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, 1995

                                       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



<PAGE>



     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 ___ No _X_
                                (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 $9,790,000. The
aggregate market value of the voting stock held by nonaffiliates (based upon the
average  of 


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the bid and asked price of these  shares on the  over-the-counter  market) as of
December 24, 1996 was approximately $4,633,500.

Class                               Outstanding at December 24, 1996

Common Stock, $.0001 par value      12,522,831 shares

                   Documents incorporated by reference: None

                 Transitional Small Business Disclosure Format:

                                             Yes ___  No _X_


                                                                               2
<PAGE>


                      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.  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 undertaking  and 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 


                                                                               3
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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 because, pursuant
to the terms of the lease  agreement,  the Company was losing money on a monthly
basis. The Company requested Jackpot to cease operations as of June 30, 1996. On
March 31, 1996 the operator  discontinued its gaming operations on the property,
removed all off its gaming  equipment and  subsequently  filed a lawsuit against
DRHC. [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 will  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.  The purchase price for the Hotel is $16,800,000,  which will consist of
3,750,000  "free-trading"  shares of ILX common stock valued for purposes of the
transaction at $2.00 per share,  $4,200,000 in cash and $5,100,000 in assumption
of mortgage  indebtedness.  The market  value of ILX's common stock has recently
been  substantially  less than $2.00 per share.  When the market  value of ILX's
common  stock  reduces  so does the  negotiated  purchase  price.  Under the ILX
agreement, immediately after the closing, ILX has agreed to lease certain of the
hotel  facilities to Debbie  Reynolds and /or a designee (the "Hotel  Facilities
Lease").  The Hotel  Facilities  Lease is expected to be for a term of 99 years,
with a monthly  lease  payment  to be  determined,  although  the ILX  Agreement
documents specify monthly payments of approximately  $150,000 it is unlikely the
Lease would be profitable  at that rate and there is no guarantee  that ILX will
agree to an acceptable  lower figure.  The Hotel Facilities Lease is expected to
include the showroom,  the museum,  the gift shop, the vacant casino space,  the
back bar and certain joint areas. In addition,  in consideration  for use of her
name and likeness,  and associated goodwill and other services,  Debbie Reynolds
will  receive a  percentage  of the net profit of any  timeshare  project at the
Hotel  pursuant  to  a  Timeshare  Profit  Agreement.  Ms.  Reynolds  will  also
participate in future activities of the Hotel and other ILX business activities,
pursuant  to  the  Debbie  Reynolds  Participation  Agreement.  As  a  condition
precedent  to the sale,  ILX has  requested  Debbie  Reynolds  to enter  into an
agreement with Red Rock Collection  Incorporated,  a wholly owned  subsidiary of
ILX.  Subsequently,  Ms.  Reynolds and Todd Fisher have entered into  agreements
with Red Rock Collections Incorporated.  The sale of the Hotel to ILX is subject
to  the  approval  of the  Company's  shareholders,  a  standard  due  diligence
investigation  by ILX,  receipt of any  necessary  governmental  approvals,  and
satisfaction  of various  other  conditions.  The Company  anticipates  that the
closing  will  occur in the  first  quarter  of 1997;  however,  there can be no
assurance that the closing will occur.

     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.  If the sale under the ILX
Agreement is not consummated,  the Company may need to seek protection under the
Federal  bankruptcy  laws. In order for the Company to continue to operate until
the sale under the ILX  Agreement  is  consummated,  the  Company  must obtain a
sufficient  amount of  interim  financing  to fund its  operations.  While  such
interim financing is currently being  negotiated,  



                                                                               4
<PAGE>


there is no assurance  it will be  obtained.  If the Company is unable to obtain
the interim  financing the Company may need to seek protection under the Federal
bankruptcy laws.

     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 August 31, 1996, the average room
rate was  approximately  $50.00).  The  Hotel's  average  occupancy  rates  were
approximately  80%,  82% and 74% for the  1993,  1994  and  1995  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 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, 1995 the  showroom  averaged 84%
occupancy for Ms. Reynolds' show with ticket prices of $34.95.

     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,  Ms.  Reynolds  License  Agreement has been  terminated and Hollywood's
License Agreement is in default (See below). Under this License Agreement, which
is in  default,  the  Company  also has 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.



                                                                               5
<PAGE>


     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. Under the lease  agreement,  Celebrity was required to
pay the Company 8% of net income for the lease of the  restaurant and bar. Under
the oral agreement, 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.  Until the Company  received  approval  for its own
liquor license,  Celebrity accommodated the Company by undertaking and operating
the restaurant and bar under its liquor license. 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 been
aggressively pursuing 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
October 31,  1996,  approximately  1,290  timeshare  units have been sold.  Unit
prices have ranged 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.  Upon  completion  of the  initial  phase of 43  rooms,  the  Company  is
considering  the idea of applying for timeshare  licensing for the remaining 150
rooms which it would intend to designate as timeshare  units.  While the Company
believes it will be able to obtain such additional timeshare licensing,  at this
time there can be no assurance that such additional  licensing will be obtained.
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 is 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 


                                                                               6
<PAGE>


termination notice in February 1996 because,  pursuant to the terms of the lease
agreement,  the  Company  was  losing  money on a  monthly  basis.  The  Company
requested Jackpot 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. [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 an pending  application  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. In January 1995, the Company entered into a business
consulting agreement with Telex, Inc. an unaffiliated company, under which Telex
agreed to provide the Company with  business and strategic  planning  consulting
services for nine months in  consideration  of the issuance of 40,000  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
MBL, an  unaffiliated  company,  which  contract was  extended,  under which the
consultant  agreed to provide the Company with business and  strategic  planning
consulting  services for 12 months in  consideration  of the issuance of 200,000
shares of the Company's Common Stock under a Registration  Statement on Form S-8
filed by the Company.

     During 1995, the Company  extended the business  consulting  agreement with
Miron Lesham,  an unaffiliated  company,  under which the consultants  agreed to
provide the Company with business and strategic planning consulting services for
12 months in  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 



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<PAGE>


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.

     (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.

     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, the Debbie Reynolds license has been terminated and Hollywood's license
is in default and a 30-day termination  notice was received from Hollywood.  The
licenses are currently in default due to  non-payment  of  performance  fees and
non-issuance of stock.  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.  



                                                                               8
<PAGE>


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 a pending  application 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."

     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 a  pending  application  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. No person may become a stockholder of, or receive any percentage of
profits from, the Company  without first  obtaining  licenses and approvals from
the Nevada Gaming Authorities.



                                                                               9
<PAGE>


     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.

     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 



                                                                              10
<PAGE>


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,  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 



                                                                              11
<PAGE>


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  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



                                                                              12
<PAGE>


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 December 31, 1996, 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") are 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,  an 79-seat museum,  a full-service  restaurant,  a cocktail
lounge and bar, one swimming  pool and several  hundred  parking  spaces.  These
facilities total approximately 210,380 square feet.

     As of October 31, 1996 the Company had a total of approximately  $6,100,000
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  



                                                                              13
<PAGE>


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.

     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.

     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.

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.



                                                                              14
<PAGE>


     (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
                                     --------         -------

  1/1/94 -  3/31/94                    6.00             5.00
  4/1/94 -  6/30/94                    6.25             5.50
  7/1/94 -  9/30/94                    6.50             5.13
 10/1/94 - 12/31/94                    5.50             3.88
                                  
  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
                               
     On December 24, 1996, the reported bid and asked prices for the
Registrant's Common Stock were $.34 and .41, respectively.

     (a)(2) Not applicable.

     (b) On December 24, 1996 the  Registrant had  approximately  536 holders of
record of its Common  Stock  which does not  include  approximately  630 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,  1995,  the Company  had a working  capital  deficit of
$10,059,000  compared to a working capital deficit of $1,074,000 at December 31,
1994.  In  addition,  the Company is in default in the payment of the  following
indebtedness;  interest  payments on mortgages,  interest payment on debentures,
payroll taxes,  property taxes,  operating  taxes,  equipment leases and various
other accounts  payable.  During the year ended December 31, 1995, cash and cash
equivalents increased by $160,000.

   Financings

     During 1995, the Company's  long-term  debt  increased  from  $7,162,000 at
December 31, 1994 to $8,328,000 at December 31, 1995. During 1994, $1,150,000 of
long-term debt was exchanged for 383,333  common shares,  $400,000 was exchanged
for 2,850,833  common 



                                                                              15
<PAGE>


shares (in connection  with the  DRMC\Maxim  Mergers) and $250,000 was exchanged
for 213,816 common shares.

     In 1994,  the  Company  issued  $1,273,000  of  additional  debt  which was
subsequently exchanged for 424,333 common shares.

     During 1994 the Company  obtained  additional  financing for its operations
totalling net proceeds of approximately  $3,868,000  through the sale of 128,515
units in a private  offering,  each unit  consisting of four shares of Series AA
Convertible  Preferred  Stock,  $.0001  par  value,  four  two-year  Convertible
Debentures  each in the principal  amount of $4.50 and four Class A Common Stock
Purchase  Warrants,  each to  purchase  one share of  Common  Stock at $5.50 per
share. In connection with the private placement, 116,000 Warrants were issued to
the sales agent.

     In November  1994 the Company  closed an  additional  private  placement of
38,961 units  totalling  net proceeds of $896,000.  Each unit  consisted of four
shares of  Series  AA  Convertible  Preferred  Stock,  $.0001  par  value,  four
four-year Convertible  Debentures each in the principal amount of $4.50 and four
Class B Common  Stock  Purchase  Warrants,  each to purchase one share of Common
Stock at $5.50 per share.

     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, 1995
the principal amount outstanding was reduced to approximately $2,115,000.

     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 bears interest at 13% per annum and was
due on June 7, 1996. The loan requires monthly payments of interest and payments
of $1,000  per  timeshare  unit  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.  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  and  Source  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  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,  1995  was
approximately $885,000. This loan is currently in default.

     From  the  proceeds  of the  loans  and  sale of  securities  during  1994,
$3,909,000  was  invested in building  improvements,  timeshare,  the Museum and
furniture and  equipment.  From the proceeds of the loans and sale of securities
during  1995,  approximately  $650,000  was  invested in building  improvements,
timeshare, the Museum and furniture and equipment.



                                                                              16
<PAGE>


     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, 1995 the Company had utilized and was contingently
liable for approximately $4,967,000 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 is 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 is 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 general  corporate  purposes,  which includes 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.

     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  



                                                                              17
<PAGE>


Company's  common stock totalling net proceeds of  approximately  $205,000.  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 April 1996,  the Company  announced  the signing of a term sheet with CS
First Boston Mortgage Capital  Corporation,  "CS First",  for certain financing.
The financing, subject to certain terms and conditions, was to be evidenced by a
senior note in the amount of $8,500,000  secured by a senior  mortgage of a like
amount on the property of the Company. In addition, subject to certain terms and
conditions  CS First  was to fund an  additional  $1,500,000.  The  terms of the
proposed financing were: a 2-year term, paying interest only at an interest rate
of Libor plus 500 basis points (600 basis points when the additional  $1,500,000
was  funded)  payable  monthly in arrears.  Principal  payments to be paid to CS
First were initially in the amount of $1,250 for every  timeshare  interval sold
and when  certain  conditions  were met the Company  was to  commence  paying an
amount of $2,000 for every timeshare  interval sold.  Subsequently,  the Company
and CS First terminated negotiations with respect to the proposed financing.

     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 803,636 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 



                                                                              18
<PAGE>


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 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.

     The Company is currently in default  under the following  obligations:  the
Bennett  Management  &  Development  ("BMD")  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 BMD
mortgage had a principal  balance of  approximately  $2,115,000  outstanding  at
December 31, 1995; 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
$2,865,000  outstanding  at December 31, 1995;  the TPM  Holding,  Inc.  ("TPM")
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 TPM  mortgage  had a principal  balance of
approximately  $885,000  outstanding at December 31, 1995; and the Company is in
default on its unsecured  subordinated  debentures due to non-payment of monthly
interest,  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 will  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.  The purchase price for the Hotel is $16,800,000,  which will consist of
3,750,000  "free-trading"  shares of ILX common stock valued for purposes of the
transaction at $2.00 per share,  $4,200,000 in cash and $5,100,000 in assumption
of mortgage  indebtedness.  The market  value of ILX's common stock has recently
been  substantially  less than $2.00 per share.  When the market  value of ILX's
common  stock  reduces  so does the  negotiated  purchase  price.  Under the ILX
agreement, immediately after the closing, ILX has agreed to lease certain of the
hotel  facilities to Debbie  Reynolds and /or a designee (the "Hotel  Facilities
Lease").  The Hotel  Facilities  Lease is expected to be for a term of 99 years,
with a monthly  lease  payment  to be  determined,  although  the ILX  Agreement
documents specify monthly payments of approximately  $150,000 it is unlikely the
Lease would be profitable  at that rate and there is no guarantee  that ILX will
agree to an acceptable  lower figure.  The Hotel Facilities Lease is expected to
include the showroom,  the museum,  the gift shop, the vacant casino space,  the
back bar and certain joint areas. In addition,  in consideration  for use of her
name and likeness,  and associated goodwill and other services,  Debbie Reynolds
will  receive a  percentage  of the net profit of any  timeshare  project at the
Hotel  pursuant  to  a  Timeshare  Profit  Agreement.  Ms.  Reynolds  will  also
participate in future activities of the Hotel and other ILX business activities,
pursuant  to  the  Debbie  Reynolds  Participation  Agreement.  As  a  condition
precedent  to the sale,  ILX has  requested  Debbie  Reynolds  to enter  into an
agreement with Red Rock Collection  Incorporated,  a wholly owned  subsidiary of
ILX.  



                                                                              19
<PAGE>


Subsequently, Ms. Reynolds and Todd Fisher have entered into agreements with Red
Rock  Collections  Incorporated.  The sale of the Hotel to ILX is subject to the
approval of the Company's  shareholders,  a standard due diligence investigation
by ILX,  receipt of any necessary  governmental  approvals,  and satisfaction of
various other conditions. The Company anticipates that the closing will occur in
the first quarter of 1997;  however,  there can be no assurance that the closing
will occur.

     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.  If the sale under the ILX
Agreement is not consummated,  the Company may need to seek protection under the
Federal  bankruptcy  laws. In order for the Company to continue to operate until
the sale under the ILX  Agreement  is  consummated,  the  Company  must obtain a
sufficient  amount of  interim  financing  to fund its  operations.  While  such
interim financing is currently being  negotiated,  there is no assurance it will
be  obtained.  If the  Company is unable to obtain  the  interim  financing  the
Company may need to seek protection under the Federal bankruptcy laws.

     In addition to pursuing the ILX Agreement, 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 is
implementing  cost  control  measures to increase  the cash flow of the Company.
There can be no assurance the additional financing can be obtained.

Revenues:

     Revenues for fiscal 1995 totalled  $9,790,000 as compared to $8,957,000 for
fiscal 1994.  This increase is attributed to the timeshare  department  having a
full year of  operations  during  the  fiscal  year 1995 and the  opening of the
Hollywood  Movie Museum in April of 1995.  Revenues  from  timeshare  sales were
$3,839,000 and from hotel rooms were $2,444,000 for fiscal year 1995 as compared
to respective  revenues of $3,514,000  and  $2,838,000 for fiscal year 1994. The
increase in timeshare sales is attributed to a full year of operations in fiscal
year  1995.  Showroom  revenues  totalled  $1,938,000  for 1995 as  compared  to
$1,607,000 in 1994. This increase is attributed to additional  marketing and the
increase in the ticket price of Ms. Reynolds' show. Restaurant revenues totalled
$297,000  for the  approximate  four  month  period  the  Company  operated  the
restaurant during 1995 as compared to restaurant revenues totalling $310,000 for
the  approximate  four month period the Company  operated the restaurant  during
1994.  Rental  income for 1995  totalled  $502,000  all of which was from casino
rental. Casino rental income for 1994 totalled $472,000. The Company's gift shop
produced  revenues of $123,000 for 1995  compared to $133,000  for 1994.  Museum
revenues  for fiscal year 1995  totalled  $416,000 as compared to no revenues in
1994.

     The loss from  operations  for 1995  totalled  $6,002,000  as  compared  to
$3,637,000  for 1994.  The increase in the loss from  operations for 1995 can be
attributed to the expense of 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 totalling  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
accounts  receivable.  Because of the  investment in building  improvements  and
furniture and equipment,  depreciation and amortization  increased from $633,000
in 1994 to  $1,107,000  in 1995.  The net loss for 1994  totalled  $4,195,000 as
compared to $8,603,000 for 1995.



                                                                              20
<PAGE>


Interest Expense:

     Interest expense increased from $565,000 in 1994 to $2,601,000 in 1995 as a
result of the  increase  in the  Company's  borrowings,  increase in the cost of
borrowings and additional  interest costs associated with the conversion of debt
into shares of common stock.

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, 1995

     Consolidated  Statements of Operations - Years ended  December 31, 1995 and
     1994

     Consolidated  Statements of Shareholders' Equity (Deficiency) - Years ended
     December 31, 1995 and 1994

     Consolidated  Statements of Cash Flows - Years ended  December 31, 1995 and
     1994

     Notes to Consolidated Financial Statements


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


                                                                              21
<PAGE>


                                    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'  48-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  called  "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,  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  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.



                                                                              22
<PAGE>


     (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 1995 all Section 16 filing requirements applicable to its
officers,  directors  and  10%  beneficial  owners  were  complied  with by such
persons. 

Item 10. Executive Compensation.

     (a) General.

     During the fiscal  years  ended  December  31,  1992 and 1993  Lawrence  E.
Meyers, the President and Chief Executive Officer of Halter Venture  Corporation
during such years,  received  aggregate  cash  compensation  from the Company of
$20,547 and $35,400,  respectively. No executive officer of the Company received
compensation in excess of $100,000 during the 1992 and 1993 fiscal years.

     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, 1993, 1994 and 1995.



                                                                              23
<PAGE>


<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>          <C>
Debbie                1995       $965,000(1)      -0-           N/A            -0-         -0-              -0-          -0-
Reynolds              1994       $600,000         -0-           N/A            -0-        50,000(2)         -0-          -0-
Chairman of the       1993          -0-           -0-           N/A            -0-         -0-              -0-          -0-
Board, Secretary                                                                        
                                                                                        
Todd Fisher           1995       $127,615         -0-           N/A            -0-         -0-              -0-          -0-
CEO, President,       1994       $128,000         -0-           N/A            -0-        50,000(2)         -0-          -0-
Treasurer, CFO        1993          -0-           -0-           N/A            -0-         -0-              -0-          -0-
                                                                                        
Henry Ricci           1995       $129,038         -0-           N/A            -0-         -0-              -0-          -0-
Former                1994       $131,250         -0-           N/A            -0-       275,000(3)         -0-          -0-
President             1993          -0-           -0-           N/A            -0-         -0-              -0-          -0-
                                                                                        
Donald                1995       $ 39,000         -0-        $164,060(4)       -0-         -0-              -0-          -0-
Granatstein           1994       $120,000         -0-        $103,500(5)       -0-       300,000(6)         -0-          -0-
Former CFO,           1993          -0-           -0-           N/A            -0-         -0-              -0-          -0-
Executive Vice                                                                        
President, and
Treasurer
</TABLE>

1  Represents  amounts  paid or accrued to Raymax  Productions,  Inc., a Company
wholly-owned by Ms. Reynolds ("Raymax"),  pursuant to an agreement among Raymax,
Ms.  Reynolds and the Company.  For the year ended  December 31, 1995 Raymax was
paid $170,000.00 and is owed $795,000 in accrued wages and showroom  performance
fees. See (g) "Employment Contracts and Arrangements" below.

2 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.

3 Represents shares  underlying stock options  exercisable per diem 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.

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

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

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.

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


                                                                              24
<PAGE>


(c) Option/SAR Grants Table.

                     Option/SAR Grants in Last Fiscal Year
                               Individual Grants

No options were granted to any of the Named  Executive  Officers during the 1995
fiscal year.

     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 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 October 1996,  options to purchase up to 335,000 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 560,000 had been
granted as of December 31, 1995.  During 1996 an  additional  88,000 shares were
granted under the Plan.


                                                                              25
<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             Options/SARs 
                                                            at                         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-              50,000                     $-0-
                                                        exercisable
Todd Fisher            -0-               -0-              50,000                     $-0-
                                                        exercisable
Donald Granatstein     -0-               -0-              300,000                    $-0-
                                                        exercisable
Henry Ricci            -0-               -0-              160,417                    $-0-
                                                        exercisable
                                                          114,583                    $-0-
                                                        unexercisable
</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 has 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 will 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  received  compensation  of $50,000 per month for her services.



                                                                              26
<PAGE>


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.  The
Company  and  Raymax  have  agreed  to net  the  $455,000  advance  against  the
$1,914,000 in arrears as of December 31, 1996. In September, 1996 Raymax and Ms.
Reynolds  served the Company  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 was  $1,740,000  plus  $174,000  in accrued  interest.  Ms.
Reynolds has agreed to render showroom and other services on an "at will" basis,
terminable any time. The terms relating to Ms.  Reynolds'  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 was in default of the agreement with Ms. Reynolds. In November 1996,
Ms. Reynolds delivered a 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.

     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.



                                                                              27
<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 the 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 the 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.


                                                                              28
<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 December 24, 1996 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                         2,945,833(1)                 22.5%
305 Convention Center Drive         
Las Vegas, NV  89109                
                                    
Kennedy Capital                         1,852,679(2)                 13.9%
425 N. New Ballas Rd.               
St. Louis, MO.  63141               
                                    
Michael Weiner                            835,056(3)                  6.6%
1035 Pearl Street, #402             
Boulder, Colorado  80302            
                                    
Todd Fisher                               252,930(4)                  2.0%
305 Convention Center Drive         
Las Vegas, NV  89109                
                                    
Stephen Cherner                           625,000(5)                  5.0%
1035 Pearl Street, Suite 402        
Boulder, Colorado 80302             
                                    
All officers and directors              3,198,763(6)                 24.2%
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, 2000, respectively; (iii) 400,000 shares subscribed to by Ms. Reynolds,
     pursuant  to a license  agreement  but not  issued.  See Part III,  Item 10
     "Executive Compensation" for a description of the license agreement.

     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,  owed 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:  (i) 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 June 30,  2000,
     respectively.



                                                                              29
<PAGE>


     5 Includes:  (i) 300,000  shares owned by the Maxim Profit  Sharing Plan of
     which Mr. Cherner is the primary beneficiary; and (ii) 325,000 shares owned
     by the Cherner  Family Trust of which Mr.  Cherner is the trustee,  and his
     children are the  beneficiaries.  Mr.  Cherner  disclaims  ownership of the
     325,000 shares owned by the Cherner Family Trust.

     6  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.



                                                                              30
<PAGE>


     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.

     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.  Rental income
was based upon 8% of net income.  No money was received under this lease for the
years ended December 31, 1995 and 1994,  respectively,  because the operation of
the restaurant produced a net loss. Under the oral agreement, DRMC was obligated
to cover the operating  cash  shortfalls of  Celebrity's  operations.  Until the
Company received approval for its own liquor license, Celebrity accommodated the
Company by  undertaking  and operating the  restaurant  and bar under its liquor
license.  During the year ended  December  31,  1995 the amount  DRMC  funded to
Celebrity was approximately  $461,000.  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.

     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.

     During the year ended  December  31, 1994 and since such time Ms.  Reynolds
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, 1995.  The Company has  indemnified
Ms. Reynolds and Mr. Granatstein from these personal  guarantees.  See Part III,
Item 10, "Executive Compensation".

                                                                              31
<PAGE>

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  5.0% 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.

     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.


                                                                              32
<PAGE>


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

     (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)

                                                                              33
<PAGE>

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

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.

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

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

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

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

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

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

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

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

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

                                                                              34
<PAGE>

10.32       ILX Incorporated definitive agreement dated October 30, 1996.

23.1        Consent of KPMG Peat Marwick LLP

 ------------------------------------------------

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-K for the year ended December 31, 1993.

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


     (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:  January 23, 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                      January 23, 1997
-------------------        Board, Secretary
DEBBIE REYNOLDS            and Director

/s/Todd Fisher              Chief Executive Officer,
-------------------        Chief Financial Officer,
TODD FISHER                Treasurer, and Director              January 23, 1997






                                                                              36
<PAGE>


                           DEBBIE REYNOLDS HOTEL & CASINO, INC.
                           AND SUBSIDIARIES

                           Consolidated Financial Statements

                           December 31, 1995

                           (With Independent Auditors' Report Thereon)



                                       F-1


<PAGE>



              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES



                                Table of Contents
                                -----------------

                                                                           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, 1995, 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, 1995.
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, 1995, and the results
of their  operations  and their cash flows for each of the years in the two year
period ended December 31, 1995, 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 8 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 8 and 11.  The  consolidated  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.



                                                  /s/ KPMG Peat Marwick LLP


December 20, 1996
Las Vegas, Nevada
                                       F-3


<PAGE>


              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheet

                                December 31, 1995

<TABLE>
<CAPTION>

<S>                                                                                                                    <C>         
                                     Assets

Current assets:
    Cash and cash equivalents                                                                                          $    172,000
    Restricted cash                                                                                                         152,000
    Accounts receivable, net of allowance of $56,000                                                                      1,451,000
    Inventories (note 3)                                                                                                    615,000
    Prepaid expenses and deposits                                                                                           114,000
                                                                                                                       ------------
              Total current assets                                                                                        2,504,000
                                                                                                                       ------------
Property and equipment (notes 4, 6 and 11):
    Land and building                                                                                                     7,073,000
    Furniture and equipment                                                                                               3,361,000
                                                                                                                       ------------
                                                                                                                         10,434,000
    Less accumulated depreciation and amortization                                                                        1,996,000
                                                                                                                       ------------
              Net property and equipment                                                                                  8,438,000
                                                                                                                       ------------

Due from affiliates (note 2)                                                                                                545,000
Deposits and other assets                                                                                                   442,000
                                                                                                                       ------------

              Total assets                                                                                             $ 11,929,000
                                                                                                                       ============
                                     Liabilities and Shareholders' Equity (Deficiency)

Current liabilities:
    Current maturities of long-term debt  and capital lease obligations (note 4)                                       $  8,078,000
    Accounts payable and accrued liabilities                                                                              2,967,000
    Accrued legal claims (note 9)                                                                                           450,000
    Due to affiliates (note 5)                                                                                              916,000
    Timeshare deposits                                                                                                      152,000
                                                                                                                       ------------
              Total current liabilities                                                                                  12,563,000
Long-term debt and capital lease obligations, excluding current maturities (note 4)                                         250,000
                                                                                                                       ------------
              Total liabilities                                                                                          12,813,000
                                                                                                                       ------------

Commitments and contingencies (notes 6, 8, 9 and 11) Shareholders' equity
(deficiency) (notes 4, 10 and 11):
    Preferred stock, $.0001 par value.  Authorized 50,000,000 shares;  2,000,000 designated
      as Series AA, 319,844 issued and outstanding ($1,279,000 liquidation preference)                                         --
    Common stock, $.0001 par value.  Authorized 25,000,000 shares; issued and outstanding
      11,484,070 shares                                                                                                       1,000
    Additional paid-in capital                                                                                           14,141,000
    Stock subscribed                                                                                                        300,000
    Deferred compensation                                                                                                  (300,000)
    Accumulated deficit                                                                                                 (15,026,000)
                                                                                                                       ------------
              Total shareholders' equity (deficiency)                                                                      (884,000)
                                                                                                                       ------------

              Total liabilities and shareholders' equity                                                               $ 11,929,000
                                                                                                                       ============

</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, 1995 and 1994

<TABLE>
<CAPTION>

                                                           1995            1994
                                                       ------------    ------------
<S>                                                    <C>                <C>   

Revenue:   
    Timeshare sales                                    $  3,839,000       3,514,000
    Rooms                                                 2,444,000       2,838,000
    Showroom                                              1,938,000       1,607,000
    Museum                                                  416,000            --
    Restaurant                                              297,000         310,000
    Casino lease                                            502,000         472,000
    Other                                                   354,000         216,000
                                                       ------------    ------------
              Total revenue                               9,790,000       8,957,000
                                                       ------------    ------------

Operating costs and  expenses:
    Timeshares                                            2,876,000       2,434,000
    Rooms                                                 1,591,000       1,358,000
    Showroom                                              2,352,000       1,341,000
    Museum                                                  314,000            --
    Restaurant                                              374,000         591,000
    Other                                                   263,000         114,000
    General and administrative                            4,611,000       3,877,000
    Bad debt expense                                           --            70,000
    Depreciation and amortization                         1,107,000         633,000
    Property operations, maintenance and energy           2,304,000       2,176,000
                                                       ------------    ------------
              Total operating costs and expenses         15,792,000      12,594,000
                                                       ------------    ------------

              Loss from operations                       (6,002,000)     (3,637,000)
                                                       ------------    ------------

Other income (expense):
    Interest income                                            --             7,000
    Interest expense                                     (2,601,000)       (565,000)
                                                       ------------    ------------
              Total other income (expense)               (2,601,000)       (558,000)
                                                       ------------    ------------

              Net loss                                 $ (8,603,000)     (4,195,000)
                                                       ============    ============


Loss per common share                                  $       (.99)           (.69)
                                                       ============    ============


Weighted-average number of common shares outstanding      8,734,362       6,049,651
                                                       ============    ============

</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, 1995 and 1994


<TABLE>
<CAPTION>
                                                                                                                           Total
                                 Preferred Stock       Common Stock        Additional    Accumu-              Deferred     Share-
                                 ---------------    -----------------       Paid-in       lated      Stock     Compen-    holders'
                                 Shares   Amount    Shares      Amount      Capital      Deficit   Subscribed   sation     Equity
                                 ------   ------    ------      ------      -------      -------   ----------   ------     ------

<S>                              <C>      <C>     <C>         <C>         <C>          <C>             <C>       <C>    <C>         
Balance at January 1, 1994          --    $--     3,404,314   $  1,000    $   50,000   $(2,163,000)    $  --     $--    $(2,112,000)
Shareholder contribution            --                            --       1,761,000          --          --      --      1,761,000
Shares issued in conjunction
    with Maxim merger               --     --     2,850,833       --         400,000          --          --      --        400,000
Shares issued through conversion
    of debt                         --     --     1,284,842       --       3,264,000          --          --      --      3,264,000
Shares issued to
    officer/director for            --     --       100,000       --         200,000          --          --      --        200,000
    services rendered
Shares issued as loan fees to
    holder of first mortgage        --     --        25,000       --          75,000          --          --      --         75,000
Shares issued for consulting
    services                        --     --       235,000       --         648,000          --          --      --        648,000
Shares issued in conjunction
    with lease termination          --     --        77,991       --         118,000          --          --      --        118,000
Shares issued in consideration
    of obtaining loans              --     --        35,000       --          85,000          --          --      --         85,000
Shares issued for professional
    services                        --     --        45,000       --         226,000          --          --      --        226,000
Preferred stock dividend                             25,924       --          65,000       (65,000)       --      --           --
Net proceeds from sale of
    pre-ferred stock and
    warrants in conjunction with
    the private placement of     667,904   --          --         --       2,655,000          --          --      --      2,655,000
    securities (note 4)
Net loss                            --     --          --         --            --      (4,195,000)       --      --     (4,195,000)
                                 -------   ----   ---------   --------    ----------   -----------   ---------   -----  -----------

Balance at December 31, 1994     667,904   --     8,083,904      1,000     9,547,000    (6,423,000)       --      --      3,125,000

</TABLE>

                                                                    (Continued)

                                       F-6


<PAGE>


              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

     Consolidated Statements of Shareholders' Equity (Deficiency), Continued

                     Years ended December 31, 1995 and 1994

<TABLE>
<CAPTION>
                                                                                                                            Total
                                 Preferred Stock     Common Stock        Additional    Accumu-              Deferred       Share-
                                 ---------------    ---------------       Paid-in       lated      Stock     Compen-      holders'
                                 Shares   Amount    Shares    Amount      Capital      Deficit   Subscribed   sation       Equity
                                 ------   ------    ------    ------      -------      -------   ----------   ------       ------
<S>                              <C>       <C>     <C>        <C>     <C>          <C>            <C>       <C>         <C>        
Balance at December 31, 1994,
    brought forward              667,904   $ --    8,083,904  $1,000  $ 9,547,000  $ (6,423,000)  $   --    $    --     $ 3,125,000
Shares issued for consulting and
    other services                  --       --      414,061    --        876,000          --         --         --         876,000
Shares issued in consideration
    of obtaining loans              --       --      400,745    --        419,000          --         --         --         419,000
Regulation S offering, shares
    issued for cash                 --       --      300,000    --        225,000          --         --         --         225,000
Regulation D offering, shares
    issued for cash                 --       --       50,000    --         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          --         --         --       2,158,000
Shares issued through exercise
    of warrants                     --       --       93,120    --         93,000          --         --         --          93,000
Shares issued through exercise
    of options                      --       --      750,000    --        563,000          --         --         --         563,000
Uncollected receivable for
    shares issued through
    exercise of options                                                  (563,000)         --         --         --        (563,000)
Stock subscribed (note 9)           --       --         --      --           --            --      300,000       --         300,000
Deferred compensation (note 9)      --       --         --      --           --            --         --     (300,000)     (300,000)
Options issued for services         --       --         --      --        773,000          --         --         --         773,000
Net loss                            --       --         --      --           --      (8,603,000)      --         --      (8,603,000)
                                --------   ------ ----------  ------  -----------  ------------   --------  ---------   -----------

Balance at December 31, 1995     319,844   $ --   11,484,070  $1,000  $14,141,000  $(15,026,000)  $300,000  $(300,000)  $  (884,000)
                                ========   ====== ==========  ======  ===========  ============   ========  =========   ===========
</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, 1995 and 1994

<TABLE>
<CAPTION>

                                                                                                        1995                1994
                                                                                                     -----------         ----------
<S>                                                                                                  <C>                 <C>        
Cash flows from operating activities:
    Net loss                                                                                         $(8,603,000)        (4,195,000)
    Adjustments to reconcile net loss to net cash used in operating activities:
        Depreciation and amortization                                                                  1,107,000            663,000
        Amortization of debt discount                                                                    275,000               --
        Amortization of consulting fees                                                                  297,000            344,000
        Provisions for losses on receivables                                                                --               70,000
        Forgiveness of debt from affiliate                                                               108,000               --
        Forgiveness of debt to affiliate                                                                (201,000)              --
        Expense associated with conversion of debt to equity                                             592,000               --
        Common stock issued for services rendered                                                        876,000            364,000
        Options issued for services                                                                      773,000               --
        Shares issued as consideration for loans                                                         419,000               --
        Changes in assets and liabilities:
          Increase in accounts receivable                                                               (494,000)          (994,000)
          Increase in other receivables                                                                    5,000           (126,000)
          Increase in inventories                                                                           --              (47,000)
          (Increase) decrease in prepaid expenses and deposits                                           (13,000)            43,000
          Increase in deposits and other assets                                                          473,000           (592,000)
          Increase in accounts payable and accrued expenses                                            1,613,000            614,000
                                                                                                     -----------         ----------
                  Net cash used in operating activities                                               (2,773,000)        (3,856,000)
                                                                                                     -----------         ----------

Cash flows from investing activities:
    Capital expenditures                                                                                (676,000)        (3,579,000)
                                                                                                     -----------         ----------
                  Net cash used in investing activities                                                 (676,000)        (3,579,000)
                                                                                                     -----------         ----------

Cash flows from financing activities:
    Proceeds from borrowings from affiliates                                                             838,000            331,000
    Payments on amounts due to affiliates                                                                (54,000)          (641,000)
    Loans made to affiliates                                                                                --             (601,000)
    Net proceeds from private placement of securities                                                       --            4,764,000
    Proceeds from issuance of stock                                                                      368,000               --
    Proceeds from issuance of long-term debt                                                           3,215,000          6,588,000
    Principal payments on long-term debt and capital lease obligations                                  (758,000)        (3,400,000)
    Cash acquired in connection with Maxim merger                                                           --              100,000
                                                                                                     -----------         ----------
                  Net cash provided by financing activities                                            3,609,000          7,141,000
                                                                                                     -----------         ----------

                  Net increase (decrease) in cash and cash equivalents                                   160,000           (294,000)

Cash and cash equivalents at beginning of year                                                            12,000            306,000
                                                                                                     -----------         ----------

Cash and cash equivalents at end of year                                                             $   172,000             12,000
                                                                                                     ===========         ==========
</TABLE>


                                                                     (Continued)

                                       F-8

<PAGE>



              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

                Consolidated Statements of Cash Flows (Continued)

                     Years ended December 31, 1995 and 1994


<TABLE>
<CAPTION>

                                                                                                         1995               1994
                                                                                                     -----------         ----------
<S>                                                                                                  <C>                    <C>    
Supplemental disclosure of cash flow information:
    Cash paid for interest                                                                           $   821,000            171,000
                                                                                                     ===========         ==========
</TABLE>


Supplemental disclosures of noncash investing and financing activities:

   In March 1994, a subsidiary of the Company  acquired  Debbie Reynolds Hotel &
      Casino,  Inc.  (DRHC) in exchange for issuing  2,350,833  shares of common
      stock.

   The Company fully  divested  itself  of  its  wholly-owned  subsidiary,  SWTV
      Production Services,  Inc., (SWTV) in exchange for the 2,126,540 shares of
      the Company's  common stock owned by the Company's former  President.  The
      2,126,540 shares were canceled on March 31, 1994.

   In March  1994,  an  officer,  director  and  principal  shareholder  made an
      additional  capital  contribution  through the conversion of $1,761,000 of
      debt to equity.

   In March 1994, a subsidiary of the Company acquired Maxim Properties  Company
      (Maxim) in exchange for issuing 2,850,833 shares of common stock valued at
      $400,000.

   During 1994,  certain of the Company's  lenders and related parties converted
      debt of $3,264,000 in exchange for 1,284,842 shares of common stock.

   In consideration for services rendered in 1994 in developing and constructing
      the  showroom  and  museum,  100,000  shares  of common  stock,  valued at
      $200,000, were issued to an officer/director.

   In consideration  for services  rendered in 1994,  the Company issued 235,000
      shares of common stock valued at $648,000.

   In connection  with the first  mortgage note  financing in 1994,  the Company
      issued 25,000 shares,  valued at $75,000,  to the mortgage  holder as loan
      fees.

   In connection with a private  placement in 1994,  $385,000  representing  the
      fair value of the common stock purchase warrants, was recorded as original
      issue discount on the convertible subordinated debentures.

   In connection  with  a  subsequent   private  placement  in  1994,   $192,000
      representing  the fair value of the common stock  purchase  warrants,  was
      recorded  as  original  issue  discount  on the  convertible  subordinated
      debentures.

   During 1994,  the Company  issued an aggregate of 25,924 shares of restricted
      common  stock with a value of  approximately  $65,000 as a dividend on its
      preferred stock.

   During 1994,  the Company  entered into  various  capital  lease  obligations
      aggregating $54,000 for the purchase of furniture and equipment.

   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.

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

   The Company issued  696,120  shares of common  stock  through  conversion  of
      348,060  shares of preferred  stock.  The Company issued 696,120 shares of
      common stock valued at $1,566,000 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, 1995





(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 Companies).  On November 18, 1994, the shareholders
          of the Company elected at their annual shareholders' meeting to change
          the name of the Company  from  Halter  Venture  Corporation  to Debbie
          Reynolds Hotel & Casino, Inc.

     (b)  Merger

          Effective  February  11,  1994,  Halter  entered  into an Agreement of
          Merger and Plan of  Reorganization,  as amended and  restated on March
          10,  1994  (Agreement),  with  Maxim  Properties  Company  (Maxim),  a
          privately held Colorado corporation, DRHC and Hamlett Production, Ltd.
          (HPL),  both  privately  held Nevada  corporations,  and  others.  The
          mergers contemplated by the Agreement were consummated as of March 22,
          1994. Under the Agreement, HPL Acquisition Corporation, a wholly-owned
          subsidiary  of Halter,  merged with and into DRHC,  formerly  HPL, the
          surviving corporation (the DRHC Merger). In addition,  MPC Acquisition
          Corporation,  another wholly-owned  subsidiary of Halter,  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
          "Mergers."

          Pursuant  to the  Mergers,  Halter  acquired  all  of the  outstanding
          securities of DRHC and Maxim in exchange for the issuance of 2,850,833
          shares of Halter's  common stock to the Maxim  shareholders  and other
          related parties,  and 2,350,833 shares of Halter's common stock to the
          DRHC shareholder. Prior to the closing, DRHC merged with and into HPL,
          and HPL changed its name to Debbie  Reynolds  Hotel & Casino,  Inc. In
          connection  with  the  Mergers,  Maxim  and  its  principals  obtained
          financing for DRHC consisting of convertible  promissory  notes in the
          amount of $2,553,500  and one other note of $800,000.  In  conjunction
          with the Mergers,  the  convertible  notes were converted into 851,167
          shares of Halter's  common stock. In connection with the Maxim merger,
          $300,000 of the other note was contributed to the Company.

          In conjunction with the Mergers,  pursuant to a Divestiture  Agreement
          dated  March 23,  1994,  Halter  divested  itself of its  wholly-owned
          subsidiary,  SWTV Production Services, Inc. (SWTV), to Halter's former
          President  in exchange  for the  2,126,540  shares of common  stock of
          Halter owned by the former  President.  The 2,126,540 shares were then
          canceled on March 31,  1994.  SWTV was acquired by Halter on April 22,
          1993  and  from  that  time  until  divestiture  constituted  the sole
          business operations of Halter.

                                      F-10


<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


          For  accounting   purposes,   the  Mergers  are  accounted  for  as  a
          recapitalization  of DRHC,  with DRHC the acquirer  and the  surviving
          corporation.   The  accompanying   consolidated  financial  statements
          reflect  only  the  operations  of the  Company  and its  wholly-owned
          subsidiaries, DRHC and DRRI.

          The  Company  continued  to operate  under the  Halter  name until the
          shareholders meeting in November 1994, when it was changed to DRHC.

     (c)  Description of Business

          DRHC owns and  operates a hotel,  gift shop and  showroom,  and leases
          space to a third party for the  operation  of a gambling  casino,  and
          leases space to an affiliate for the operation of a bar and restaurant
          located on Convention Center Drive in Las Vegas, Nevada (collectively,
          the Property).  Additionally, at December 31, 1994, the Company was in
          the  process  of  completing   construction  on  the  Debbie  Reynolds
          Hollywood Movie and Memorabilia Museum (Museum), which opened on April
          1, 1995. The Company's  operations  also include the  development  and
          sale of timesharing units in the Debbie Reynolds Hotel (Hotel) through
          DRRI.  The Company  obtained a timeshare  license which was granted by
          the Nevada Real Estate Board on June 28, 1994.

          On April 20,  1994,  DRHC entered  into an  agreement  with  Hollywood
          Restaurant,  Inc. to terminate the existing restaurant lease and begin
          operating  the  restaurant,  "Celebrity  Cafe".  In  April  1994,  the
          restaurant  was  leased to the  affiliate  that  operates  the bar and
          liquor operations (see Note 2).

     (d)  Principles of Consolidation

          The  accompanying   consolidated   financial  statements  include  the
          accounts  of  Debbie  Reynolds  Hotel  and  Casino,   Inc.,  a  Nevada
          Corporation,  and its wholly  owned  subsidiaries  DRMC and DRRI.  All
          intercompany   accounts  and  transactions  have  been  eliminated  in
          consolidation.

     (e)  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.

     (f)  Restricted Cash

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

     (g)  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.

                                      F-11


<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


          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.

     (h)  Income Taxes

          Under the asset and liability  method of Statement  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 and operating loss and tax credit carry  forwards.  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 Statement
          109, the effect on deferred tax assets and  liabilities of a change in
          tax rates is  recognized  in income in the period  that  includes  the
          enactment date.

     (i)  Self Insurance

          The  Company  is  self-insured  for  losses  and  liabilities  related
          primarily  to health  care.  The Company  does not have a maximum self
          insurance  exposure.  Losses  are  accrued  based  upon the  Company's
          estimates using historical information.

     (j)  Recognition of Timeshare Revenue

          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 passed.

     (k)  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.  Earnings  available  to common  shares  have been  reduced  for
          preferred  stock  dividends  declared of $65,000 in 1994 and preferred
          stock dividends not declared and in arrears of $65,000 in 1995. 

                                      F-12


<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


     (l)  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 to prepare these
          financial  statements in conformity with generally accepted accounting
          principles. Actual amounts could differ from these estimates.

     (m)  Inventories

          Inventory of food and  beverage is accounted  for at the lower of cost
          (first-in first-out basis) or net realizable value.

     (n)  Fair Value of Financial Instruments

          In December  1991,  the Financial  Accounting  Standards  Board (FASB)
          issued  Statement of  Financial  Accounting  Standards  (SFAS) No. 107
          Disclosure about Fair Value of Financial  Instruments (SFAS 107). SFAS
          107  requires  all  entities to disclose  the fair value of  financial
          instruments, both assets and liabilities recognized and not recognized
          on the balance  sheet,  for which it is  practicable  to estimate fair
          value.  SFAS 107 defines fair value of a financial  instrument  as the
          amount  at which  the  instrument  could  be  exchanged  in a  current
          transaction  between  willing  parties.  As of December 31, 1995,  the
          carrying value of all financial  instruments  approximates  fair value
          based  on what the  instrument  could be  exchanged  for in a  current
          transaction between willing parties.

     (o)  Recently Issued Accounting Standards

          The FASB  issued  SFAS  No.  121,  Accounting  for the  Impairment  of
          Long-Lived Assets and for Long-Lived Assets to be Disposed of in March
          1995.  This  statement,   effective  for  the  Company's  fiscal  year
          beginning January 1, 1996, requires that long-lived assets and certain
          identifiable intangibles to be held and used by an entity, be reviewed
          for impairment  whenever events or changes in  circumstances  indicate
          that  the  carrying  amount  of  an  asset  may  not  be  recoverable.
          Management  believes  that if SFAS  No.  121 had  been  adopted  as of
          December 31, 1995, it would not have had a  significant  effect on the
          financial position or results of operations of the Company.

          The FASB issued SFAS No. 123, Accounting for Stock-Based  Compensation
          in October 1995.  This statement,  effective for the Company's  fiscal
          year beginning January 1, 1996, requires certain disclosures about the
          impact on  results  of  operations  of the fair  value of  stock-based
          employee compensation  arrangements.  Management believes that if SFAS
          No. 123 had been adopted as of December  31,  1995,  it would not have
          had a  significant  effect on the  financial  position  or  results of
          operations of the Company.

     (p)  Reclassifications

          Certain  amounts in the 1994  consolidated  financial  statements have
          been reclassified to conform with the 1995 presentation.


                                      F-13


<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(2)  Due From Affiliates

     In March 1993, the Company entered into an oral 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  sales and are payable  monthly.  Included in
     due from affiliates is  approximately  $62,000 as of December 31, 1995, for
     working capital advances. On August 1, 1996, DRMC received a liquor license
     and terminated this lease.

     The Company  advanced  $455,000 during 1994 to the chairman of the board of
     directors.  The funds were advances  against future profits earned under an
     employment agreement.

(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, 1995, $558,000 of cost relating to units remained in inventory
     awaiting sale.

     The Company maintained an inventory of $57,000 of food and beverage for the
     bar and restaurant area at December 31, 1995.


                                      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, 1995 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
   (see below)                                                                                                          $ 2,115,000

Note payable, due August 23, 1999, interest at 14%, secured by a fourth
   deed of trust, currently in default (see below)                                                                        2,865,000

Note payable, due December 1, 1996, interest at the greater of 12% or 4% above prime rate; secured by a
   third deed of trust; payments due monthly based on a graduated scale of timeshare sales, currently
   in default (see below)                                                                                                   885,000

Note payable, due June 7, 1996, interest at 13% payable monthly; secured by a second deed of trust;
   payments of $1,000 are due upon sale of each timeshare unit (see below)                                                  151,000

 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, 1995
    and 1994, respectively; effective rate of 19%, currently in default                                                     576,000

 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, 1995
    and 1994, respectively; effective rate of 21%, currently in default                                                     591,000

Capital lease obligations (note 6)                                                                                          688,000

Other                                                                                                                       457,000
                                                                                                                        -----------
    Total long term debt and capital lease obligations                                                                    8,328,000

Less current maturities (a)                                                                                              (8,078,000)
                                                                                                                        -----------
Long term debt and capital lease obligations, excluding current maturities                                              $   250,000
                                                                                                                        ===========
</TABLE>

     The  aggregate  scheduled  maturities  of long-term  debt and capital lease
     obligations  for each of the years  subsequent  to December 31, 1995 are as
     follows: 1996, $8,078,000(a); 1997, $166,000; 1998, $72,000; 1999, $12,000;
     and 2000, $-0-. As disclosed above, two notes require aggregate payments of
     $2,200 upon the sale of each timeshare unit and a third requires  graduated
     payments based on aggregate  timeshare  sales. The sales of timeshare units
     will  accelerate  the  principal   payments  on  such  notes,   however  no
     assumptions   regarding  such  accelerated  principal  payments  have  been
     reflected in the maturities schedule.

--------------
(a)  The  Company  has  reclassified  $5,549,000  of long term debt to  current,
     because of certain  events of default and  noncompliance  with certain loan
     covenants at December 31, 1995.

                                      F-15



<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

     On March 22,  1994,  the Company  obtained a  $2,500,000  loan from Bennett
     Management  &  Development  Corp.  (Bennett),  the  proceeds  of which were
     principally used to repay an existing mortgage on the Hotel and for general
     corporate  purposes.  In  consideration  of the loan the Company  agreed to
     issue to Bennett  25,000  shares of its common  stock.  The chairman of the
     board of directors of the Company has  personally  guaranteed the repayment
     of the loan.

     In August 1995,  the Company  obtained an additional  $2,865,000  loan from
     Bennett,  the proceeds of which were  principally  used to pay off existing
     debt and for general corporate purposes.

     On December 1, 1994,  the Company  obtained a  $1,100,000  loan 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:

              Through January 31, 1995:
                  $100 per timeshare sale between 1 and 350 units 
                  $500 per timeshare sale between 351 and 515 units 
                  $1,500 per timeshare sale in excess of 516 units

              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.

     On June 15, 1994, the Company obtained a $1,000,000 loan from TPM Holdings,
     Inc.  (TPM),  the proceeds of which have been used  principally to continue
     construction  of the museum and for general  corporate  purposes.  The loan
     agreement  provided that in the event that the loan was not paid in full by
     February 1995, TPM would receive  warrants that provided for the conversion
     of the then outstanding  indebtedness into the Company's common shares. The
     warrants  would have  entitled  the holder to convert the then  outstanding
     indebtedness  into the Company's  restricted common shares at a price of $3
     per share, or in the event of a public offering or private placement of the
     Company's common stock at an offering price of less than $4 per share, then
     75% of that offering price. Additionally, the lender would receive warrants
     to purchase 75,000 restricted common shares at the lower of $4 per share or
     in the event of a public  offering or private  placement  of the  Company's
     common stock at less than $4 per share,  then 75% of that  offering  price.
     Additionally, if the loan was not paid in full by February 1995, TPM could,
     at its option,  require DRHC to exercise its right to terminate  the casino
     operations  lease (refer to Note 5),  provided  that TPM advances  DRHC all
     costs  incurred  with  terminating  the lease.  Furthermore,  TPM could not
     exercise its right to require the lease termination  without prior approval
     of the Nevada Gaming  authorities.  Subsequent  to December 31, 1994,  this
     option  agreement was  terminated and replaced with warrants to purchase up
     to 100,000 shares of restricted  common stock. The warrants are exercisable
     for five  years at an  exercise  price of the  lesser  of $3.00 or 75% of a
     public offering or private  placement of the Company's  common stock.  This
     note has been paid in full by the Company subsequent to December 31, 1995.

                                      F-16


<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


     In April 1995, the Company  obtained a $500,000 loan from TPM, 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  lenders  second
     mortgage. The Company paid off this loan in November of 1995.

     In October 1994,  the Company  completed a private  placement of securities
     for the  Company's  expansion  and capital  improvements,  and sold 128,515
     units, with total net proceeds of approximately $3,868,000.  The units each
     consist of four shares of Series AA Convertible Preferred Stock, $.0001 par
     value, four two year Convertible Debentures each in the principal amount of
     $4.50,  and four Class A Common Stock Purchase  Warrants,  each to purchase
     one share of common stock at $5.50 per share. The preferred shares accrue a
     cumulative  stock  dividend of 8-3/4% based on a conversion  rate of $4 per
     share.  The preferred  shares are  convertible  into common stock at $4 per
     share and have a liquidation preference of $4 per share. In connection with
     the private  placement,  the Company  issued  514,060  shares of  preferred
     stock.  The Company has assigned values to each of the components  based on
     the estimated  fair market value at the date of sale,  which resulted in an
     original issue discount for the convertible debentures of $385,000.

     In November  1994,  the Company  completed a second  private  placement  of
     securities for the Company's  expansion and capital  improvements  and sold
     approximately  38,000 of the 66,000 units offered,  with total net proceeds
     of approximately  $896,000. The units each consist of four shares of Series
     AA  Convertible   Preferred  Stock,   $.0001  par  value,   four  four-year
     Convertible Debentures each in the principal amount of $4.50 and four Class
     B Common  Stock  Purchase  Warrants,  each to purchase  one share of common
     stock at $5.50 per share.  The preferred  shares accrue a cumulative  stock
     dividend  of  8-3/4%  based  on a  conversion  rate  of $4 per  share.  The
     preferred shares are convertible into common stock at $4 per share and have
     a  liquidation  preference of $4 per share.  In connection  with the second
     private  placement,  the Company issued 153,844 shares of preferred  stock.
     The  Company has  assigned  values to each of the  components  based on the
     estimated  fair  market  value at the date of sale,  which  resulted  in an
     original issue discount for the convertible debentures of $192,000.

     In August  1995,  the Company  offered all holders of the  Company's  units
     issued pursuant to the Company's private  placement  memorandum 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,  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.


                                      F-17


<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


     The convertible  debentures prohibit the Company from paying any dividends,
     other than the common stock dividend  requirement  of the preferred  stock,
     while the debentures are outstanding.  In December 1994, the Company issued
     25,924 shares of restricted  common stock as  Convertible  Preferred  Stock
     dividends with a value of approximately  $65,000.  These dividends are at a
     rate of 8-3/4% and are in  accordance  with the private  placements  stated
     above.

     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 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  holders  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  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.  Subsequent to year end, an
     additional  150,000 units of this offering have been sold.  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.

                                      F-18


<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(5)  Due to Affiliates

          Due to affiliates at December 31, 1995 consists of the following:

          Accounts payable to the Chairman of the Board of Directors
              of the Company                                         $  838,000
          Unsecured loans payable, without interest, due on demand       78,000
                                                                     ----------

                        Total due to affiliates                      $  916,000
                                                                     ==========

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

(6)  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.  At December  31,  1995,  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                  (644,000)
                                                       ---------------
                                                       $       510,000
                                                       ===============

          Amortization  of assets  held  under  capital  leases is  included  in
          depreciation  and  amortization  expense.  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, 1995 and 1994 aggregated $99,000 and $130,000,  respectively,  and
          is included in general and administrative  expense in the accompanying
          consolidated statements of operations.

                                      F-19


<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


          Future  minimum lease payments under  noncancelable  operating  leases
          (with  initial  or  remaining  lease  terms in excess of one year) and
          future minimum capital lease payments, as of December 31, 1995 are:

<TABLE>
<CAPTION>

                                                             Capital        Operating
                                                             Leases          Leases
                                                           ----------       ---------
          <S>                                              <C>            <C>
          Year ending December 31:
                1996                                       $  578,000         99,000
                1997                                          176,000         99,000
                1998                                           81,000         74,000
                1999                                           14,000             --
                                                           ==========     ==========

                        Total minimum lease payments          849,000        272,000
                                                                          ==========
          Less amount representing interest (at rates 
              ranging from 10% to 17.5%)                     (161,000)
                                                           ----------

          Present value of net minimum capital lease
               payments                                    $  688,000
                                                           ==========
</TABLE>

     (b)  Lessor

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

          The Company leases  approximately 6,000 square feet of its facility to
          an  unaffiliated  third party  operator  for  purposes of  operating a
          casino.  The lease is for a four-year period beginning July 1993, with
          extensions  available for an unspecified number of successive one-year
          periods. Rental income is $175 per slot machine per month but not less
          than  $30,625  in any one month,  reduced by 10% until the  Company is
          fully  operating  two  restaurants.  Rental  income was  $502,000  and
          $472,000 for the years ended December 31, 1995 and 1994, respectively.
          Included in the lease is a  provision  whereby  between  July 1994 and
          June  1996 the  Company  has 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.

          The restaurant and bar and liquor sales  operations  were leased to an
          affiliate  under  a  lease  that  commenced  in  April  1994  and  was
          terminated in August of 1996.

                                      F-20


<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(7)  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                         $ 2,925,000

       Reduction in income tax benefit resulting from:
           Change in the valuation allowance for deferred
             tax assets                                         (2,925,000)
                                                               -----------

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

     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                   $ 4,104,000
           Allowance for doubtful accounts                         (5,000)
           Less valuation allowance                            (4,099,000)
                                                              -----------

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

     At December 31, 1995 the Company has net operating loss  carry-forwards for
     federal  income  tax  purposes  of  approximately   $18,000,000  which  are
     available to offset future federal taxable income, if any, through 2010.

(8)  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.
     Management  of the Company is seeking  additional  sources of  financing to
     reduce  its debt  service  obligations  and is  implementing  cost  control
     measures  to  increase  the  cash  flow of the  Company.  The  accompanying
     consolidated financial statements do not include any adjustments that might
     result from the outcome of this uncertainty.

     The Company has entered into an agreement to sell  substantially all of the
     assets  of the  Company  (see  Note  11).  The  sale  of the  Hotel  to ILX
     Incorporated   (ILX)  is  subject  to  the   approval   of  the   Company's
     shareholders, a standard due diligence investigation by ILX, receipt of any
     necessary  governmental  approvals,   and  satisfaction  of  various  other
     conditions.  The Company  anticipates  that the  closing  will occur in the
     first quarter of 1997; however,  there can be no assurance that the closing
     will occur.

                                      F-21


<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


     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, 1995, 1,082
     timeshare units have been sold, proceeds from which total $7,353,000.

(9)  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, 1995 the Company
     had utilized and was contingently  liable for  approximately  $4,967,000 of
     this commitment.

     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  owed  under  this  agreement,  all of which  were
     outstanding  at December 31,  1995.  The Company is currently in default of
     this agreement due to non-payment. As of December 31, 1995, the Company was
     in arrears  approximately  $795,000 pursuant to the agreement.  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  anytime.  The  terms  relating  to Ms.  Reynolds
     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

                                      F-22


<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


     memorabilia.   As  additional  consideration  for  the  license,  upon  Ms.
     Reynolds' death, the Company will 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 was in default of the agreement with Ms. Reynolds.
     In November 1996, Raymax delivered a notice to the Company terminating this
     agreement.

     Also on March 9, 1995, the Company entered into an agreement with Hollywood
     Motion   Picture  and   Television   Museum,   a  non-profit   organization
     (Hollywood),  which is the  owner of an  extensive  memorabilia  collection
     which is  displayed  in the  Museum.  The  Company  has  agreed to  insure,
     maintain and house the  memorabilia.  The Company will pay $50,000 per year
     to Hollywood until the construction  costs of the Museum have been recouped
     from the Museum profits, at which time the annual payments will increase to
     $100,000. The payments may be made in cash or in movie memorabilia.

     On February 14, 1994,  DRHC entered into an  employment  agreement  with an
     individual  to serve as  general  manager of the Hotel for a period of five
     years. As compensation for services performed, the employee will receive an
     annual  salary  of  $150,000.  The  employee  will  also  receive  a  bonus
     calculated as 2% of DRHC's hotel operation net profits,  as defined,  which
     excludes timeshare operations. Additionally, this employee has been granted
     stock options to purchase 275,000 shares of the Company's restricted common
     stock,  which vest ratably per diem and are  exercisable at $3.00 per share
     for five years from the vesting date. In May 1995,  the Company  terminated
     this contract with the employee and entered into a modified  contract.  The
     modified  contract with DRMC was for the period June 1995 through May 1996.
     Under this  contract the  employee  served as Chief of  Operations  for the
     Debbie  Reynolds  Hotel  for a term of one year and  received  annual  base
     compensation  of $80,000.  The employee also received a $30,000  payment as
     additional  consideration  from the new contract.  As of December 31, 1995,
     the  employee is 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  options to purchase an additional  25,000 shares
     of the Company's common stock  exercisable at $1.00 per share. In September
     1996, the employee and the Company mutually  terminated his employment. 

     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.

     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 for.
     As of December 31, 1995, the Company has accrued $450,000 for these claims.

                                      F-23


<PAGE>

              DEBBIE REYNOLDS HOTEL & CASINO, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(10) 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. As of December 31,
     1995, 560,000 shares have been 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 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.  As of December 31, 1995, the
     Company has issued options to purchase  190,000 shares of common stock with
     an exercise  price of $4 per share.  The options,  which vest  immediately,
     expire on October 10, 1999. As of December 31, 1995,  none of these options
     have been exercised.

(11) Subsequent Event

     On October  30,  1996,  the  Company  entered  into an  agreement  with ILX
     Incorporated   (ILX),   an  Arizona   Corporation,   for  the  purchase  of
     substantially  all of the assets of the Company for the  purchase  price of
     $16,800,000.  The  purchase  price will be payable to the  Company in cash,
     assumption of existing  mortgage  debt,  and issuance of  unrestricted  ILX
     common stock. Under the ILX Agreement,  immediately after the closing,  ILX
     has agreed to lease  certain  of the hotel  facilities  to Debbie  Reynolds
     and/or a designee (the Hotel Facilities  Lease). The Hotel Facilities Lease
     is expected to be for a term of 99 years,  with a monthly  lease payment of
     approximately $150,000, and will include the showroom, the museum, the gift
     shop,  the vacant casino space,  the back bar and certain joint areas.  The
     sale of the  Hotel  to ILX is  subject  to the  approval  of the  Company's
     shareholders, a standard due diligence investigation by ILX, receipt of any
     necessary  governmental  approvals,   and  satisfaction  of  various  other
     conditions.  The Company  anticipates  that the  closing  will occur in the
     first quarter of 1997; however,  there can be no assurance that the closing
     will occur.

     In August  1996,  the Company  obtained a $500,000  loan from an  unrelated
     third party, 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 a $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 the unrelated third party 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 unrelated  third party agreed to extend the maturity date to
     February 1, 1997. In consideration  for the extension,  the Company reduced
     the unrelated third party exercise price on the warrants to acquire 260,000
     share of the Company's common stock from $.70 per share to $.22 per share.

                                      F-24