of $10,000,000 for the benefit
     of the  Company.  During 1994 the Company had  advanced  $455,000 to Raymax
     against  future  amounts  owing  under  this  agreement,  all of which  was
     outstanding  at December 31, 1995.  As of December 31, 1995 the Company was
     in arrears  approximately  $795,000 pursuant to the weekly  performance fee
     and  monthly  draw of this  agreement.  In  September,  1996 Raymax and Ms.
     Reynolds  served the Company a written  notice that this  agreement  was in
     default due to non-payment.  In November 1996, Raymax delivered a notice to
     the Company terminating this agreement. As of December 31, 1996, the amount
     the Company was in arrears to Raymax and Ms.  Reynolds was $1,620,000  plus
     $162,000 in accrued interest. The Company and Raymax have agreed to net the
     $455,000 advance against the $1,620,000 in arrears as of December 31, 1996.
     Ms. Reynolds has agreed to render showroom and other services on an "at


                                      F-13
<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

     will" basis,  terminable at any time. The terms  relating to Ms.  Reynolds'
     current "at will"  services  are the same as  specified  in the  terminated
     agreement  except  that as to all  unpaid  past  and  future  sums  due Ms.
     Reynolds, the Company shall pay interest at a rate of prime plus 2%.

     Effective  March 9, 1995 the Company  entered  into an  agreement  with Ms.
     Reynolds and Raymax  under which Ms.  Reynolds was to grant the Company the
     exclusive,   perpetual,   non-transferable  license:  (i)  to  display  Ms.
     Reynolds'  extensive  Hollywood  memorabilia  collection  at the  Company's
     Hollywood Movie Museum; and (ii) to use the name, photograph,  likeness and
     signature  of Ms.  Reynolds  for  the  promotion  of the  Company  and  its
     operations.  In consideration for the license,  the Company was to agree to
     issue 400,000  shares of  restricted  Common Stock to Raymax and to insure,
     maintain and house the memorabilia.  The Company's estimated fair value for
     the  400,000  shares was  $300,000.  As  additional  consideration  for the
     license,  upon Ms.  Reynolds'  death,  the  Company  would pay to her heirs
     and/or assigns annually,  10% of the net profits of the Company (as defined
     in the agreement) in perpetuity. The Company is in default of the agreement
     with Ms.  Reynolds.  In November  1996,  Ms.  Reynolds  delivered a written
     notice to the Company terminating this agreement.

     Also Effective March 9, 1995 the Company  entered into a license  agreement
     with  Hollywood   Motion  Picture  and  Television   Museum,  a  non-profit
     organization   ("Hollywood"),   which  also  owns  an  extensive  Hollywood
     memorabilia collection. Under the agreement with Hollywood, the Company has
     been granted the license to display  Hollywood's  memorabilia in its Museum
     in  consideration  for the Company's annual payment to Hollywood of $50,000
     until the  construction  costs of the  Museum  has been  recouped  from the
     Museum profits, at which time the annual payment will increase to $100,000.
     On December 27, 1996 Hollywood sent a default and 30-day termination notice
     to the Company  due to  non-performance  on the  contract  terminating  the
     agreement as of January 26, 1997.

     During 1995, a $201,000 loan from a related party was forgiven and included
     in other income.

(3)  Inventories

     During 1995, the Company  finished  construction of all timeshare units and
     transferred  the cost  associated  with  these  units  into  inventory.  At
     December 31, 1996, $493,000 of cost relating to units remained in inventory
     awaiting sale.

     The Company maintained an inventory of $15,000 of food and beverage for the
     bar and  restaurant  area and  inventory  in the gift  shop of  $33,000  at
     December 31, 1996.


                                      F-14
<PAGE>


              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

(4)  Long-Term Debt and Capital Lease Obligations
<TABLE>
<S>                                                                                                  <C>
     Long-term debt at December 31, 1996 consists of the following:

     First  mortgage note payable,  due March 15, 1997,  interest at 13% payable
            monthly;  secured by a first deed of trust;  payments  of $1,200 are
            due  upon  sale  of  each  timeshare  unit,  currently  in  default,
            including interest of $134,000. This loan is guaranteed by the
            chairman of the board                                                                    $2,249,000

     Note payable, due August 23, 1999, interest at 14%, secured by a third deed
            of trust, currently in default, including interest of $201,000. This
            loan is guaranteed by the chairman of the board                                           3,066,000
     Note payable, due December 1, 1996, interest at the greater of 12% or 4%
            above prime rate;  secured by a second deed of trust;  payments  due
            monthly based on a graduated scale of timeshare sales,  currently in
            default,
            including interest of $20,000                                                               511,000
     Note payable, due February 1, 1997, interest at 12% ( 3% payable monthly and
            9% accruing interest); secured by a fourth deed of trust, currently in                      569,000
            default, including interest of $69,000. This loan is guaranteed by the
            chairman of the board and the chief executive officer
     Convertible  subordinated  debentures,  interest  at 8-3/4%,  due March 25,
            1996;  convertible  into one share of common stock at $4.50,  net of
            discount of $180,000  and $360,000 as of December 31, 1996 and 1995,
            respectively;
            effective rate of 19%, currently in default                                                 288,000
     Convertible subordinated debentures, interest at 8-3/4%, due November
            17, 1998;  convertible  into one share of common stock at $4.50, net
            of discount of $92,000 and $187,000 as of December 31, 1996 and
            1995, respectively; effective rate of 21%, currently in default                             692,000
     Capital lease obligations (note 5)                                                                 805,000
     Notes to third parties, interest rates between 6% and 12%, unsecured,
            currently in default, maturing at various dates from 1993 to 1996                           508,000
                                                                                                     ----------
             Total long term debt and capital lease obligations (All classified as
               current maturities)                                                                    8,688,000
                                                                                                     ==========
</TABLE>


     On December 1, 1994, the Company obtained a $1,100,000 loan, with a current
     unpaid balance of $511,000,  from Source Capital Corporation (Source),  the
     proceeds of which have been used  principally to complete  construction  of
     the  museum  and for  general  corporate  purposes.  Payments  on the loan,
     although made monthly, are to be facilitated through the following schedule
     of timeshare sales:

     Subsequent to February 1, 1995:
     $500 per timeshare sale between 1 and 515 units
     $1,500 per timeshare sale in excess of 516 units until the loan is repaid.

     In August 1996, the Company  obtained a $500,000 loan the proceeds of which
     were principally used to reduce past due tax obligations,  and reduce trade
     payable  debt.  The loan bears  interest at 12% and has $550,000  principal
     balance due November 1, 1996.  This loan is secured with a fourth  mortgage
     on the Company's property and with certain of the Company's receivables. In
     connection  with the  financing,  the Company  granted  warrants to acquire
     260,000  shares of the Company's  common stock at an exercise price of $.70
     per share.  On October 18, 1996, the maturity date was extended to February
     1, 1997.  In  consideration  for the  extension  the  Company  reduced  the
     exercise  price on the  warrants  from $.70 per share to $.22 per share and
     recognized a charge of $26,000. This loan is currently in default.


                                      F-15
<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

     The fair value of the Company's  notes payable,  capital lease  obligations
     and convertible  subordinated  debentures are estimated based on the quoted
     market  prices for the same or similar.  The  estimated  fair values of the
     notes  payable,  capital lease  obligations  and  convertible  subordinated
     debentures,   respectively,   at  December   31,  1996  are   approximately
     $6,145,000,  $839,000 and $922,000,  using an estimated market rate of 20%.
     There is no  assurance  that the Company  could  obtain  financing  on such
     terms.

(5)  Leases

     (a)  Lessee

          DRHC is  obligated  under  various  capital  leases for certain  hotel
          furniture and  equipment  that expire at various dates during the next
          five years.  The Company is in default on all of their capital leases.
          Management  estimates  that  these  leases  will  be  settled  at  the
          discounted  present  value of lease  payments  which is  approximately
          $805,000,  and is recorded  as current ( See note 4). At December  31,
          1996,   the  gross  amount  of  property  and  equipment  and  related
          accumulated amortization recorded under capital leases is as follows:


          Furniture and equipment         $ 1,154,000
          Less accumulated amortization      (875,000)
                                           -----------

                                          $   279,000
                                           ===========

          The Company entered into a lease agreement during 1993 for the Hotel's
          sign under terms  classified as an operating lease. The lease is for a
          five year period and  provides for monthly  payments of  approximately
          $8,000,  representing principal only. Rent expense for the years ended
          December   31,  1996  and  1995   aggregated   $314,000   and  $99,000
          respectively, and is included in general and administrative expense in
          the accompanying consolidated statements of operations. All leases are
          currently in default and presently due.

     (b)  Lessor

          The  Company  leased the casino and bar  operations  under  agreements
          classified as operating leases, as follows:

          The Company leased  approximately 6,000 square feet of its facility to
          an  unaffiliated  third party  operator  for  purposes of  operating a
          casino. The lease was for a four-year period beginning July 1993, with
          extensions  available for an unspecified number of successive one-year
          periods.  Rental  income was $175 per slot  machine  per month but not
          less than  $30,625 in any one month,  reduced by 10% until the Company
          was fully  operating  two  restaurants.  Rental income was $96,000 and
          $502,000 for the years ended December 31, 1996 and 1995, respectively.
          Included in the lease is a  provision  whereby  between  July 1994 and
          June  1996 the  Company  had the  right to  terminate  the  lease.  In
          exchange,  the Company would have to pay the lessee an amount equal to
          the  remaining  book  value  of the  slot  machines,  one-half  of the
          lessee's  capitalized  expenditures  related to the casino operations,
          and reimburse the lessee for renovations  made to the casino area. The
          Company served the operator with a termination notice in February 1996
          and requested  that the operator cease  operations  effective June 30,
          1996.  On  March  31,  1996,  the  operator  discontinued  its  gaming
          operations on the property and  subsequently  filed a lawsuit  against
          the Company.


                                      F-16
<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

(6)  Income Taxes

     Income  tax  benefit  attributable  to losses  from  continuing  operations
     differed from the amount  computed by applying the federal  income tax rate
     of 34% to pretax loss from operations as a result of the following:

               Computed "expected" tax benefit                      $ 2,236,000

               Reduction in income tax benefit resulting from:
                   Change in the valuation allowance for deferred
                     tax assets                                      (2,236,000)
                                                                    -----------

                                                                    $        --
                                                                    ===========

     Prior to March 8, 1994,  DRHC was taxed as an S Corporation  and HPL as a C
     Corporation.  The S Corporation  losses incurred prior to that date are not
     eligible to be carried  over by the  Company.  The tax effects of temporary
     differences  that give rise to  significant  portions of the  deferred  tax
     assets are presented below:


           Deferred tax assets:
               Net operating loss carry forward          $ 5,662,000
               Allowance for doubtful accounts                35,000
               Less valuation allowance                   (5,697,000)
                                                         -----------

                         Total net deferred tax assets   $        --
                                                         ===========

     At December 31, 1996 the Company has net operating loss  carry-forwards for
     federal  income  tax  purposes  of  approximately   $16,652,000  which  are
     available to offset future federal taxable income, if any, through 2010.

(7)  Liquidity and Going Concern

     The  accompanying  consolidated  financial  statements  have been  prepared
     assuming  the Company  will  continue  as a going  concern.  The  Company's
     recurring losses from operations,  working capital deficiency, debt service
     obligations,  and defaults on various  agreements raise  substantial  doubt
     about the consolidated entity's ability to continue as a going concern. The
     Company's recurring losses from operations, its working capital deficiency,
     its   shareholders   equity   deficiency,   its  significant  debt  service
     obligations  and its  default  with  respect  to various  agreements  raise
     substantial  doubt  about the  Company's  ability  to  continue  as a going
     concern.  The  ability of the  Company to  continue  as a going  concern is
     dependent  on its  ability to obtain  additional  financing  to finance its
     working  capital  deficit until such time as cash flows from operations are
     sufficient  to finance the  Company's  operations,  including the Company's
     proposed casino  operations.  The Company may need to seek protection under
     the Federal  bankruptcy  laws.  In  addition  to  pursuing  an  alternative
     transaction with ILX, management is seeking additional sources of financing
     to reduce its debt service  obligations,  complete certain capital projects
     and fund its working capital needs. In addition, management has implemented
     cost control measures to improve the cash flow of the Company. There can be
     no  assurance  that  the  additional   financing  will  be  obtained.   The
     accompanying   consolidated   financial   statements  do  not  include  any
     adjustments that might result from the outcome of this uncertainty.

     On October 30, 1996 the Company  entered into an Agreement for Purchase and
     Sale with ILX  Incorporated  ("ILX")  under  which ILX would  purchase  the
     Debbie Reynolds Hotel & Casino (the "Hotel"),  including all of the Hotel's
     real and personal property and the Hotel's timeshare operations (the


                                      F-17
<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

     "ILX  Agreement").  ILX is a  publicly-held  corporation  based in Phoenix,
     Arizona which principally  owns,  operates and markets resort properties in
     Arizona, Florida, Indiana and Mexico. On May 15, 1997 ILX elected to cancel
     and terminate this Agreement.  The Company and ILX continue to negotiate an
     alternative  transaction,   there  is  no  guarantee  that  an  alternative
     agreement will be reached.

     On June 28, 1994,  the Nevada Real Estate Board  granted DRRI its permanent
     timeshare license. The Company continues to allocate substantial  resources
     to developing the timeshare  operations.  Through  December 31, 1996, 1,186
     timeshare units have been sold, proceeds from which total $8,693,000.

(8)  Commitments and Contingencies

     The Company  finances a  significant  portion of its  timeshare  sales.  To
     facilitate  the sale of  timeshares  the Company has obtained a $25,000,000
     (increased  to  $35,000,000  at March 31,  1995)  commitment  from  Bennett
     Funding  International,  Ltd. (Bennett) whereby Bennett purchases timeshare
     notes receivable from the Company with recourse,  and subject to its credit
     criteria,  and advances the Company 85% of the amount financed.  Generally,
     the Company  receives at least a 10% down  payment from the  purchaser  and
     finances the remaining  90% with Bennett.  At December 31, 1996 the Company
     had utilized and was contingently  liable for  approximately  $2,824,000 of
     this commitment.

     On April 21, 1997 Maxim Financial  Profit Sharing Plan,  filed a lawsuit in
     the United States District Court, District of Colorado, against the Company
     and others,  alleging  breach of contract,  intentional  fraud,  Securities
     Violations  and  Recission.  The plaintiff is seeking  damages in excess of
     $75,000.  The  Company  believes  the  probability  of the  outcome  is not
     determinable  within  reasonable  limits and  accordingly no provisions for
     future  losses,  if  any,  from  this  matter  have  been  included  in the
     accompanying consolidated financial statements.

     A similar  claim has been  asserted  against the Company by another  party,
     however, at this date, the Company is unaware of any formal claim filed.

     In addition  to the above  mentioned  lawsuits,  there are  numerous  other
     lawsuits filed against the Company by certain vendors and other  creditors.
     The Company believes that these lawsuits maybe satisfied through payment of
     the related indebtedness to the extent the Company's cash flow permits.

     The Company is involved in various claims and legal actions. In the opinion
     of management, the ultimate disposition of these matters has been evaluated
     and those claims considered probable and estimable have been accrued. As of
     December 31, 1996,  the Company has accrued  $890,000 for these claims.  In
     addition,  the Company estimates that the ultimate resolution of one matter
     will  result in the  purchase  of a fixed  asset.  Accordingly,  the amount
     relating  to the fixed  asset  will be  recorded  when the  matter has been
     resolved. The Company believes the ultimate resolution of the matters which
     have not been accrued for will not have a materiel  effect on the Company's
     financial position or results of operations.

(9)  Equity Transactions and Stock Plans

     In June  1994,  the Board of  Directors  of the  Company  adopted  the 1994
     Employee  Stock  Compensation  Plan (Plan) for all  full-time and part-time
     employees and consultants and advisors to the Company. The Company reserved
     an aggregate of 1,000,000 shares of the Company's common stock for issuance
     under the 1994 Plan.  The number of shares  granted to an  individual is at
     the  discretion  of the Board of  Directors  of the  Company.  During 1996,
     177,710 shares were granted under the Plan.

     In June 1994,  the Board of  Directors  adopted the 1994 Stock  Option Plan
     (Option  Plan) for  officers,  directors  and key  employees,  approved  by
     shareholders at the November 1994 Annual Shareholders  meeting. The Company
     has reserved an aggregate of 2,000,000 shares of the Company's common stock
     for


                                      F-18
<PAGE>


              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

     issuance under the 1994 Plan. The Option Plan includes  options intended to
     qualify as incentive stock options, non-qualified options, and formula plan
     options  which are  non-discretionary  and will be granted  annually to the
     disinterested  directors of the Company.  During 1996,  the Company  issued
     options to purchase  225,000  shares of common stock which include  various
     exercise prices per share. The options,  which vest immediately,  expire on
     October 10, 1999 and February 16,  2001.  As of December 31, 1996,  none of
     these options have been exercised.

     In August  1995,  the Company  offered all holders of the  Company's  units
     issued  pursuant to the Company's  private  placement in March and November
     1994  the  opportunity  to  convert  the  Series  AA  Preferred  Stock  and
     Debentures  constituting  part of the units into  restricted  shares of the
     Company's  common  stock.  Each  Series AA  Preferred  Stock and  Debenture
     converted  into one  share of the  Company's  common  stock at the  reduced
     conversion prices of $2.00 and $2.25, respectively. The total dollar amount
     converted from Series AA Preferred  Stock and  Debentures  was  $2,954,500,
     which  converted into 1,392,240  shares of the Company's  common stock.  As
     additional  consideration,  the Company  also  offered the unit holders the
     right to  exercise  each Class A Warrant to  purchase  two shares of Common
     Stock (instead of one) at an exercise price of $1.00 (instead of $5.50) for
     60 days from the date of the offer.  Pursuant  to the  Warrant  offer,  the
     Company  received  $93,120 from the exercise of warrants to purchase 93,120
     shares of common stock.  As additional  consideration  to the Company,  the
     unit holders waived the past due interest and dividend payments owed. Total
     expenses associated with this conversion are $592,000.

     The convertible  debentures prohibit the Company from paying any dividends,
     other  than the  dividend  requirement  of the  preferred  stock,  which is
     payable in common stock, while the debentures are outstanding.

     In  October  1995,  the  Company  raised  additional  financing  through  a
     Regulations  S offering  under the  Securities  Act of 1933 (the Act).  The
     Company sold 300,000 shares of the Company's  common stock for net proceeds
     of  approximately  $225,000.  The offering of shares was directed solely to
     persons who are not  residents  of the United  States.  The offer was for a
     maximum  of  2,666,666  shares  at $.75  per  share.  The  shares  were not
     registered  under  the Act and may  not be  offered  or sold in the  United
     States absent registration or an applicable exemption from registration. In
     addition  the shares  were  subject to a minimum six month  restriction  on
     transfer.

     In December 1995,  the Company  commenced a Regulation D offering under the
     Act. At December  31,  1995,  the Company  sold 50,000 units at a $1.00 per
     unit price,  consisting of one share of the Company's  common stock and one
     warrant to purchase one share of common  stock.  During  1996,  the Company
     sold an  additional  150,000  units.  No  value  has been  ascribed  to the
     warrants.

     On  December  7, 1995,  the  Company  entered  into  Management  Consulting
     Agreements  with two unrelated third party  consultants.  Pursuant to these
     agreements,  the Company issued 750,000  options to purchase  shares of the
     Company's  common  stock at $.75 per share in exchange  for an  anticipated
     eight months of consulting  services.  These options were  exercised by the
     consultants through the issuance of two short term promissory notes payable
     with an aggregate  principal value of $563,000.  Subsequent to the issuance
     of the shares, the consultants defaulted on these notes.

     In connection with the $500,000 financing the Company obtained in August of
     1996,  the  Company  granted  warrants  to  acquire  260,000  shares of the
     Company's  common stock at an exercise price of $.70 per share.  On October
     18, 1996,  the maturity  date of the loan was extended to February 1, 1997.
     In  consideration  for the extension the Company reduced the exercise price
     on the  warrants  from $.70 per share to $.22 per  share and  recognized  a
     charge of $26,000.

                                      F-19
<PAGE>


              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

     In connection  with financing  obtained by the Company in October 1996, the
     Company granted  warrants to acquire 55,000 shares of the Company's  common
     stock at an exercise price of $.22 per share

     Stock option activity during the periods  indicated for the Company's stock
     option plan is as follows:

                                         Number of           Weighted Average
     Options                             Shares              Exercise Price
                                         ------              --------------
     Outstanding at

     December 31, 1994                    915,000            $3.27
     Granted                              860,000            $1.08
     Exercised                           (250,000)            $.75
     Canceled                            (110,000)           $4.00

     Outstanding at

     December 31, 1995                  1,415,000            $2.39
     Granted                              225,000             $.82
     Exercised
     Canceled

     Outstanding at
     December 31, 1996                  1,640,000            $2.17

                                         Number of           Weighted Average
     Warrants                            Shares              Exercise Price
                                         ------              --------------
     Outstanding at

     December 31, 1994                    785,904            $3.74
     Granted                               72,000            $1.83
     Exercised                            (93,120)           $1.00
     Canceled

     Outstanding at
     December 31, 1995                    764,794            $1.00
     Granted                              465,000             $.47
     Exercised
     Canceled

     Outstanding at
     December 31, 1996                  1,229,784             $.80

     The Company  applies APB Opinion No. 25 in accounting  for their Plans and,
     accordingly,  no  compensation  cost has been  recognized  for their  stock
     options  in  the   financial   statements.   Had  the  Company   determined
     compensation cost based on the fair value at the grant date for their stock
     options under SFAS 123, the impact on the Company's net income would not be
     material, therefore pro forma net income and earnings per share disclosures
     have not been presented.

(10) Subsequent Event

     In February 1997, the Company obtained a $1,100,000 loan from Galt Capital,
     an affiliate of Gregory Orman, an independent  third party, the proceeds of
     which were principally used to pay-off the TPM/Source  second mortgage that
     was in default, reduce past due tax obligations,  reduce trade payable debt
     and the  balance  will  fund  the  Company's  operations  until  additional
     financing  can  be  arranged.  The  loan  bears  interest  at 12%  and  has
     $1,100,000 principal balance.  This loan is currently in default. This loan
     is secured  pursuant to an assignment of TPM Holding,  Inc.  second Deed of
     Trust,  Loan  Agreement  and  Promissory  Note dated  December  1994 and is
     secured by a $573,000 first deed of trust placed against real


                                      F-20
<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

     property  owned by Selden  Enterprises,  ("Selden"),  an  affiliate  of Ms.
     Reynolds and Todd Fisher. In addition, Debbie Reynolds and Todd Fisher have
     personally  guaranteed  this loan.  The Company will issue  Selden  500,000
     shares of its common stock as consideration  for allowing the deed of trust
     to be placed on its real property. The Company will also issue Ms. Reynolds
     500,000  shares  of its  common  stock  in  consideration  of her  personal
     guarantee  and in  recognition  of numerous past  uncompensated  guarantees
     provided by Ms.  Reynolds  as well as Ms.  Reynolds'  continued  efforts on
     behalf of the Company.  In  connection  with the  financing the Company has
     issued a warrant to purchase  approximately 2% of the Company's outstanding
     common stock, as calculated pursuant to the agreement, at an exercise price
     of $.22 per share, the estimated fair market value,  which expires February
     5, 2000.


                                      F-21