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                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
 
                                  FORM 10-KSB
(MARK ONE)
/X/   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                   SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
 
                    FOR THE FISCAL YEAR ENDED: JUNE 30, 1996
 
                                       OR
 
/ /  TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
                  SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
 
           FOR THE TRANSITION PERIOD FROM             TO
 
                        COMMISSION FILE NUMBER: 0-11532
                           INLAND CASINO CORPORATION
                 (Name of Small Business Issuer in its Charter)
 
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                     UTAH                                       33-0618806
       (State or other jurisdiction of                       (I.R.S. Employer
        incorporation or organization)                     Identification No.)
</TABLE>
 
         4225 EXECUTIVE SQUARE, SUITE 1650, LA JOLLA, CALIFORNIA 92037
              (Address of principal executive offices) (Zip Code)
 
         ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (619) 546-9383
 
        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
 
                         COMMON STOCK, $.001 PAR VALUE
                                (Title of Class)
 
     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days.  Yes  /X/     No  / /
 
     Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B contained in this form, 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
amendment to this Form 10-KSB.  / /
 
     State issuer's revenues for its most recent fiscal year: $11,482,040
 
     As of September 30, 1996, the aggregate market value of the voting stock
held by non-affiliates of the registrant (based on the closing sale price of
such stock on such date) was approximately $3,116,960.
 
     State the number of shares outstanding of each of the registrant's classes
of common equity at September 30, 1996: 3,854,548.
 
     Transitional Small Business Disclosure Format (check one)  Yes [ ]  No [X]
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
     (1) Portions of the Proxy Statement prepared in connection with the Annual
         Meeting of Shareholders to be held in 1996 -- Part III.
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                               TABLE OF CONTENTS
 
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PART I
  ITEM 1:     DESCRIPTION OF BUSINESS...............................................    1
  ITEM 2:     DESCRIPTION OF PROPERTY...............................................   18
  ITEM 3:     LEGAL PROCEEDINGS.....................................................   18
  ITEM 4:     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................   18
PART II
  ITEM 5:     MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..............   19
  ITEM 6:     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.............   20
  ITEM 7:     FINANCIAL STATEMENTS..................................................   25
  ITEM 8:     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
              FINANCIAL DISCLOSURE..................................................   40
PART III
  ITEM 9:     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
              COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.....................   40
  ITEM 10:    EXECUTIVE COMPENSATION................................................   40
  ITEM 11:    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT........   40
  ITEM 12:    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................   40
  ITEM 13:    EXHIBITS AND REPORTS ON FORM 8-K......................................   41
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                                     PART I
 
ITEM 1.  DESCRIPTION OF BUSINESS
 
     Inland Casino Corporation, a Utah corporation ("Inland Casino" or the
"Company") is a gaming management and consulting company in the Indian gaming
industry. Inland Casino is the successor to a corporation organized in June
1994, also known as Inland Casino Corporation, a Delaware corporation ("ICC
II"), to consolidate various entities which were owned by the shareholders of
ICC II.
 
     Effective May 22, 1995, ICC II was merged (the "Merger") into a public
reporting company named Twin Creek Exploration Co., Inc. ("Twin Creek"). Twin
Creek was incorporated on March 6, 1980 under the laws of the State of Utah and
organized for the purpose of engaging primarily in the oil and gas exploration
industry and the acquisition of oil and gas producing properties. Although it
retained some oil and gas interests, it was no longer active in the oil and gas
exploration business at the time of the Merger. Since 1990, it had been involved
in the research, development and marketing of English language instruction
courses for Spanish-speaking and Japanese-speaking people. In anticipation of
the Merger with ICC II, all of the assets of Twin Creek were assigned to
Linguistix, Inc., the sole subsidiary of Twin Creek and subsequently the stock
of Linguistix, Inc. was distributed pro rata to the persons who were
shareholders of Twin Creek prior to the Merger. Following the Merger, the name
of Twin Creek was changed to Inland Casino Corporation.
 
     ICC II was incorporated in the State of Delaware on June 6, 1994 and
commenced operations on July 1, 1994. ICC II was formed to consolidate various
entities which were owned by the shareholders of Inland Casino and which were
engaged in providing gaming operations services and consulting services for the
Barona Group of Capitan Grande Band of Mission Indians (the "Barona Tribe") at
the Barona Casino on the Barona Tribe's reservation land located approximately
30 miles east of San Diego, California. ICC II was capitalized pursuant to the
terms of an Incorporation Agreement (the "Incorporation Agreement") by and among
ICC II, Inland Casino Corporation, a Nevada corporation ("ICC I"), Eagle Edge
Partners, a California limited partnership ("EEP"), Inland Casino Partners, a
California general partnership ("ICP"), Redwood Gaming, Inc., a California
corporation ("Redwood"), L. Donald Speer, II, Jonathan Ungar, Alan Woods, Jack
Smith, Karol M. Schoen and Duncan Edwards. The Incorporation Agreement sets
forth the terms whereby ICC I, EEP, and ICP, each of which was directly or
indirectly involved in the existing operations of ICP, were rolled-up (the
"Roll-Up Transaction") into ICC II.
 
     References to Inland Casino with respect to periods prior to the Merger
should be deemed references to ICC II or its predecessor entities, as the
context requires.
 
     The Company's executive offices are located at 4225 Executive Square, Suite
1650, La Jolla, California 92037. Its telephone number is (619) 546-9383.
 
BUSINESS OF ISSUER
 
     Business in Fiscal 1996.  During the past three years ended June 30, 1996,
the Company and its predecessors have devoted substantially all of their efforts
to providing operating and consulting services to the Barona Tribe at the Barona
Casino. The Barona Casino consists of the "Barona Big Top," a turn-of-the-
century circus theme casino which includes 1,057 video games, 32 table games, a
1,500-seat bingo parlor, a 200-seat buffet restaurant and a 150-seat off-track
betting facility, which is operated by the Barona Tribe. The complex exceeds
100,000 square feet and is located on approximately 15 acres, including parking
for approximately 2,000 cars. The Barona Casino is open 24 hours a day, 365 days
a year.
 
     During the last three fiscal years, with the exception of approximately
$46,000 billed for consulting services in Fiscal 1996 to other Indian tribes,
all fee revenue related to services performed for the Barona Tribe in connection
with the Barona Casino.
 
     Recent Business Developments.  Consistent with its business strategy, the
Company recently entered into several consulting agreements with Indian tribes
and Indian organizations other than the Barona Tribe.
 
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     In May 1996, the Company entered into a Marketing Consulting Agreement with
the Confederated Tribes of Siletz Indians of Oregon (the "Siletz Tribe") to
provide marketing and consulting services in connection with the operation by
the Siletz Tribe of the Chinook Winds Gaming and Convention Center (the "Chinook
Winds Property") in Lincoln City, Oregon, approximately 90 miles south-west of
Portland, Oregon. The Chinook Winds property has been in operation since June
1996, and includes a 158,000 square-foot facility, with 817 video lottery
terminals, 16 blackjack tables, 8 poker tables, a 250-seat buffet restaurant, a
150-seat restaurant and lounge, a 24 hour deli-restaurant, and a 750-seat bingo
hall which also serves as a 1,062-seat showroom. The property includes 35,000
square feet of convention and meeting space. The Siletz Tribe operates the
Chinook Winds Property under the provisions of a Tribal-State Compact with the
State of Oregon. In October 1996, the Company advised the Siletz Tribal Council
of the Company's intent to terminate the Marketing Consulting Agreement pursuant
to its terms. See "Summary of Inland Casino Gaming Agreements -- Agreement with
the Siletz Tribe," in this Item 1, herein.
 
     In June 1996, the Company entered into a Consulting Agreement with the
Klamath and Modoc Tribes and the Yahooskin Band of Snake Indians (collectively,
the "Klamath Tribes") to provide consulting services in connection with the
development of the planned Kla-Mo-Ya Casino, to be constructed near Chiloquin,
in south-central Oregon. The Klamath Tribes plan to build and operate a 50,000
square-foot facility, with up to 500 video lottery terminals, 12 blackjack
tables, eight poker tables, a 212-seat buffet, a 108-seat restaurant and lounge,
a 52-seat deli-restaurant and a 430-seat cabaret. The opening date of the
Kla-Mo-Ya Casino has not yet been determined. The Klamath Tribes will operate
the Kla-Mo-Ya Casino under the provisions of a Tribal-State Compact with the
State of Oregon.
 
     Additionally, in June 1996, Inland Casino entered into a short-term
Marketing Consulting Agreement with the Associated Tribes of Northwest Indians
("ATNI") to promote Indian gaming in the Pacific Northwest and in August 1996,
the Company entered into a small, short-term consulting engagement with the
Pueblo of Sandia in New Mexico regarding legislative and public relations
matters. Revenue in the approximate amount of $11,000 was realized from the ATNI
agreement in the fiscal year ended June 30, 1996 ("Fiscal 1996"). Revenue
associated with the Pueblo of Sandia was not earned in Fiscal 1996.
 
     Business Strategy.  Inland Casino's basic business strategy is to continue
to pursue marketing its gaming management and consulting services to others, as
well as developing computer applications (both hardware and software) for use in
the gaming industry.
 
INDUSTRY AND REGULATORY OVERVIEW
 
     General.  Gaming is an international industry that is expanding at a rapid
pace in the United States. Gaming activities include traditional full service
casinos, state or national Indian sponsored lotteries, bingo games, riverboat
gaming, small-stakes casino gaming, international gaming, gaming on cruise ships
in international waters, and Indian gaming. Other forms of gaming conducted in
certain areas of the United States include parimutuel betting on horse racing,
dog racing and jai-alai; sports bookmaking; and card rooms. Inland Casino has
sought to position itself to benefit from the emergence of two major gaming
trends: the significant expansion of gaming and the emergence of Indian tribes
as major providers of gaming.
 
     Indian Gaming.  Prior to 1981, casino-style gaming in the United States,
such as slot machines, blackjack, poker, roulette and craps, was the province of
the traditional gaming markets of Nevada and Atlantic City, New Jersey. In 1981,
however, the Seminole Tribe of Florida established its right to conduct
high-stakes bingo games on its reservation. Bingo is currently conducted by
Indian tribes throughout the United States. As bingo games on tribal land
expanded, tribes began to offer additional gaming activities, such as draw poker
and other card games. Such expanded activities led to litigation regarding the
permitted scope of Indian gaming. In 1987, the U.S. Supreme Court ruled that if
a state regulates rather than prohibits any form of gaming, Indian tribes have
the right to conduct such gaming on Indian land, free of state restrictions.
 
     Indian Gaming Regulatory Act.  In response to this U.S. Supreme Court
decision, the United States Congress enacted the Indian Gaming Regulatory Act,
25 U.S.C. Sec. 2701 et seq. ("IGRA") in 1988, which created the National Indian
Gaming Commission (the "NIGC") to establish basic regulations and provide some
oversight responsibilities for Indian gaming. The IGRA was adopted to promote
tribal economic
 
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development and self-sufficiency, while attempting to balance these goals with
legitimate federal and state regulatory concerns. Due to their generally remote
locations, Indian tribes have had few opportunities for economic development and
high unemployment has been a significant problem on Indian reservations. Indian
casinos have provided tribal members with jobs and revenue for economic
development and for construction of schools, health care facilities, and water
treatment and sewage systems.
 
SUMMARY OF INLAND CASINO GAMING AGREEMENTS
 
     Agreements with the Barona Tribe
     --------------------------------
 
     The Operations Agreement.  Prior to April 1, 1996, the Company provided
operational and other services in accordance with the terms and conditions of a
certain Gaming Management Agreement dated February 1992, as amended (the
"Operations Agreement") with the Barona Tribe, under a grant of authority from
the Barona Tribe's General Council. The Operations Agreement was scheduled to
expire in February 1999 and established the Company's rights, obligations and
duties to the Barona Tribe including the Company's incurrence of a contingent
liability for certain obligations of the Barona Casino.
 
     The Company's revenue was derived from fees based upon a percentage of
profits or the excess of revenue over certain expenses, as defined in the
Operations Agreement, generated from the gaming operations at the Barona Casino.
 
     IGRA requires that management contracts must be approved by the NIGC and
that an assignment of a management agreement (e.g., from ICP to ICC II, in
connection with the Roll-Up Transaction and from ICC II to the Company in
connection with the Merger) also must be approved by the NIGC. The Operations
Agreement has not been approved by the NIGC. The Agreement was submitted to the
Bureau of Indian Affairs (the "BIA") in Riverside, California soon after its
execution in February 1992. In April 1992, the BIA's office in Riverside
notified the Barona Tribe that it had completed its review and was sending it to
the BIA's Sacramento Area Office for approval. In February 1993, the BIA sent
the entire package back to the Barona Tribe with a letter to the effect that,
since the NIGC had begun to function, the BIA was not going to take further
action on any of the various gaming management agreements that it had under
submission. In 1993, the NIGC issued a "call" for all gaming Indian tribes to
submit their gaming ordinances for approval. The Barona Tribe responded and
received such approval. In April 1993, the Barona Tribe, at the request of a
Field Representative of the NIGC, submitted the Operations Agreement to such
Field Representative for NIGC approval. As of September 30, 1996, the NIGC has
not approved or disapproved the Operations Agreement. From February 1992 through
March 1996, the Company operated as manager of the Barona Casino under the terms
of the Operations Agreement with the Barona Tribe. See "Discussion of Regulatory
Matters," under this Item 1 and Item 3. Legal Proceedings, herein.
 
     On March 27, 1996, the Company entered into a Consulting Agreement with the
Barona Tribe with an effective date of April 1, 1996 (the "Initial Consulting
Agreement"). In May 1996, the parties recognized that an inadvertent mistake in
the provision relating to consulting fees had been made and entered into an
Amended and Restated Consulting Agreement (the "Consulting Agreement"). The
Consulting Agreement, by its terms, relates back to March 27, 1996 and
reiterates the April 1, 1996 effective date. Since April 1, 1996, the parties
have been operating under the terms of the Consulting Agreement whose terms are
more specifically defined in this Item 1 under the caption "Summary of Inland
Casino Gaming Agreements -- Agreements with the Barona Tribe -- The Consulting
Agreement." Pursuant to the terms of the Consulting Agreement and the related
Mutual Release dated as of March 27, 1996, the Operations Agreement was
cancelled effective March 31, 1996 and was superseded by the Consulting
Agreement with an effective date of April 1, 1996.
 
     The NIGC does not approve consulting agreements; however, it does review
such agreements to determine whether they are management or consulting
agreements. If a contract is determined to be a consulting contract, the
contract is then forwarded to the BIA for approval.
 
     In March 1996, the Barona Tribe submitted the Initial Consulting Agreement
to the NIGC. In May 1996, the NIGC (i) determined that the Initial Consulting
Agreement was not a management agreement and,
 
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therefore, not subject to NIGC approval and (ii) forwarded the Initial
Consulting Agreement to the BIA. The Company intends to submit the Consulting
Agreement to the NIGC and the BIA. Although there can be no assurance that the
NIGC will conclude that the Consulting Agreement is not a management agreement,
the Company believes that, based upon its prior ruling with respect to the
Initial Consulting Agreement, the NIGC will make a similar determination with
respect to the Consulting Agreement. In addition, if the BIA determines that the
Initial Consulting Agreement and/or the Consulting Agreement is subject to its
review there can be no assurance that such Agreements will be approved by the
BIA. Failure to approve the Initial Consulting Agreement or the Consulting
Agreement may have a material adverse effect on the business and financial
condition of the Company. See Notes to Financial Statements, Note A -- Summary
of Significant Accounting Policies, 3. Barona Consulting and Operations
Agreements, Note G -- Commitments and Contingencies and Item 6. Management's
Discussion and Analysis or Plan of Operations -- Liquidity and Capital
Resources, herein.
 
     The Consulting Agreement.  Pursuant to the terms of the Consulting
Agreement, the Company will (i) consult with and advise the Barona Tribe,
members of the Barona Tribal Council and the Barona Tribal Gaming Committee,
(ii) provide technical assistance and training to the employees and staff of the
Barona Casino, and (iii) provide other services as may be directed by the Barona
Tribe in such areas as organization and administration, financing, planning and
development, gaming activities, internal controls, accounting systems and
procedures, engineering and maintenance, housekeeping, human resources,
marketing and advertising, purchasing, surveillance, security and food and
beverage operations.
 
     The Consulting Agreement provides for an initial term of three (3) years
commencing April 1, 1996, with an option to extend the agreement for an
additional five-year period. At any time after April 1, 1997, the Barona Tribe
may terminate the Consulting Agreement by (i) giving nine months' notice to the
Company, during which time the Consulting Agreement will remain in effect, and
(ii) paying the Company $475,000 per month for each month remaining under the
initial three-year term. Either party may terminate the Consulting Agreement for
(i) committing or knowingly allowing to be committed any act of theft or
embezzlement; however, theft or embezzlement by an officer or employee of the
Company without the Company's knowledge shall not be cause for termination of
the Agreement, as long as the Company repays all sums which may have been stolen
or embezzled as soon as the Company becomes aware of the facts or (ii)
committing a material breach of any of the Company's representations that
adversely affects its ability to carry out its responsibilities under the
Agreement. Remedies for breach include the resolution of any serious problems
with the Company's performance within 10 days of receipt of notice by the
Company, and if the problems are not resolved within 10 days of notice, by the
Company's meeting and conferring in good faith with the Barona Tribal Council or
the Barona Tribal Gaming Committee to determine what remedial action, if any, is
necessary. In addition, disputes arising under the Consulting Agreement and not
resolved with the Tribal Council or Tribal Gaming Committee shall be submitted
to binding arbitration before the American Arbitration Association in San Diego.
 
     For its services, the Company receives a monthly base consulting fee of
$475,000 and may receive additional consulting fees if certain operating levels
are reached by the Barona Casino. Notwithstanding the consulting fees to be paid
under the Consulting Agreement, pursuant to its terms, the Barona Tribe has the
right to draw from the gross revenues of the Barona Casino an annual income
stream at least equal to the distributions received by the Barona Tribe for the
twelve month period ended December 31, 1995. In light of such provision, fees
paid or payable to the Company may be reduced.
 
     The Barona Casino relies extensively on electronic video games, including
video pull-tab games, video poker, video keno, and video bingo (the "video
gaming machines"). Inland Casino does not own any of the video gaming machines.
The Company has entered into three leases (each, a "Video Machine Lease" and
collectively, the "Video Machine Leases") for the video gaming machines. These
agreements are currently in the process of being assigned to the Barona Tribe.
To the extent that the Video Machine Leases are "collateral agreements" to the
Consulting Agreement within the meaning of IGRA, each Lessor is required to
comply with IGRA and its regulations. Neither the Barona Tribe nor Inland Casino
have submitted the Video Machine Leases to the NIGC for its approval as
"collateral agreements". If these Leases are "collateral
 
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agreements" and are not approved, the Barona Tribe's present intention is to
replace the video gaming machines.
 
     Consulting Agreement with the Siletz Tribe
     ------------------------------------------
 
     In May 1996, the Company entered into a Marketing Consulting Agreement (the
"Siletz Agreement") with the Siletz Tribe to provide consulting services to the
Chinook Winds Property in Lincoln City, Oregon. Under the terms of the Siletz
Agreement, the Company will consult with, provide technical assistance and
training and advice to the Siletz Tribe, to members of the Siletz Tribal Council
and to the Chinook Winds management and employees, in matters relating to the
operation and business activities of the Chinook Winds Property, including
marketing administration, advertising and promotion, including special events,
entertainment, customer service and casino promotions.
 
     The term of the Siletz Agreement is a three year agreement which commenced
June 1996. At any time after the first full year of the Siletz Agreement, the
Siletz Tribe may terminate the Siletz Agreement by giving three months' notice
to the Company, during which time the Siletz Agreement will remain in effect,
and paying the Company an amount equal to three times the most recent monthly
consulting fees paid to the Company.
 
     Either party may terminate the Agreement for (i) committing or knowingly
allowing to be committed any act of theft or embezzlement; (ii) committing a
material breach of the Agreement, defined as a failure of either party to
substantially perform any duty or obligation required under the Agreement, or
(iii) a material breach of any of the Company's representations or failure to
disclose pertinent information that adversely affects its ability to carry out
its responsibilities under the Agreement. Remedies for breach include initial
dispute resolution with the Siletz Tribal Council and binding arbitration before
the American Arbitration Association in Portland, Oregon.
 
     For its performance of services under the Siletz Agreement, the Company
shall receive a monthly base consulting fee of $35,000, and may receive
additional consulting fees if certain operating levels are reached by the
Chinook Winds Property.
 
     The Siletz Tribe operates the Chinook Winds Property under the provisions
of a Tribal-State Compact with the State of Oregon (the "Siletz Compact"). Since
the Siletz Compact permits the Siletz Tribe to offer Class III games, as that
term is defined under IGRA, at the Chinook Winds Property, the Siletz Agreement
must be reviewed by the NIGC. As of September 24, 1996, the Siletz Agreement has
not been submitted to the NIGC for consideration. The Company currently expects
the Siletz Agreement to be submitted to the NIGC within the next several months.
Accordingly, there can be no assurance that all required regulatory approvals
will be granted and no assurance that the Company will qualify as a consultant
or vendor to the Siletz Tribe. For a further discussion of the regulatory
approval process, including required tribal and state approvals, see "Discussion
of Regulatory Matters" in this Item 1, herein.
 
     In October 1996, the Company advised the Siletz Tribal Council of the
Company's intent to terminate the Siletz Agreement pursuant to its terms. The
Siletz Agreement contains certain procedural provisions relating to termination
events. Accordingly, there can be no assurance that the Company will continue to
provide consulting services for the Siletz Tribe.
 
     Consulting Agreement with the Klamath Tribes
     --------------------------------------------
 
     In June 1996, the Company entered into a consulting agreement (the "Klamath
Agreement") with the Klamath Tribes. The Klamath Tribes plan to build and
operate the Kla-Mo-Ya Casino, to be constructed near Chiloquin, in south-central
Oregon. The opening date of the facility has not yet been determined.
 
     Under the terms of the Company's consulting agreement with the Klamath
Tribes, the Company will consult with and advise the Tribes, provide technical
assistance and training, and provide services as may be directed by the Tribes
in such areas as organization and administration, financing, planning and
development, gaming activities, internal controls, accounting systems and
procedures, engineering and maintenance,
 
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<PAGE>   8
 
housekeeping, human resources, marketing and advertising, purchasing,
surveillance, security and food and beverage operations.
 
     The Kla-Mo-Ya Casino project is to be constructed on a 42-acre site which
will be acquired by the Klamath Tribes in fee simple and transferred to the U.S.
Government to be held in trust for the benefit of the Klamath Tribes. The
estimated total cost of the project, including land acquisition cost of
$1,083,000, is $12,347,500, which is to be financed through the issuance of
revenue bonds issued by the Klamath Tribes.
 
     The term of the Klamath Agreement is five years, commencing with the date
of opening of the Kla-Mo-Ya Casino. At any time after the first full year of the
Agreement, the Klamath Tribes may terminate the Klamath Agreement by giving 30
days' notice to the Company, during which time the Klamath Agreement will remain
in effect, and pay the Company an amount equal to 12 times the average
consulting fees paid over the past 12 months. The Klamath Tribes will not be
required to make these early termination payments if, upon review and
investigation, the Company does not meet the criteria necessary to qualify as a
vendor to Indian gaming, as determined by the State of Oregon, the Klamath
Tribes or the NIGC.
 
     Either Party may terminate the Agreement for (i) committing or knowingly
allowing to be committed any act of theft or embezzlement; (ii) committing a
material breach of the Agreement, defined as a failure of either party to
perform any duty or obligation required under the Agreement, or (iii) a material
breach of any of the Company's representations or failure to disclose pertinent
information that adversely affects its ability to carry out its responsibilities
under the Agreement. Remedies for breach include initial dispute resolution with
the Klamath Tribe's Executive Committee and binding arbitration before the
American Arbitration Association in the State of Oregon.
 
     For services rendered pursuant to the Klamath Agreement, the Company will
receive a monthly base consulting fee of $25,000, commencing from the opening of
the Kla-Mo-Ya Casino, and will receive additional consulting fees if certain
operating levels are reached. From June 1996 through to the opening of the
casino, the Company will be reimbursed for its out-of-pocket costs and expenses.
Through June 30, and August 31, 1996, the Company incurred approximately $8,000
and $26,000 in costs, respectively, related to the project.
 
     The Klamath Tribes will operate the Kla-Mo-Ya Casino under the provisions
of Tribal-State Compact (the "Klamath Compact") with the State of Oregon. Since
the Klamath Compact permits the Klamath Tribes to offer Class III games at its
casino, as that term is defined in IGRA, the Klamath Consulting Agreement must
be reviewed by the NIGC. The Klamath Consulting Agreement has been submitted by
the Klamath Tribes to the NIGC. As of September 30, 1996, neither the NIGC nor
the BIA have made any determinations with respect to the Klamath Consulting
Agreement. Accordingly, there can be no assurance that all required regulatory
approvals will be granted and no assurance that the Company will qualify as a
consultant or vendor to the Klamath Tribe. For a further discussion of the
regulatory approval process, including required tribal and state approvals see
"Discussion of Regulatory Matters" in this Item 1, herein.
 
     The Kenny Rogers Agreements.  In connection with serving its Indian gaming
clients, the Company has entered into contracts with Kenny Rogers and his
production company for the use of his services in promotional events,
commercials and performances at the Barona Casino and at the Chinook Winds
Gaming and Convention Center and in connection with other potential Indian
gaming clients of the Company.
 
COMPETITION
 
     Inland Casino provides consulting services for the Barona Casino which
operates in an intensely competitive gaming industry. The Barona Casino competes
directly with two other casinos in the San Diego area located on Indian
reservations, the Sycuan Band of Mission Indians (the "Sycuan Tribe") and the
Viejas Band of Kumeyaay (Mission) Indians (the "Viejas Tribe"). In addition,
there are a total of 17 Indian tribes in San Diego county and at least two of
those tribes plan to open casino operations in the near future. Also, to at
least some extent, the Barona Casino's operations compete with Indian gaming
operations in other parts of the State of California, especially in southern
California. Currently, there are Indian gaming operations in the California
counties of San Diego, Riverside, Tuolumne, Colusa, Lake, Amador, Shasta, Yolo,
San Bernardino,
 
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<PAGE>   9
 
Santa Barbara, Fresno and Humboldt. In addition, the Barona Casino's operations
compete with facilities in Nevada, Atlantic City, New Jersey and other parts of
the world, and with national or state-sponsored lotteries, a proposed national
Indian sponsored lottery, on- and off-track wagering, card club casinos,
riverboats, other Native American gaming ventures, and other forms of legalized
gambling. Competition is likely to increase as Indian and other forms of gaming
continue to expand.
 
     The Company provides marketing consulting services to the Siletz Tribes and
the Chinook Winds Casino in Lincoln City, Oregon, which is approximately 90
miles south of Portland, Oregon, and competes in roughly the same market area as
the Grand Ronde Tribe's Spirit Mountain Casino, which is closer to Portland,
Oregon. The Company also provides consulting services to the Klamath Tribes. The
Klamath Tribes plan to build and operate the Kla-Mo-Ya Casino, to be constructed
near Chiloquin, in south-central Oregon. The planned Kla-Mo-Ya Casino will
compete in roughly the same market area as the Cow Creek Casino in Canyonville,
Oregon. Both Oregon properties compete or will compete with as many as six or
more Indian gaming operations in Oregon, as well as the Oregon State-run
lottery, and with gaming facilities in Nevada, California and other states with
casino and other gaming facilities, including cardrooms and race tracks.
 
     Inland Casino competes with other consulting and other management companies
for casino clients. Most of Inland Casino's competitors have significantly
greater financial resources than Inland Casino. Currently, gaming management
companies from Nevada have not been active in managing Indian gaming operations
in California. However, certain operators have negotiated agreements with Indian
tribes located in California and it is anticipated that if a tribal-state
compact is reached or if legislation or legal actions clarify the scope of
allowed gaming activities at the Barona Casino, there will be significantly more
competition for Inland Casino from other casino management companies. In
addition, more Indian tribes may choose to develop and manage their casinos
without engaging a management or consulting company. If and when Inland Casino
develops any Indian gaming casinos in the future, such new casinos also may
compete with other casinos constructed in the future, including casinos that are
parts of national or regional chains. Such chains, or other casino development
or management companies may have greater financial resources and personnel with
more experience than Inland Casino. Competition in the future also may be
affected by (i) periodic over-building, which can adversely affect patronage
levels; (ii) changes in regional and local market conditions; (iii) changes in
regional and local population and disposable income characteristics; and (iv)
changes in travel patterns and preferences.
 
     The Indian gaming industry competes with other forms of gaming, including
low-stakes bingo games operated by non-profit organizations and pull-tab games;
sports betting; riverboat gaming; parimutuel betting on horse racing, dog racing
and jai-alai; state sponsored lotteries; and international gaming in Mexico and
gaming on cruise ships in international waters. One consequence of the growth in
Indian gaming has been the increased pressure on state legislatures to allow
competitive gaming activity by non-Indians. Several states, other than
California, have approved or are considering approval of non-Indian, land-based
casinos; riverboat gaming; or dockside casinos. Increased support also is
present in a number of states for approval of video gaming machines for bars,
restaurants and resorts. In addition, non-gaming entertainment competes with the
gaming industry for the public's disposable income. Depending on the extent that
these other forms of entertainment and non-Indian gaming affect the demand for
Indian gaming, the opportunities Inland Casino has to manage Indian gaming
casinos and participate in Indian casino development projects may be adversely
affected.
 
MARKETING AND SALES STRATEGIES
 
     Inland Casino markets its services as a consultant to the gaming industry
and to prospective Indian gaming clients through continuing personal contact
with industry and tribal leaders, media advertising, sponsorships, attendance at
industry conferences and presentations of the Company's qualifications and
credentials.
 
     In its role as consultant, the Company develops marketing and sales
strategies for its clients, including innovative promotional programs and
focused marketing efforts, which together with significant media advertising
programs emphasize special events, entertainment, casino games offered, food
specials, and special
 
                                        7
<PAGE>   10
 
drawings for casino customers. To promote repeat business, the Company also
assists its clients in ensuring a high level of customer satisfaction and
loyalty by providing attentive customer service in a friendly, casual and
value-oriented atmosphere. Although perceived value attracts casino customers
initially, actual value generates customer satisfaction and loyalty. The Company
believes that actual value becomes apparent during the customer visit through an
enjoyable and high-quality entertainment experience.
 
RESEARCH AND DEVELOPMENT
 
     The Company expended $172,000 during Fiscal 1996 with third-party vendors
in the development of hardware and software for proposed new video lottery
terminals primarily for sale to existing and prospective Indian gaming clients.
The Company did not expend any amounts on research and development activities in
Fiscal 1995.
 
EMPLOYEES
 
     As of June 30, 1996, Inland Casino had 25 full time employees.
 
DISCUSSION OF REGULATORY MATTERS
 
     General Regulatory Background of Indian Gaming.  The operation of any type
of gaming casino on Indian land is subject to extensive Federal, state and
tribal regulation. The current regulatory environment regarding Indian gaming is
evolving rapidly. Changes in federal, state, or tribal law or regulations may
limit or otherwise affect Indian gaming and could therefore have a material
adverse effect on the operations of Inland Casino.
 
     Gaming on American Indian reservations is governed by IGRA. One of the
Congressional purposes in enacting IGRA was to provide a statutory basis for the
operation of gaming by Indian tribes as a means of promoting tribal economic
development, self sufficiency, and strong tribal governments; to provide a
statutory basis for the regulation of gaming by an Indian tribe adequate to
shield it from organized crime and other corrupting influences; to ensure that
the Indian tribe is the primary beneficiary of the gaming operations; and to
assure that gaming is conducted fairly and honestly by both the operator and
players.
 
     IGRA also is subject to judicial and legislative clarification or
amendment. IGRA established the NIGC to regulate Indian gaming. The NIGC has the
power to (i) monitor Class II gaming conducted on Indian lands; (ii) inspect and
examine all premises located on Indian lands on which Class II gaming is
conducted; (iii) conduct or cause to be conducted such background investigations
as may be necessary; (iv) inspect, examine, photocopy and audit all papers,
books and records respecting gross revenues of Class II gaming conducted on
Indian lands; (v) hold such hearings, sit and act at such times and places, take
such testimony, and receive such evidence as the NIGC deems appropriate; and
(vi) promulgate such regulations and guidelines as it deems appropriate to
implement the provisions of IGRA. The NIGC collects an annual fee on each Class
II gaming activity regulated by it, ranging from 0.5% to 2.5% of the first
$1,500,000 of gross revenues and up to 5% of the gross revenues from each
activity in excess of the first $1,500,000.
 
     IGRA categorized gaming activities as Class I, Class II and Class III
activities. Class I gaming is defined as social games solely for prizes of
minimal value or traditional forms of Indian gaming engaged in by individuals as
a part of, or in connection with, tribal ceremonies or celebrations. Included
within Class II gaming are (i) bingo (whether or not electronic, computer, or
other technologic aids are used) including (if played in the same location)
pull-tabs, lotto, punch boards, tip jars, instant bingo, and other games similar
to bingo, and (ii) card games that are explicitly authorized by the laws of the
state, or are not explicitly prohibited by the laws of the state and are played
at any location in the state, but only if such card games are played in
conformity with those laws and regulations (if any) of the state regarding hours
or periods of operation of such card games or limitations on wagers or pot sizes
in such card games. Class II gaming does not include (i) any banking card games,
including baccarat, chemin de fer or blackjack, or (ii) electronic or
electromechanical facsimiles of any games of chance or slot machines of any
kind. Class III gaming means all forms of gaming that are not Class I or Class
II gaming.
 
                                        8
<PAGE>   11
 
     The Chairman of the NIGC has the authority to levy and collect appropriate
civil fines, not to exceed $25,000 per violation, against the tribal operator of
an Indian game or a management contractor engaged in gaming for any violation of
any provision of IGRA. The NIGC also may impose federal criminal sanctions for
illegal gaming on Indian Land and for theft from Indian gaming facilities. The
Chairman also has the power to order temporary closure of an Indian gaming
operation for substantial violation of the provisions of IGRA, or of tribal
regulations, ordinances or resolutions approved in connection with the
applicable provisions of IGRA. After a temporary closure order, the Indian tribe
or management contractor involved has a right to a hearing before the NIGC to
decide whether the NIGC will order a permanent closure of the gaming operation.
 
     IGRA provides that an Indian tribe may engage in, or license and regulate,
Class II gaming on Indian lands within such tribe's jurisdiction if (i) such
Indian gaming is located within a state that permits such gaming for any purpose
by any person, and (ii) the governing body of the Indian tribe adopts an
ordinance or resolution which is approved by the Chairman of the NIGC. Net
revenues received by the Indian tribe may not be used for purposes other than to
(i) fund tribal government operations or programs; (ii) provide for the general
welfare of the Indian tribe and its members; (iii) promote tribal economic
development; (iv) donate to charitable organizations; or (v) help fund
operations of local government agencies.
 
     Any Indian tribe which operates a Class II gaming activity and which (i)
has continuously conducted such activity for a period of not less than three
years, including at least one year after 1988; and (ii) has otherwise complied
with the applicable provisions of the IGRA may petition the NIGC for a
certificate of self-regulation. The NIGC will issue a certificate of
self-regulation if it determines that the Indian tribe has, among other items,
(i) conducted its gaming activity in a manner which has resulted in an effective
and honest accounting of all revenues, has resulted in a reputation for safe,
fair and honest operation of the activity, and has been generally free of
evidence of criminal or dishonest activity; and (ii) adopted and is implementing
adequate systems for accounting for all revenues from the activity, monitoring
of all employees and prosecution of violation of its gaming ordinance and
regulations. An Indian tribe may enter into a management contract for the
operation and management of a Class II gaming activity but the Chairman of the
NIGC must approve the contract.
 
     Unlike Class II gaming, an Indian tribe can only engage in Class III gaming
if it enters into a tribal-state compact with the state in which its gaming will
take place, or agrees to abide by a set of regulatory rules obtained from the
Secretary of the Interior after a federal court has determined that a state has
not negotiated with the Indian tribe in good faith, has declared that a specific
compact should be executed, and the state has refused to do so.
 
     Contracts to manage Class III gaming activities must be approved by the
NIGC under rules nearly identical to those applicable to Class II management
contacts. Of particular significance are the statutes and regulations regarding
approval of Class II and Class III management contracts which place limitations
on the amount of any management fee which is based on a percentage of the
operation's net revenues from gaming. See Summary of Inland Casino Gaming
Management Agreement and Required Approval by Indian Gaming Commission of the
Agreement, herein.
 
     Under IGRA, Indian tribal governments have primary regulatory authority
over gaming on Indian land within the Indian tribe's jurisdiction unless a
tribal-state compact has delegated this authority. Therefore, persons engaged in
gaming activities, including Inland Casino, are subject to the provisions of
tribal ordinances and regulations on gaming. Such ordinances and regulations
must be consistent with the IGRA and the Indian Civil Rights Act of 1968, and
cannot impose criminal penalties upon non-Indians. However, the civil remedies
imposed by such tribal government regulations, if otherwise valid, will apply to
Inland Casino and its employees. IGRA also requires that the NIGC review tribal
gaming ordinances and approve such ordinances only if they meet certain
requirements relating to the ownership, security, personnel background,
recordkeeping and auditing of the tribe's gaming expenses; the use of the
revenues from such gaming, and the protection of the environment and the public
health and safety.
 
     In October 1993, the General Council of the Barona Tribe enacted and
adopted a Gaming Ordinance (the "Ordinance"), authorizing, among other things,
Class II and Class III gaming operations at the Barona Reservation, in
accordance with NIGC regulations. The Ordinance was approved by the NIGC in
February
 
                                        9
<PAGE>   12
 
1994. The Barona Tribe is required by the Ordinance to conduct a background
investigation of each of its key employees and management officials employed by
the Barona Casino, and a report concerning the background investigation and the
Barona Tribe's determination of eligibility of each such individual must be sent
to the NIGC. The Company, its officers, key employees, directors and
shareholders holding 10% or more of the Company's common stock (collectively,
"Principals") are subject to these background investigations. Unless the NIGC
has an objection, an individual may be licensed as a key employee or management
official of the Barona Casino by the Barona Tribe. Any license so granted may be
suspended if the Tribe receives information from the NIGC that an individual is
not eligible for employment. The Barona Tribe has licensed all key employees and
management officials for ICP, and is in the process of completing such
investigation with respect to Principals of Inland Casino. No licenses have been
suspended or revoked. For a discussion of the similar investigation and
licensing requirements with respect to the Oregon tribes, see "Discussion of
Regulatory Matters -- Effect of Regulation on Existing Gaming
Activities -- Gaming Activities in Oregon" in this Item 1, herein.
 
     In furtherance of its responsibilities, the NIGC has issued a series of
formal regulations as well as several informal "bulletins" which address
implementation of IGRA. The NIGC's rules and directives, together with IGRA and
cases decided under it, the tribal gaming ordinance, and the provisions of any
applicable tribal-state compact, provide the regulatory framework for gaming on
the Barona reservation.
 
     Required Approval of Management and Consulting Agreements.  IGRA provides
that an Indian tribe may enter into a contract for the management or operation
of Class II or Class III gaming activity if such contract has been submitted to,
and approved by, the NIGC. IGRA also prohibits a management company from
operating a casino on Indian land without first having its management contract
approved by the NIGC.
 
     The Chairman of the NIGC (or his designee), after notice and hearing, has
the authority to require contract modifications or may void any contract if he
makes certain findings of violations. In addition, pursuant to the regulations
under IGRA (the "Regulations") management agreements that have not been approved
by the Secretary of the Interior or the Chairman of the NIGC in accordance with
the Regulations may be deemed void.
 
     The NIGC does not approve consulting contracts; however the NIGC reviews
such contracts to determine whether they are management or consulting contracts.
If a contract is determined to be a management contract, it is subject to
approval by the NIGC; if determined to be a consulting contract, it is then
forwarded by the NIGC to the BIA for approval.
 
     The regulations under the IGRA (the "Regulations") incorporate and
elaborate upon the contract review requirements imposed by the IGRA. Under IGRA,
a management contract can be approved only after the appropriate federal
authority determines that the contract provides for (i) adequate accounting
procedures and verifiable financial reports, which must be furnished to the
tribe; (ii) tribal access to the daily operations of the gaming enterprise,
including the right to verify daily gross revenues and income; (iii) minimum
guaranteed payments to the tribe, which must have priority over the retirement
of development and construction costs; (iv) a ceiling on the repayment of such
development and construction costs; and (v) a contract term not exceeding five
years and a management fee not exceeding 30% of profits; provided, that the NIGC
may approve up to a seven year term and a management fee not to exceed 40% of
net revenues if the NIGC is satisfied that the capital investment required or
the income projections for the particular gaming activity justify the larger
profit allocation and longer term. No contract term shall exceed five years, and
no fee in excess of 30% of Net Revenues may be approved unless the NIGC is
satisfied that a "very substantial capital investment" will be made by the
management contractor, in relation to the size, cost, location and income
projections for the project.
 
     Under IGRA, the management company must provide the NIGC with background
information on each interested party, including a complete financial statement
and a description of such person's gaming experience. Such a person also must
agree to respond to questions from the NIGC.
 
     The Regulations also impose detailed requirements for background
investigations of each officer, director, key employee and interested party of
Indian gaming management companies, gaming equipment suppliers and
 
                                       10
<PAGE>   13
 
certain lenders to Indian gaming operations. Key employees are defined by the
Regulations, and all such persons must provide extensive personal background
information to the NIGC, including a credit bureau report and financial
statement for each of the past 10 years, and the fingerprints of each such
person must be submitted to the Federal Bureau of Investigation before a
management contract involving such persons may be approved by the NIGC. The NIGC
will not approve a management company and may void an existing management
contract if an officer, director, key employee or an interested party of the
management company is (i) an elected member of the Indian tribal government that
owns the facility being managed; (ii) has been or is convicted of a felony
gaming offense; (iii) has knowingly and willfully provided materially important
false information to the NIGC or the tribe; (iv) has refused to respond to
questions from the NIGC; or (v) is a person whose prior history, reputation and
associations pose a threat to the public interest or to effective gaming
regulation and control, or create or enhance the chance of unsuitable activities
in gaming or the business and financial arrangements incidental thereto. In
addition, the NIGC will not approve a management contract if the management
company or any of its agents has attempted to unduly influence any decision or
process of tribal government relating to gaming, or if the management company
has materially breached the terms of the management contract, or the tribe's
gaming ordinance, or if a trustee, exercising due diligence, would not approve
such management contract. The Regulations incorporate and elaborate upon these
requirements and provide that a management contract shall be terminated if
certain persons, who are not clearly identified, are convicted of any felony or
misdemeanor offense after the contract becomes effective, or if Inland Casino
has attempted to unduly influence any decision or process of tribal government.
 
     Even after a management contract has been approved, the NIGC has the
authority to void the contract if an interested party engages in certain
activities, including refusing to respond to inquiries of the NIGC, or, in the
opinion of the NIGC, has a reputation that enhances the possibility of
unsuitable activities in gaming. Inland Casino's Amended and Restated Articles
of Incorporation provide that in the event that an interested party fails to
provide information requested by the NIGC or otherwise gives it cause to either
deny approval of or seek to void a management contract to which Inland Casino is
a party, such interested party shall be required to divest all of Inland
Casino's stock owned by him or her within a 90 day period. If the interested
party is unable to sell such stock within this period, Inland Casino must
repurchase it at a designated purchase price below the fair market value of such
stock. As a public company, Inland Casino will be limited in its ability to
regulate who its stockholders may be. In the event that Inland Casino cannot
purchase such shares, whether for financial reasons or because such interested
stockholder refuses to sell his shares to any party, including Inland Casino,
and the NIGC, as a result of such interested stockholder's actions, denies
approval of, or seeks to void the Agreement or other agreements, such action by
the NIGC would have a material adverse effect on Inland Casino.
 
     Federal and State Laws Other than IGRA.  In addition to the regulations
imposed by IGRA, tribally owned gaming facilities on Indian land are subject to
a number of other federal statutes, including the Assimilative Crimes Act, which
imposes federal criminal penalties for the violation of state laws on Indian
reservations, and the Johnson Act, which imposes federal criminal penalties for
the operation of mechanical gambling devices on Indian reservations. If gaming
activities on Indian land are in compliance with IGRA, neither the Assimilative
Crimes Act nor the Johnson Act, nor any state criminal or civil law, will
operate to impose penalties on such activities. However, if gaming activities on
Indian land do not comply with the provisions of IGRA, the provisions of the
Assimilative Crimes Act, the Johnson Act and other federal and state law may
impose criminal and civil penalties on such activities. In addition, the
Treasury Department has adopted new regulations under the Bank Secrecy Act which
apply specifically to Indian gaming operations. These regulations impose federal
criminal penalties for the violation of federal regulations requiring the
reporting of information on unusual or large cash transactions. The Barona
Casino and the Chinook Winds Property have implemented procedures and programs
to comply with these new regulations. It is anticipated that prior to its
opening, the Kla-Mo-Ya Casino will have in place such appropriate procedures and
programs.
 
     Indian Nation Sovereignty.  Indian tribes are sovereign nations with their
own governmental systems. As such, they enjoy sovereign immunity with respect to
most disputes, claims and demands. However, there is a limited waiver of
sovereign immunity in each of the Company's consulting agreements with respect
only to suits by Inland Casino to enforce such agreements.
 
                                       11
<PAGE>   14
 
     Effect of Regulation on Existing Gaming Activities
     --------------------------------------------------
 
     Gaming Activities in California.  The Barona Tribe's governmental system
consists of two layers, the Tribal Council and the General Council. The Tribal
Council consists of elected representatives who manage the day-to-day operations
of the Tribe and its land. The General Council consists of all of the members of
the Barona Tribe. The Barona Tribal Council has appointed a gaming commission
(the "Barona Gaming Commission"), which reports to the Tribal Council, to
supervise the day-to-day operations of the gaming activities on the Barona
Tribe's land. The Barona Tribe has undertaken substantial responsibilities as
managers of the Barona Casino and has established policies and procedures for
casino operations to safeguard the assets of the Barona Tribe.
 
     Inland Casino provides consulting services to the Barona Tribe for the
operation of the Barona Casino which includes, among its gaming activities,
various forms of electronic gaming devices. Under NIGC regulations, certain
electronic games may be deemed to be "electronic facsimiles" of games of chance
or slot machines; as such they are defined as Class III gaming and must be
subject of a tribal-state compact to be legally used on Indian lands. In Cabazon
Band of Mission Indians v. National Indian Gaming Commission, 14 F.3d 633 (D.C.
Cir., 1994), the Court agreed with the NIGC that an electronic pull-tab game
played using computers and video screens (the "Video Pull-Tab Game"), a game
similar to electronic games in use at the Barona Casino, to be a Class III game.
 
     Accordingly, some of the Barona Casino's electronic games could be deemed
to be Class III electronic facsimiles or slot machines. If so, those games, to
be lawful under IGRA, must be of the kind permitted by California law and be
subject to a tribal-state compact. The Barona Tribe has no such compact with the
state. Accordingly, if it is finally determined that any of the electronic video
gaming devices operated at the Barona Casino are Class III machines, the Barona
Tribe has expressed its intention to convert them into, or replace them with,
video display paper pull-tab dispensing machines which will qualify as Class II
machines and can be operated without a tribal-state compact.
 
     The Barona Casino's continuing operation of video pull-tab or other
electronic games (except for traditional bingo played with certain electronic
and technologic aids), if deemed illegal, could lead to monetary sanctions and
closure of the Barona Casino by the NIGC and criminal sanctions and confiscation
of equipment by the U.S. Attorney. Because of other pending litigation that
could decide the legality of the Barona Tribe's gaming activities (e.g., Rumsey
Indian Rancheria of Wintun Indians v. Wilson, discussed below) and based upon
the verbal agreement described below and entered into between the Barona Tribe,
two other San Diego County Indian tribes and Alan Bersin, the U.S. Attorney for
the Southern District of California, Inland Casino believes that the parties'
rights will be determined through discussion and civil litigation before resort
is made to criminal prosecution. Nevertheless, no assurances can be given that
the attempts by various federal agencies, such as the NIGC or the Department of
Justice, to invoke one or more of the various sanctions described above, will
not be made without warning.
 
     In at least one criminal case recently brought against a management
company, United States v. E.C. Investments, 77 F.3d 327 (9th Cir., 1996), the
Ninth Circuit Court of appeals reversed the District Court's dismissal of the
indictments against the management company and certain of its principals,
holding that violation of the state law (in this case, California's prohibition
against the use of slot machines) may serve as the predicate offense for federal
prosecution of gambling activities in Indian Country that are in violation of
state law. The case, which was remanded to the District Court for further
proceeding, is significant because the electronic games in question are similar
to those used by the Barona Tribe at the Barona Casino. Also, there is the
possibility that any interested party could bring a civil action under the
federal racketeering and corrupt organization laws.
 
     There also may be a question concerning whether "Jokers Wild 21," a form of
blackjack with a player bank currently being played at the Barona Casino is a
Class II or Class III game. Inland Casino and the Barona Tribe take the position
that it is a Class II game and can be operated by a tribe without a tribal-state
compact. If it is a Class III game, then a tribal-state compact would be
required. The NIGC recently issued an advisory opinion to the Pascua Yaqui Tribe
in Arizona, in connection with a review of a game called "Arizona 21,"
indicating that IGRA classifies all types of "banked" card games, whether house
banked or
 
                                       12
<PAGE>   15
 
player banked, as Class III games. The NIGC also indicated that it intends to
propose amendments to the Regulations with respect to banking games to provide
it with greater enforcement powers to enforce the Regulations. The advisory
opinion is not directly binding on the Barona Tribe, but it may represent the
position that the NIGC would take with respect "Jokers Wild 21." The NIGC has
asked the California Indian tribes to send it written comments concerning the
manner in which banked and non-banked card games should be treated. The NIGC may
also propose additional regulations further defining these issues.
 
     Inland Casino takes the position that "Jokers Wild 21" is a Class II game
for several reasons, including the position that the term "banking game" as used
in IGRA for Class III games and as used in the California Penal Code refers only
to a "house banking" game, and "Jokers Wild 21" is not a house banking game.
Based on the foregoing, Inland Casino believes "Jokers Wild 21" is a Class II
game which may be played without a tribal-state compact. There can be no
assurance, however, that a court or the NIGC would come to the same conclusion.
If "Jokers Wild 21" is determined to be a Class III game, it could not be
offered at the Barona Casino without a compact with the State of California.
Further, the playing of Jokers Wild 21 without a compact could cause regulatory
sanctions or criminal penalties to be imposed against the Barona Tribe and/or
Inland Casino.
 
     Several lawsuits could materially affect gaming on the Barona reservation.
 
     Cabazon Band of Mission Indians v. National Indian Gaming Commission, 14
F.3d 633 (D.C. Cir., 1994). As noted above, the NIGC has determined that at
least one form of gaming, the Video Pull-Tab Game, which is not currently in use
at the Barona Casino but is substantially similar to some of the electronic
games being utilized there, falls within Class III and must be regulated under a
tribal-state compact. The Court of Appeals for the District of Columbia upheld
the NIGC's determination and the U.S. Supreme Court refused to grant a writ of
certiorari, the effect of which was to affirm the lower court ruling that the
Video Pull-Tab Game is a Class III gaming device.
 
     Sycuan Band of Mission Indians v. Roache, 54 F.3d 535 (9th Cir., 1994). In
1991, sheriff's deputies with search warrants from the San Diego Municipal Court
raided the Barona, Sycuan, and Viejas tribes' gaming centers in San Diego
County. None of ICC I, ICC II, or ICP managed the video gaming operations of
Barona Casino at the time of the raid. The deputies seized gaming machines, cash
and records and the district attorney commenced prosecutions of four persons
employed in the gaming operations. The Indian tribes brought actions in the U.S.
District Court for the Southern District of California for declaratory relief
and injunctions against the state prosecutions. The district court granted
declaratory and injunctive relief in favor of the Indian tribes declaring that
the county officials were precluded by IGRA from executing warrants and
prosecuting the tribal gaming officials. The district court also held that the
federal government has exclusive power to enforce any violation of IGRA on
Indian land. Further, the court found that the confiscated video "pull-tab"
machines were "electronic facsimiles" of games of chance and hence were Class
III gaming devices that could be lawfully operated only if authorized by a
tribal-state compact and that no such compact was in place between the State of
California and any of the tribes. On appeal, the Court of Appeals for the Ninth
Circuit affirmed the district court's decision and the U.S. Supreme Court
refused to grant certiorari, thereby affirming the holdings of both lower
courts. While the Barona Casino's electronic video gaming devices are not the
same as those which were the subject of Sycuan, based on the court's reasoning,
the video gaming devices are likely to be classified as Class III operations
under IGRA.
 
     Rumsey Indian Rancheria of Wintun Indians v. Wilson, 64 F.3d 1250 (Aug. 11,
1995), amending 41 F.3d 421 (Nov. 15, 1994). In Rumsey, the Barona Tribe and
other Indian tribes filed a declaratory judgment action in the United States
District Court for the Eastern District of California seeking a determination
that certain electronic and casino style card games, all acknowledged by the
tribes and the state to be Class III games, were permitted under California law
and hence that the state was required to negotiate a compact with the tribes for
such gaming activities. The Court of Appeals for the Ninth Circuit held that
with the possible exception of slot machines in the form of video lottery
terminals, such games were prohibited. The limited question of whether
California permits the operation of slot machines in the form of the state
lottery or otherwise was remanded to the district court for consideration.
However, by the appellate panel's order in December 1995, a final disposition
and mandate in Rumsey will not issue until after the court
 
                                       13
<PAGE>   16
 
considers the impact of the California Supreme Court's recent decision in
Western Telcon v. California State Lottery, discussed below.
 
     Western Telcon, Inc. v. California State Lottery, 13 Cal. 4th 475 (1996).
In Western Telcon, the California Supreme Court held that a form of keno
conducted by the California State Lottery was a house-banked game and not a
lottery and hence was not authorized by the California State Lottery Act. In its
decision, the court did not address the positions presented by the plaintiffs
and the intervener, California-Nevada Indian Gaming Association, that the keno
game involved slot machines and that the Lottery Act granted the California
State Lottery a complete exemption from the anti-gaming provisions of the
California Penal Code. A ruling that the game involved slot machines or a form
of electronic gaming authorized by the Lottery Act would have been favorable to
Indian tribes seeking, via Rumsey, a declaration that the state is required by
IRGA to enter into a tribal-state compact governing electronic gaming on tribal
lands. On the other hand, the court noted that the California State Lottery (and
hence by implication, Indian tribes operating with tribal-states compacts) could
legally conduct keno or other numbers game, using video terminals and on-line
computers, provided the games are structured as lotteries rather than
house-banked games.
 
     Because the ruling in Western Telcon is so recent, it is too early to
determine what action the Rumsey litigants will take or what impact Western
Telcon will have on Rumsey. Following the Ninth Circuit's decision, the Indian
tribes may appeal Rumsey to the United States Supreme Court, thus further
delaying final resolution of the case.
 
     If the Indian tribes lose the appeals and if the electronic video gaming
devices and/or "Jokers Wild 21" are deemed to be Class III gaming activities,
such activities could be found to be unlawful because there is no tribal-state
compact between the Barona Tribe and the State of California. Also, it might be
determined that such activities are beyond the scope of what the State of
California can be compelled to include in a tribal-state compact. If this were
to occur, there would be little likelihood that the State of California would
agree to such gaming activities in a compact. This could have a material adverse
effect on the business and financial condition of Inland Casino.
 
     The significance of the uncertainty of result in Rumsey is reflected in the
standstill agreements of 1994 between the U.S. Attorney for the Southern
District of California and the three Indian tribes in that district, including
the Barona Tribe, which are currently conducting large-scale gaming enterprises
which may be affected by an adverse ruling from the Rumsey court. See
"Discussion of Regulatory Matters -- Verbal Agreement with U.S. Attorney for the
Southern District of California," herein.
 
     Seminole Tribe v. Florida, 116 S. Ct. 1114 (1996), aff'g 11 F.3d 1016 (11th
Cir., 1994). Section 11(d)(7)(A)-(B) of IGRA authorized a tribe to bring civil
suit in federal district court if a state refused to negotiate in good faith a
tribal-state compact governing Class III gaming on the tribe's land. If the
tribe prevailed, the court could order the state to conclude a compact within 60
days and if a compact was not concluded within that time, a court-appointed
mediator would select either the tribe's or the state's last best offer. If the
state did not consent to the selected offer within 60 days, the Secretary of the
Interior could prescribe procedures, consistent with the selected offer, IGRA,
and state law, under which the tribe could conduct such gaming.
 
     In Seminole, the U.S. Supreme Court, citing the states' immunity from suit
by private parties in federal courts under the Eleventh Amendment, held that
Congress lacked the power under the Indian Commerce Clause of the U.S.
Constitution to authorize such suit. This leaves open the question whether, when
a state refuses to negotiate in good faith and to consent to federal
jurisdiction, a tribe may proceed directly to the Secretary of Interior. The
Eleventh Circuit so held in Seminole, 11 F.3d at 1029, cert. denied, 116 S. Ct.
1416 (1996), a holding which the Supreme Court declined to review.
 
     Given the uncertainties as to the Barona Tribe's remedies if the State of
California fails to negotiate a compact in good faith, it is unclear if or when
the Tribe will be able to secure a compact or to obtain procedures for Class III
gaming from the Secretary of the Interior.
 
                                       14
<PAGE>   17
 
     California v. Monteau, No. S-96-797-LKK (E.D. Cal.). In this pending
action, the State of California seeks to enforce an allegedly nondiscretionary
duty on the part of the NIGC and its Chairman, Harold Monteau, to issue orders
of temporary and permanent closure to the various tribal gaming operations in
California where electronic machines or house-banked card games are allegedly
being used or conducted. If the state prevails and the NIGC in response
temporarily or permanently closes any of the Barona Casino's electronic gaming
activities, the business and financial condition of Inland Casino could be
materially and adversely affected.
 
     Verbal Agreement with U.S. Attorney for the Southern District of
California. On June 30, 1994, Alan Bersin, the U.S. Attorney for the Southern
District of California (which includes San Diego), issued a public announcement
that the Barona, Sycuan, and Viejas tribes had entered into a verbal agreement
with him. The agreement provides that the tribes will refrain from adding gaming
devices at their respective casinos until all Ninth Circuit appeals are finally
resolved in Rumsey, Sycuan, and Cabazon(of which only Rumsey is still being
litigated) or until a tribal-state compact or amendment to IGRA specifically
allows such devices. In return, Mr. Bersin promised not to take any enforcement
action against the tribes. Despite the Ninth Circuit ruling in Rumsey described
above, Mr. Bersin announced that he will not immediately force the tribes to
remove their electronic video gaming devices. Instead, he indicated he plans no
action until the matter is finally resolved in the courts. Although no document
was signed to evidence this agreement, Mr. Bersin sent a letter dated October 5,
1994 to the Barona Tribe confirming the existence of the standstill agreement.
Inland Casino is not a party to the verbal agreement and receives no direct
protection from the standstill agreement, but the Company believes that it has
been and will continue to be an indirect beneficiary of the standstill
agreement. Furthermore, by entering into the verbal agreement, the Barona Tribe
has stated that it will remove the electronic gaming machines if they are found
to be illegal. Such removal could have a material adverse effect on the business
and financial condition of Inland Casino. While the Barona Tribe and the
management of Inland Casino believe that they can rely on the personal word of
Mr. Bersin, he is under no legal obligation to honor this agreement, and either
he or his successor, if any, could change his mind at any time. Any such change
could lead to the enforcement actions referred to above.
 
     Gaming Activities in Oregon.  Tribal gaming in Oregon is governed by
compacts negotiated between the state and each Indian tribe, pursuant to IGRA.
IGRA, together with the compacts, provides the substantive body of gaming law in
Oregon.
 
     Since 1992, Oregon has negotiated Class III Tribal-State Compacts with the
following tribes: the Cow Creek Band of Umpqua Tribe of Indians, the
Confederated Tribes of the Umatilla Indian Reservation, the Confederated Tribes
of the Grand Ronde Community of Oregon, the Coquille Indian Tribe, the
Confederated Tribes of Coos, Lower Umpqua and Siuslaw Indians, the Klamath
Tribes, the Confederated Tribes of the Warm Springs Reservation of Oregon, and
the Siletz Indian Tribe. All such compacts have been approved by the Secretary
of the Interior.
 
     A compliance audit is conducted annually by the Oregon State Police. In
addition, a tribe's tribal gaming commission monitors compliance with both the
compact and federal gaming law.
 
     Oregon has no statutory approval process, nor is there an independent
gaming commission charged with negotiating tribal compacts. Instead,
negotiations are conducted through the Governor's office in consultation with
the Attorney General. The same procedure applies for formal amendments to
compacts.
 
     Each tribal compact in Oregon is separately negotiated between the tribe
and the state. While there are differences among Oregon's compacts, they tend to
be similar in most significant respects. The Klamath Compact includes a
reciprocity provision that provides for automatic amendments when the state
agrees to amend the compacts of certain other tribes. For example, when the
Siletz Tribe successfully negotiated to add blackjack to its gaming offerings,
the Klamath Tribes were entitled to amend their compact accordingly.
 
     Oregon's compacts typically set forth licensing requirements and procedures
affecting prospective consulting or management companies. The Klamath Tribes are
presently awaiting a determination by the NIGC that their contract with the
Company is for consulting, and not management services. Once received,
 
                                       15
<PAGE>   18
 
the Klamath Tribes may proceed with the licensing without the need for NIGC
approval. As stated above, the Siletz Agreement has not yet been submitted by
the Siletz Tribe to the NIGC.
 
     For both the Klamath and Siletz Tribes, the tribe's tribal gaming
commission coordinates the licensing process in cooperation with the state, and
ultimately is responsible for the licensing decision. This process includes a
background investigation of the entity under consideration, including its key
employees. The investigation is conducted by the Tribal Gaming Unit of the
Oregon State Police (the "OSP"). Based on its findings, the OSP will make a
licensing recommendation with regard to approval. Disagreements are resolved
under compact procedures. As of September 30, 1996, the Company has not been
licensed in the State of Oregon.
 
     Pending Legislation
     -------------------
 
     Legislation is pending before Congress and the California state legislature
which could either limit or redefine the scope of gaming activities permitted on
Indian reservations. It is unclear whether any of the bills described below or
any amendment or substitution for such bills will be passed by Congress or the
California legislature. Further, it is unclear what, if any, effect these bills
will have on the gaming operations of the Barona Tribe. Some of the proposed
legislation might, if passed in the proposed form, have an adverse effect on the
operations at the Barona Casino and upon the financial condition and operations
of Inland Casino.
 
     Federal.  Legislation is pending before Congress which could limit the
scope of gaming activities permitted on Indian reservations to that which is
expressly authorized under state law. Although the retroactive effect on Indian
tribes cannot be determined, Indian tribes which do not now have a compact for
electronic or casino type gaming, such as the Barona Tribe, could be seriously
limited in the scope of activities which might be permitted under new
legislation.
 
     Other bills have been introduced to Congress and each of those bills would
create a federal commission to review national policies toward gambling in light
of the expansion of the gaming industry in general and the Indian gaming
industry in particular. Also, Senators McCain and Inouye have introduced a bill
to comprehensively amend and broaden IGRA. This bill would, among other things,
clarify that electronic video gaming devices are Class III gaming activities and
would provide certain procedural and timing requirements for the negotiation of
tribal-state compacts, including a procedure by which the Secretary of the
Interior could approve a compact that meets the requirements of IGRA after both
the Indian tribe and the state present their respective positions concerning the
proposed compact.
 
     It is unclear whether any of the bills currently pending or any amendment
or substitution for such bills will be passed by Congress. Such legislation
could, if passed, however, have an adverse effect on the operations at the
Barona Casino and upon the financial condition and operations of Inland Casino.
 
     State.  In the most recent legislative session of the California
legislature, which concluded in early September 1996, there were numerous bills
which could have had an effect on gaming activities in general and Indian gaming
activities in particular within the State of California. Several of these bills
contained the objective of establishing a new centralized government entity, the
California Gaming (or Gambling Control) Commission, to regulate gambling in the
State of California. One bill would have allowed race tracks, as publicly traded
corporations, to operate cardrooms. Another of the pending bills would have
designated the Governor as responsible for negotiating and executing compacts.
Another bill would have specifically allowed player banked games. Other bills
would provide the opportunity for Indian tribe exclusivity with respect to video
display terminals. In addition, other bills addressed non-Indian gaming such as
horse racing, the California lottery, gaming clubs and non-Indian bingo games,
but each of these bills could have had an effect on Indian gaming activities
either directly or indirectly.
 
     In early September 1996, Governor Wilson of the State of California
announced that his administration would begin negotiations with non-gaming
tribes to create a compact for Indian gaming in California. The negotiations are
to begin in October 1996 with participation by Indian tribes, the Governor's
staff and the staff of the Attorney General for the State of California. If
compacts are eventually completed, negotiations with tribes with gaming
operations may follow. However, the Governor has held the position that he would
not
 
                                       16
<PAGE>   19
 
negotiate with tribes operating what were, in his opinion, "illegal machines."
While the Company does not believe that the Barona Casino is operating "illegal
machines," compact negotiations with the Governor's staff may be deferred,
delayed indefinitely, or never completed. If the Barona Tribe agreed to remove
its video machines to begin such compact negotiations, the corresponding
reduction in revenue at the Barona Casino would have a material adverse effect
on the financial condition of the Company.
 
     The Company expects that legislation involving gaming activities in general
and Indian gaming activities in particular will continue to be introduced (or
reintroduced, as the case may be) in the California legislature including some
or all of the above-referenced legislation. It is unclear whether any of these
bills or any amendment or substitution for such bills will be passed by the
California legislature at any time in the future. Further, it is unclear what,
if any, effect these bills, if passed, will have on the gaming operations of the
Barona Tribe. However, it is possible that legislation might, if passed, have an
adverse effect on the operations at the Barona Casino by limiting the amount
and/or type of gaming activities which could be offered or by increasing the
amount of competition from non-Indian gaming activities. Any of these could have
an adverse effect upon the financial condition and operations of Inland Casino.
 
     To the knowledge of the Company, there is no pending legislation in Oregon
relating to Indian gaming.
 
     Conclusion Concerning Indian Gaming Regulation
     ----------------------------------------------
 
     The State of California has prohibited privately run lotteries and any
banking or percentage game played with cards, dice or any device, for money,
checks, credit or other items of value. Slot or card machines have been deemed
illegal in the State of California. Every district attorney, sheriff, constable
and police officer in the State of California may prosecute offenders of gaming
prohibitions, although no enforcement by state or local officials can occur on
Indian land. As discussed above, if a particular gaming activity is prohibited
in a state, it cannot be operated on an Indian reservation absent a tribal-state
compact. It is unclear whether some of the gaming activities conducted at the
Barona Casino are Class II or Class III gaming activities. If they are deemed to
be Class III games, they are unlawful absent a Tribal-State Compact. However,
since tribal gaming is relatively new, many Federal and state laws, rules and
regulations affecting such operations have not as yet been finally interpreted
by authorities. The ambiguity is magnified because the State of California has
refused to enter into a compact with the Barona Tribe as permitted under IGRA. A
compact would help clarify and resolve much of the uncertainty enveloping tribal
gaming; however, with the exception of the recent limited expression of interest
noted above, the State of California has refused to negotiate such a compact
with any of the Indian tribes located in the State of California. Whether or not
a compact is ever signed between the Barona Tribe and the State of California,
there is no assurance that either the NIGC or the State of California will
ultimately agree with management of Inland Casino that certain gaming activities
currently conducted at Barona Casino are permissible. A finding that certain
gaming activities are impermissible could have a material adverse effect on the
operations of Barona Casino and upon the financial condition of Inland Casino.
 
     There are significant civil and criminal penalties associated with
operating gaming activity on the Barona Tribe's Indian Reservation otherwise
than in strict compliance with relevant law and judicial interpretation thereof.
These penalties may be imposed on both the Barona Tribe and Inland Casino, and
are generally described above. The imposition of some or all of these sanctions
could have a material adverse effect on the operations and financial prospects
of Inland Casino. In light of the uncertainties regarding potential government
action, reported financial information is not necessarily indicative of Inland
Casino's future operating results or financial condition. Any government action,
inquiry and/or investigation could have a material adverse effect on the
competitive position in San Diego County of Inland Casino in relation to other
Indian gaming operations.
 
     Although the management of Inland Casino believes that the gaming
activities conducted at the Barona Casino will eventually be expressly permitted
under IGRA and the laws of the State of California, the present regulatory
environment is extremely uncertain because of pending litigation matters
described above and because the State of California has not entered into a
compact with the Barona Tribe. As noted, a compact would help clarify and
resolve much of the uncertainty surrounding tribal gaming. Thus far, with the
exception
 
                                       17
<PAGE>   20
 
of the limited statement by Governor Wilson noted above, the State of California
has refused to negotiate with any of the California Indian tribes concerning
such a compact. Whether or not a compact is ever signed between the Barona Tribe
and the State of California, there can be no assurance that either the NIGC or
the State of California will agree with Inland Casino's management that certain
gaming activities currently conducted at the Barona Casino are permissible. A
finding that certain gaming activities are impermissible could have a material
adverse effect on the business, operations and financial condition of Inland
Casino. Furthermore, changes in such laws, rules and regulations could also have
a material adverse effect on the gaming operations at the Barona Casino.
 
ITEM 2.  DESCRIPTION OF PROPERTY
 
     Executive Offices.  The Company's executive offices are located in La
Jolla, California, and consists of approximately 5,000 square feet under a lease
which will expire in August 1997. Management believes that the current space
will accommodate the Company's currently anticipated requirements and that
additional space will be available on commercially reasonable terms if it is
needed.
 
     Lease of "Big Top" Structure.  On December 14, 1993, ICP, doing business on
behalf of the Barona Casino, entered into a Lease Agreement (the "Big Top
Lease") with Sprung Instant Structures, Inc. ("Sprung") pursuant to which ICP
agreed to lease the "Big Top" structure which houses the Barona Casino. The Big
Top Lease was assigned to Inland Casino. The original lease term was for 12
months and expired on January 15, 1995 but will continue on a month to month
basis for a monthly lease payment of $20,360 unless the Big Top Lease is
canceled by Inland Casino. The lease payments are a liability of Inland Casino
but are considered to be an operating expense of the Barona Casino. Inland
Casino has an option to purchase the "Big Top" structure for $535,342.
 
ITEM 3.  LEGAL PROCEEDINGS
 
     The General Counsel of the NIGC in a letter to the Chairman of the Barona
Tribe dated May 16, 1996 stated that (i) the Initial Consulting Agreement
submitted by the Barona Tribe to the NIGC is not a management contract and,
accordingly, does not require the approval of the NIGC; (ii) the Operations
Agreement, which was cancelled and superseded by the Initial Consulting
Agreement, should have been submitted to the NIGC for approval; and (iii) by
managing under an unapproved management agreement for over three years, the
Company may have been in violation of the IGRA and its regulations. The NIGC
General Counsel stated that this latter matter has been referred to the NIGC
Division of Enforcement to determine if further action is appropriate.
 
     To the best of management's knowledge, there are no other material pending
legal proceedings of which the Company is a party. The Company is, however,
subject to legal proceedings and claims which have arisen in the ordinary course
of business and have not been finally adjudicated.
 
     Although the Company cannot predict the likely outcome of the current
discussions with the NIGC or any pending lawsuit or claims involving the
Company, management intends to vigorously defend, and, where applicable,
prosecute, each matter or case, and believes that their final outcome will not
have a material adverse effect on the Company's financial condition or results
of operations.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
     No matters were submitted during the fourth quarter of the fiscal year
covered by this Form 10-KSB to a vote of security holders of the Company.
 
                                       18
<PAGE>   21
 
                                    PART II
 
ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
MARKET FOR COMMON STOCK
 
     The common stock of Inland Casino was accepted for trading on the Nasdaq
National Market System, effective August 24, 1995, where it trades under the
symbol INLD. The Company's Common Stock traded in the over-the-counter market on
the National Association of Securities Dealers, Inc. (the "NASD") Electronic
Bulletin Board under the symbol INLD from May 22, 1995 (the effective date of
the Merger) to August 23, 1995, and under the symbol TWCE prior to the effective
date of the Merger. There was no active trading market for the Company's Common
Stock for more than two years prior to the Merger.
 
     The table below reflects the high and low bid prices of the Company's
common stock as reported by the NASD from July 1, 1994 to August 23, 1995 and
thereafter as reported by The Nasdaq Stock Market. Such quotations are
inter-dealer quotations without retail mark-ups, mark-downs or commissions, and
may not represent actual transactions. The number of shareholders of record as
of September 30, 1996 was 3,294. The effective date of the Merger was May 22,
1995, and prices prior to that date are, accordingly, prices of Twin Creek
Common Stock before consummation of the Merger of ICC II with and into Twin
Creek. In addition, at the time of the Merger, the Company's fiscal year was
changed from a September 30 to a June 30 year-end. Also, such prices prior to
the Merger do not reflect the 1-for-100 reverse stock split of the shares of
Common Stock of Twin Creek effective at the Merger.
 
<TABLE>
<CAPTION>
        FISCAL YEAR 1995(1)                                             HIGH       LOW
        -------------------                                             ----       ---
        <S>                                                            <C>       <C>
        First Quarter................................................  $0.05     $0.04
        Second Quarter...............................................   0.05      0.04
        Third Quarter................................................   0.05      0.04
        Fourth Quarter...............................................   4.00      0.04

        FISCAL YEAR 1996
        ----------------
        First Quarter................................................  $8.32     $4.00
        Second Quarter...............................................   6.32      3.16
        Third Quarter................................................   3.56      3.24
        Fourth Quarter...............................................   4.00      3.40
        September 30, 1996...........................................  $3.00     $3.00
</TABLE>
 
---------------
(1) The Merger occurred May 22, 1995, and the fiscal year was changed at that
    time from a September 30 to a June 30 year end. Prices prior to the Merger
    do not reflect a 1-for-100 reverse stock split that was effective at the
    Merger. For purposes of presentation, Fiscal 1995 has been recast as if its
    fiscal year-end was June 30 for the entire 12-month period ended June 30,
    1995.
 
DIVIDEND POLICY
 
     To date, the Company has not paid any dividends. The Company is not
currently restricted from paying cash dividends; however, the Company's
$2,000,000 Credit Facility with Imperial Bank provides that, so long as the
Company is indebted to the Bank, it may not, without the written consent of the
Bank, pay cash dividends. As of September 30, 1996, the Company has not utilized
such Credit Facility. Notwithstanding this restriction, the Company presently
plans to reinvest earnings in order to finance the expansion and development of
its business, and it is therefore unlikely that any cash dividends will be
declared in the foreseeable future.
 
                                       19
<PAGE>   22
 
ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 
OVERVIEW
 
     From its formation through March 31, 1996, the Company provided services to
the Barona Tribe at the Barona Casino, under the terms of the Operations
Agreement, including providing assistance to the Barona Tribe in the development
and expansion of the "Big Top" facility at the Barona Casino. Through March 31,
1996, the Company earned fees based upon a percentage of the "net profits"
generated by the Barona Casino. As used in this Report, the term "net profits"
is not intended to mean net profits as defined by generally accepted accounting
principles or by IGRA. Generally, the Operations Agreement defined "net profit"
as the total amount of moneys remaining from monthly gross receipts after
payment of the operating expenses for such month, such amount being calculated
on a cash basis. The Company provided certain personnel, at its expense, to
operate the activities at the Barona Casino, and it entered into agreements for
the Barona Casino in which the Company was the obligor (e.g., leases for gaming
equipment, the big Top Lease, etc.).
 
     Effective April 1, 1996, the Company commenced providing consulting
services to the Barona Tribe pursuant to the Consulting Agreement. The Company
and the Barona Tribe also entered into a Mutual Release, effective April 1,
1996, releasing each other from their respective obligations under the
Operations Agreement. See Item 1. Description of Business -- "Summary of Inland
Casino Gaming Agreements -- Agreements with the Barona Tribe," herein.
 
     As part of its obligation to the Barona Tribe under the Operations
Agreement, Inland Casino provided significant financing for the construction and
expansion of the Barona Casino. The financing costs have been recognized as an
asset in the financial statements of the Company, designated as deferred
contract costs, and are being amortized to expense over the combined lives of
the Operations and Consulting Agreements, through April 1999. The recovery of
these deferred costs are achieved through the fees earned by Inland Casino
pursuant to its agreements with the Barona Tribe. Such construction financing
obligations were incurred upon the recommendation of the Company and subject to
acceptance by the Barona Tribe.
 
     In June 1996, the Company began providing consulting services for the
Siletz Tribe at the Chinook Winds Casino in Lincoln City, Oregon, and the
Associated Tribes of Northwest Indians in Oregon. With the exception of $46,250
billed for these consulting services in June 1996, fees earned pursuant to the
Operations Agreement and the Consulting Agreement were the Company's only source
of revenue for the years ended June 30, 1995 ("Fiscal 1995") and June 30, 1996
("Fiscal 1996").
 
RESULTS OF OPERATIONS
 
     Revenue.  Revenue decreased 18.9% from $14,152,565 for Fiscal 1995 to
$11,482,040 for Fiscal 1996, primarily because of reduced profit margins at the
Barona Casino. With the exception of $46,250 in other consulting fees in Fiscal
1996, the Company's revenue is all from fees received from the Barona Tribe in
connection with the Barona Casino. Through March 31, 1996, such fees were
calculated, in part, based on the profit margins of the Barona Casino. The lower
profit margins at the Barona Casino resulted primarily from increases in
payroll, marketing and administrative costs. The increase in payroll and
administrative costs at the Barona Casino was the result of a decision to
increase staff levels to provide additional administrative support and improved
service to customers. Increases in marketing costs resulted from the
implementation of new promotions and advertising programs.
 
     Operating Expenses.  General and administrative expenses increased 63.6%
from $4,032,941 for Fiscal 1995 to $6,597,449 for Fiscal 1996, primarily as a
result of increased payroll, marketing and administrative costs. Salaries and
benefits increased as the number of employees of the Company increased from 14
at Fiscal 1995 year-end to 25 at Fiscal 1996 year-end, including key employees
with backgrounds in law, finance, accounting and investor relations hired to
perform the duties required of a public company. Key employees with backgrounds
in operations, security and marketing also were added to (i) assist with
enhancement of operations at the Barona Casino, as well as the development and
expansion of the Barona Casino, and (ii) provide a staff to market the Company's
gaming management and consulting services to others.
 
                                       20
<PAGE>   23
 
     Other administrative costs increased as a result of increases in
sponsorships, charitable contributions, marketing costs and business development
costs, partially offset by a reduction in special promotional events and
professional fees. Fiscal 1996 administrative costs also include $172,000 of
research and development costs associated with the development of hardware and
software for proposed new video lottery terminals primarily for sale to existing
and prospective Indian gaming clients. Facilities costs increased as a result of
the Company entering into a lease for its current offices in January 1995.
Office supplies and expense, including telephone service, postage and printing
increased as the corporate staff began to occupy the offices in the Spring of
1995.
 
     Amortization of deferred contract costs decreased 10.0% from $2,677,848 for
Fiscal 1995 to $2,410,333 for Fiscal 1996. Through March 31, 1996, the last
effective date of the Operations Agreement, the amortization of management
agreement acquisition costs was calculated as the greater of the amortization
using (i) the straight-line method over the remaining term of the Operations
Agreement or (ii) an accelerated method, whichever method was greater. The
accelerated amortization was equal to the excess of fees earned over 30% of the
Barona Casino's operating income. Since the Company did not earn fees of over
30% of the Barona Casino's operating income during the nine months ended March
31, 1996, the straight-line method was used, compared to use of the accelerated
method for fiscal 1995.
 
     Beginning April 1, 1996, the effective date of the Consulting Agreement,
these costs, now captioned deferred contract costs, are being amortized using
the straight-line method over the initial three-year term of the Consulting
Agreement. The Company believes that the amounts capitalized as deferred
contract costs will continue to be fully recoverable over the life of the
Consulting Agreement as it did during the periods during which the Operations
Agreement was in force. Management will continue to review the valuation and
recoverability of these deferred costs and make adjustments, as is appropriate.
See Notes to Financial Statements, Note B -- Deferred Contract Costs.
 
     Other Income and Expense.  During Fiscal 1995, the Company incurred
$479,247 in costs related to the merger into Twin Creek Exploration Co., Inc.,
in May 1995, and incurred additional costs of the merger of $11,479 during
Fiscal 1996. Interest income decreased from $54,783 in Fiscal 1995 to $36,914 in
Fiscal 1996 due to a decrease in revenue, resulting in lower bank balances. From
April 1, 1995 through March 31, 1996, during which time the Operations Agreement
was in effect, it was decided by Management that interest earned on excess cash
balances should be paid to the Barona Casino. Effective April 1, 1996, the
Company retained interest income earned on its invested cash balances.
 
     Income Tax Provision.  The income tax provision decreased 65.9% from
$2,992,000 for Fiscal 1995 to $1,020,000 for Fiscal 1996, primarily as a result
of lower taxable income and a lower effective income tax rate. Deferred income
taxes arise as the result of timing differences between amortization expense for
financial statement purposes and tax purposes.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     As noted above, substantially all of Inland Casino's revenue is fees from
the Operations and Consulting Agreements with the Barona Casino. From Fiscal
1993 through Fiscal 1996, in addition to general and administrative and other
miscellaneous expenses, the Company's most significant expense item has been the
funding of construction costs related to an expansion of the facilities at the
Barona Casino. Net cash provided by operations from fees earned during the same
period has been insufficient by itself to fund construction. In addition to fees
earned under the Operations Agreement, the Company also has received advances
against future fees from the Barona Tribe and received capital contributions
from its shareholders.
 
     During Fiscal 1996, the Company's cash position increased $2,924,159 from
the June 30, 1995 balance of $1,423,826, to $4,347,985 at June 30, 1996. The
increase was principally due to net cash generated by operating activities of
$4,711,074 in Fiscal 1996 reduced by cash invested in management agreement
acquisition costs of $1,699,699, purchases of furniture and equipment of
$102,338, and increased by cash flows provided by financing activities of
$15,122. Cash flows provided by financing activities resulted from a net
increase in advances of future consulting fees of $545,630, partially reduced by
repayment of loans from shareholders of $29,187, and payment of $501,321 in debt
resulting from the redemption of 1,908,875 shares of
 
                                       21
<PAGE>   24
 
common stock from a former officer and director of the Company. See Notes to
Financial Statements, Note D -- Stock Repurchase/Long-Term Debt.
 
     Accounts receivable increased $62,600 during Fiscal 1996 primarily as a
result of an increase in billings to clients and an increase in loans to
officers and employees.
 
     The deferred contract costs totalling $13,160,953 at June 30, 1996, have
been financed principally by cash generated from operations, advances of future
fees from the Barona Casino, working capital and advances and capital
contributions from shareholders. Through June 30, 1996, accumulated amortization
of these deferred contract costs was $6,655,626, resulting in net deferred
contact costs of $6,505,327 at Fiscal 1996 year-end. At June 30, 1996,
outstanding advances of future fees from the Barona Casino were $2,385,814.
Advances from the Barona Tribe are repaid by Inland Casino through the reduction
in payment of future fees earned. Advances do not bear interest and are due on
demand.
 
     In the future, if the Operations Agreement is successfully challenged by
NIGC, Inland Casino may be obligated to repay such advances, or a portion
thereof, to the Barona Tribe even though the Operations Agreement has been
cancelled. See Item 3. Legal Proceedings, herein. Although the Company believes
that it will have the resources sufficient to make repayment of the advances,
there can be no assurance that Inland Casino will have the resources to repay
any outstanding advances in the future
 
     It is the Company's intention to assist the Barona Tribe in funding, or
finding acceptable sources of funding for, future improvements in the Barona
Casino. Depending on the nature and extent of the improvement project, to the
extent practicable, it is the Company's intent to first explore funding such
improvement projects from the Company's working capital and through advances of
future fees, before seeking third-party debt or equity financing for the Barona
Tribe. However, outside sources of financing for the Barona Tribe may be
required or sought at any time.
 
     At June 30, 1996, the Company had a credit facility with Imperial Bank (the
"Bank") which allowed for total credit of $2,000,000 (the "Credit Agreement").
Under terms of the Credit Agreement, the facility was to expire in October 1998,
and was secured by all of the Company's personal property, including but not
limited to bank deposits, accounts receivable, inventory and equipment. The
Credit Agreement provides that, so long as the Company is indebted to the Bank,
it must adhere to various restrictive covenants which require, among other
things, the maintenance of certain financial ratios, maintenance of $1,000,000
in the Bank's deposit accounts, a limitation on the occurrence of future
indebtedness and a prohibition on declaring or making any cash dividends. The
Company has had no outstanding borrowings under this Credit Agreement and, as of
September 30, 1996, had not utilized the facility since its inception. Under the
terms of the Credit Agreement, amounts drawn on the line will convert into notes
payable over a period of months (the exact number of which is dependent upon the
date of disbursement), with interest at prime plus 2%. All of such notes become
due and payable no later than October 10, 1998. In connection with the Credit
Agreement, the Bank received an immediately exercisable warrant to purchase
40,000 shares of the Company's common stock, subject to certain anti-dilution
provisions, at an initial exercise price of $5.00. The warrant expires on
October 10, 2000 (the "Warrant"). (See Notes to Financial Statements, Note
E -- Line of Credit.)
 
     On September 20, 1996, the Company commenced the process of cancelling the
Credit Agreement. In connection therewith, the Company requested that the Bank
terminate its security interest in the Company's assets and return the Warrant.
 
     Inland Casino has announced plans to expand and improve the existing
facilities at the Barona Casino, which expansion is subject to the approval of
the Barona Tribe and also is subject to obtaining appropriate financing. The
expansion will not increase the number of gaming devices, but is expected to
expand off-track betting and other non-gaming activities, as permitted under the
verbal agreement with the U.S. Attorney for the Southern District of California
and the compact with the State of California concerning off-track betting. This
proposed expansion project is estimated to cost up to $17.5 million and the
Company and the Barona Tribe are exploring financing alternatives for the
project.
 
                                       22
<PAGE>   25
 
     The Barona Casino and all of the related facilities are capital
improvements upon land which belongs to the Barona Tribe. As such, the Company
has no ownership whatsoever in any of the improvements to such land. All of
these improvements belong to the Barona Tribe.
 
SEASONALITY
 
     The Barona Casino is located approximately 30 miles east of downtown San
Diego, California where the population is relatively stable throughout the year,
although it peaks to some extent due to tourism during the summer months and to
a lesser extent during the winter months. On the basis of its experience to
date, the Company anticipates that the Barona Casino's business may peak in
Summer and, to some extent, in Winter, and may decline somewhat in early Spring
and late Fall. The Chinook Winds Property and the planned Kla-Mo-Ya Casino are
both located in the State of Oregon. It is anticipated that tourism will decline
in the Fall and Winter seasons in Oregon, which should result in a corresponding
decline in casino revenues from the tourist market segment. In addition, colder
weather in Winter also may result in a decline in casino revenues for these
Oregon casinos, as a result of fewer customers. At this time, however, the
Company cannot accurately predict the continued effect of seasonality on its
business.
 
INFLATION
 
     To date, inflation has not had a material impact on the Company's financial
condition or its results of operations.
 
SUBSEQUENT EVENTS, ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS AND
FORWARD-LOOKING STATEMENTS
 
  Subsequent Events
 
     In September 1996, the Company entered into a Stock Purchase and Settlement
and Release Agreement (the "Repurchase Agreement") to repurchase from two of its
principal shareholders 6,778,244 shares of its common stock. The terms of the
Repurchase Agreement include (i) a cash payment of $200,000 upon closing, (ii)
the issuance of promissory notes in the principal amount of $3,500,000, with
interest at a rate of 10%, payments of interest only for the first three years,
followed by three equal annual installments of principal repayment, with
interest on the remaining balance, commencing September 1997, (iii) a contingent
obligation to issue a total of $9,856,488 in promissory notes, including
$2,000,000 in notes each year for four years, and $1,856,488 in notes to be
issued in a fifth year, each note with interest at 10%, payments of interest
only for the first three years, followed by three equal annual installments of
principal plus interest on the remaining principal balance, and (iv) a
contingent bonus obligation to issue an additional $3,000,000 in promissory
notes (or cash, if the Company has closed a firm commitment underwritten pubic
offering of securities of not less than $35 million prior to the contingencies
being met) when and if certain conditions are met, with interest at the then
rate of interest charged to the Company by the Company's principal bank, with
interest only for three years from date of issuance, followed by two equal
annual installments of principal, plus interest on the remaining balance.
 
     The obligations to issue $2,000,000 in notes for four years and $1,856,488
in notes for a fifth year is contingent upon the Company's retained earnings
balance being at least $4,000,000 for the fiscal year ending immediately prior
to the date the notes are to be issued. Dividends paid by the Company and
certain other payments, if any, are not to be added back to the retained
earnings balance for purposes of this contingency. The period for determining
the Company's obligation to issue each of the $2,000,000 and $1,856,488 in
principal the amount of notes is an eight year period commencing with the fiscal
year ending June 30, 1997. If the $4,000,000 retained earnings test is not met
in one year, the Company is not obligated to issue the notes in that year.
However, the test is to be made each year for eight successive years commencing
with the fiscal year ending June 30, 1997, but each year can be used only once
during the eight year period, and only five out of the eight years may be used.
The contingent bonus obligation is subject to the following conditions: (i) the
Barona Tribe enters into a Class III Gaming Compact (the "Compact") with the
State of California which permits the operation of video gaming machines at the
Barona Casino in San Diego County; (ii) at the time that the Barona Tribe enters
into the Compact, the Company has a consulting agreement or similar
 
                                       23
<PAGE>   26
 
contractual arrangement; and (iii) consulting fees paid to the Company by the
Barona Tribe relating to the Barona Casino for any consecutive 12-month period
within five years after the Barona Tribe has entered into the Compact, equals to
or exceeds one and one-half times such consulting fees for the year ended June
30, 1996. The Company intends to record as the additional cost of the repurchase
of its common stock each contingent obligation and the contingent bonus
obligation as each contingency or condition is met.
 
  Additional Factors That May Affect Future Results
 
     Gaming on Indian land is extensively regulated by federal, state, and
tribal governments, and the present regulatory environment is extremely
uncertain because of certain pending litigation and legislation. Adverse
findings for any of the Indian tribes in any of the pending actions could have a
material adverse effect on the operations of Inland Casino, as would criminal
and civil enforcement actions taken by federal agencies which could be commenced
before the outcome of such litigation is known.
 
     In addition, the Company's Consulting Agreements with the Barona Tribe, the
Siletz Tribe and the Klamath Tribes have not yet been approved by all applicable
regulatory authorities. If the consulting agreements (particularly the Barona
Consulting Agreement) are not approved or are significantly modified from the
standpoint of consulting revenue, such action would have a material adverse
effect on the business and financial condition of the Company. See "Item 1.
Description of Business -- Summary of Inland Casino Gaming Agreements"; and
" -- Discussion of Regulatory Matters", herein.
 
     In any event, any material reduction in fees payable to the Company,
whether as a result of a modification to the agreements between the Company and
the Barona Tribe as result of regulatory compliance requirements or weakness in
the operations of the Barona Casino, could have a material adverse effect on the
business and financial condition of the Company, if the Company could not either
reduce expenses or increase revenues from other sources.
 
  Forward-looking Statements
 
     Included in the Notes to Financial Statements, Item 1. Description of
Business, this Item 6, Management's Discussion and Analysis or Plan of Operation
and elsewhere in this Report, are certain forward-looking statements reflecting
the Company's current expectations. Although the Company believes that its
expectations are based on reasonable assumptions, there can be no assurance that
the Company's financial goals or expectations will be realized. Numerous factors
may affect the Company's actual results and may cause results to differ
materially from the expressed in forward-looking statements made by or on behalf
of the Company. Some of these factors include the uncertainty involved in the
regulatory approval process relating to the Consulting Agreement, the regulatory
approach taken with respect to the now terminated Operations Agreement; the
outcome of a variety of pending litigation and legislation at the federal and
state levels regarding Indian gaming; the availability of funding alternatives
to fulfill certain contemplated development projects at the Barona Casino; and
the general economic factors affecting the gaming industry in general and Indian
gaming in particular in the geographic market within which the Company competes.
 
                                       24
<PAGE>   27
 
ITEM 7.  FINANCIAL STATEMENTS
 
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        -----
<S>                                                                                     <C>
Report of Independent Certified Public Accountants....................................     26
Financial Statements:
     Balance Sheet -- June 30, 1996...................................................     27
     Statements of Operations -- Two Years Ended June 30, 1995 and 1996...............     28
     Statement of Shareholders' Equity -- Two Years Ended June 30, 1995 and 1996......     29
     Statements of Cash Flows -- Two Years Ended June 30, 1995 and 1996...............     30
     Notes to Financial Statements....................................................     31
</TABLE>
 
                                       25
<PAGE>   28
 
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
 
To the Shareholders of
  Inland Casino Corporation
La Jolla, California
 
     We have audited the accompanying balance sheet of Inland Casino Corporation
as of June 30, 1996, and the related statements of operations, shareholders'
equity and cash flows for each of the years in the two year period ended June
30, 1996. These financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
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 financial statements referred to above present fairly,
in all material respects, the financial position of Inland Casino Corporation,
as of June 30, 1996, and the results of its operations and its cash flows for
each of the years in the two year period ended June 30, 1996, in conformity with
generally accepted accounting principles.
 


GRANT THORNTON LLP
 

Los Angeles, California
August 6, 1996 (except for
Note J, as to which the
date is September 30, 1996)
 
                                       26
<PAGE>   29
 
                           INLAND CASINO CORPORATION
 
                                 BALANCE SHEET
                                 JUNE 30, 1996
 
<TABLE>
<S>                                                                               <C>
                                           ASSETS
CURRENT ASSETS:
  Cash and cash equivalents...................................................    $ 4,347,985
  Accounts receivable:
     Trade....................................................................         57,055
     Employees and other related parties......................................         34,099
  Prepaid expenses and other current assets...................................         53,130
                                                                                  -----------
          Total current assets................................................      4,492,269
Furniture and equipment, net..................................................        167,213
Deferred contract costs, net..................................................      6,505,327
Deferred taxes................................................................        462,126
Deposits and other assets.....................................................        145,074
                                                                                  -----------
                                                                                  $11,772,009
                                                                                  ===========
                            LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Advances of future consulting fees -- Barona Casino.........................    $ 2,385,814
  Current portion of long-term debt...........................................        279,946
  Accounts payable and accrued expenses.......................................        449,289
  Income taxes payable........................................................        210,880
                                                                                  -----------
          Total current liabilities...........................................      3,325,929
LONG-TERM DEBT, LESS CURRENT PORTION..........................................        620,054
COMMITMENTS AND CONTINGENCIES.................................................             --
SHAREHOLDERS' EQUITY:
  Common stock, $.001 par value, 100,000,000 shares authorized and 10,632,792
     shares outstanding.......................................................      2,352,554
  Retained earnings...........................................................      5,473,472
                                                                                  -----------
          Total shareholders' equity..........................................      7,826,026
                                                                                  -----------
                                                                                  $11,772,009
                                                                                  ===========
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                       27
<PAGE>   30
 
                           INLAND CASINO CORPORATION
 
                            STATEMENTS OF OPERATIONS
                       YEARS ENDED JUNE 30, 1995 AND 1996
 
<TABLE>
<CAPTION>
                                                                       1995            1996
                                                                    -----------     -----------
<S>                                                                 <C>             <C>
Contract revenue
  Barona Casino...................................................  $14,152,565     $11,435,790
  Other...........................................................           --          46,250
                                                                    -----------     -----------
                                                                     14,152,565      11,482,040
                                                                    -----------     -----------
Operating expenses
  General and administrative expenses.............................    4,032,941       6,597,449
  Amortization of deferred contract costs.........................    2,677,848       2,410,333
                                                                    -----------     -----------
                                                                      6,710,789       9,007,782
                                                                    -----------     -----------
Operating profit..................................................    7,441,776       2,474,258
Other income (expense)
  Interest income.................................................       54,783          36,914
  Interest expense................................................       (7,533)        (24,000)
  Merger costs....................................................     (479,247)        (11,479)
                                                                    -----------     -----------
                                                                       (431,997)          1,435
                                                                    -----------     -----------
Income before income taxes........................................    7,009,779       2,475,693
Income tax provision..............................................    2,992,000       1,020,000
                                                                    -----------     -----------
Net income........................................................  $ 4,017,779     $ 1,455,693
                                                                    ===========     ===========
Income per common and common equivalent share.....................  $      0.33     $      0.12
                                                                    ===========     ===========
Shares used in the computation of income per common and common
  equivalent share................................................   12,039,019      12,159,428
                                                                    ===========     ===========
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                       28
<PAGE>   31
 
                           INLAND CASINO CORPORATION
 
                       STATEMENT OF SHAREHOLDERS' EQUITY
                       YEARS ENDED JUNE 30, 1995 AND 1996
 
<TABLE>
<CAPTION>
                                                 COMMON STOCK                              TOTAL
                                          --------------------------      RETAINED      SHAREHOLDERS'
                                            SHARES         AMOUNT         EARNINGS        EQUITY
                                          ----------     -----------     ----------     -----------
<S>                                       <C>            <C>             <C>            <C>
Balance at July 1, 1994.................      48,000     $ 4,090,201     $  260,511     $ 4,350,712
  Reorganization........................      72,000        (336,964)      (260,511)       (597,475)
  Collection of stock subscriptions
     receivable.........................          --             638             --             638
  Stock split of 99.42 for 1............  11,810,406              --             --              --
  Merger with Twin Creek Exploration....     611,387              --             --              --
  Net income............................          --              --      4,017,779       4,017,779
                                          ----------     -----------     ----------     -----------
Balance at June 30, 1995................  12,541,793       3,753,875      4,017,779       7,771,654
  Redemption of common stock............  (1,909,001)     (1,401,321)            --      (1,401,321)
  Net income............................          --              --      1,455,693       1,455,693
                                          ----------     -----------     ----------     -----------
Balance at June 30, 1996................  10,632,792     $ 2,352,554     $5,473,472     $ 7,826,026
                                          ==========     ===========     ==========     ===========
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                       29
<PAGE>   32
 
                           INLAND CASINO CORPORATION
 
                            STATEMENTS OF CASH FLOWS
                       YEARS ENDED JUNE 30, 1995 AND 1996
 
<TABLE>
<CAPTION>
                                                                       1995            1996
                                                                    -----------     -----------
<S>                                                                 <C>             <C>
Increase (decrease) in cash:
Net cash provided by operating activities:
  Net income......................................................  $ 4,017,779     $ 1,455,693
  Adjustments to reconcile net income to net cash provided by
     operating activities:
     Depreciation and amortization................................    2,678,740       2,446,277
     Deferred taxes...............................................     (666,463)        437,135
  Changes in assets and liabilities:
     Accounts receivable..........................................      (12,554)        (62,600)
     Prepaid expenses and other current assets....................           --          30,747
     Deposits and other assets....................................     (131,519)         64,730
     Accounts payable and accrued expenses........................      215,810         129,062
     Income taxes payable.........................................     (491,150)        210,030
                                                                    -----------     -----------
          Net cash provided by operating activities...............    5,610,643       4,711,074
Cash flows used in investing activities:
  Purchase of furniture and equipment.............................     (101,711)       (102,338)
  Deferred contract costs.........................................   (5,013,035)     (1,699,699)
                                                                    -----------     -----------
          Net cash used in investing activities...................   (5,114,746)     (1,802,037)
Cash flows provided by (used in) financing activities:
  Advances of future consulting fees, net.........................   (3,701,408)        545,630
  Loans from shareholders.........................................     (715,023)        (29,187)
  Payment of debt.................................................      (84,339)       (501,321)
  Collection of stock subscriptions receivable....................          638              --
                                                                    -----------     -----------
          Net cash provided by (used in) financing activities.....   (4,500,132)         15,122
                                                                    -----------     -----------
          Net increase (decrease) in cash.........................   (4,004,235)      2,924,159
Cash at beginning of period.......................................    5,428,061       1,423,826
                                                                    -----------     -----------
Cash at end of period.............................................  $ 1,423,826     $ 4,347,985
                                                                    ===========     ===========
Supplemental disclosures of cash flow information:
  Interest expense paid...........................................  $     7,533     $     3,001
                                                                    ===========     ===========
  Interest income received........................................  $    54,783     $    33,611
                                                                    ===========     ===========
  Income taxes paid...............................................  $ 4,144,150     $   565,152
                                                                    ===========     ===========
  Income tax refund received......................................  $        --     $   192,316
                                                                    ===========     ===========
  Redemption of common stock by issuance of a note payable........  $        --     $   900,000
                                                                    ===========     ===========
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                       30
<PAGE>   33
 
                           INLAND CASINO CORPORATION
 
                         NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 1995 AND 1996
 
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
1. DESCRIPTION OF BUSINESS
 
     Inland Casino Corporation provides operational and other professional
services for gaming operations under consulting agreements with various tribes
in California and Oregon. Substantially all of its consulting revenues are
earned from an agreement with one tribe.
 
     Operation of any type of gaming on Indian land is subject to Federal, state
and tribal regulation. Changes in regulation may limit or otherwise affect
Indian gaming and therefore could have a material adverse effect on the
operations of the Company. As discussed in Note G, there are various lawsuits
which, if resolved in a manner adverse to Indian gaming, and pending legislation
that, if passed in the proposed form, could have a material adverse effect upon
the financial condition and operations of the Company.
 
2. BUSINESS AND BASIS OF ACCOUNTING
 
  Reorganization
 
     Effective July 1, 1994, Inland Casino Partners and its partners, Inland
Casino Corporation, a Nevada Corporation, and Eagle Edge Partners, combined to
form a new Delaware Corporation, Inland Casino Corporation. For purposes of
presentation, the financial statements for the Company are combined as if the
companies had always operated as a single entity. At the time of the
combination, the fiscal year end was changed from December 31 to June 30.
 
  Mergers
 
     On May 22, 1995, the merger of Inland Casino Corporation, a Delaware
Corporation ("Inland-Delaware"), into and with Twin Creek Exploration ("Twin
Creek"), a Utah Corporation, became effective. To effect the merger, the common
stock of Twin Creek was reverse split 1 for 100 and the shareholders of
Inland-Delaware received 11,930,406 shares, representing 95% of the shares
outstanding after the merger. The surviving company was renamed Inland Casino
Corporation (the "Company") and the year end was changed from September 30 to
June 30. This transaction was accounted for as a recapitalization using the
carryover basis of Inland-Delaware's assets and liabilities. Accordingly, the
financial statements reflect the financial condition, results of operations and
cash flows of Inland-Delaware and its predecessors, for periods prior to the
merger date and combined with Twin Creek from that date forward. Intercompany
transactions and balances have been eliminated. Since there were no assets or
liabilities of Twin Creek at the date of the merger other than a note payable of
$15,000 due to Inland-Delaware, there is no significant impact on the results of
Inland-Delaware as a result of the merger.
 
     The Company reports revenues and expenses from consulting services to
Indian tribes using the accrual method of accounting. For all periods reported
in these Financial Statements, substantially all of the Company's consulting
revenue has been generated from management and consulting services related to
the Barona Group of Capitan Grande Band of Mission Indians (the "Barona Tribe")
who operate the Barona Casino, a single Indian gaming operation located in
California.
 
3. BARONA CONSULTING AND OPERATIONS AGREEMENTS
 
     Prior to April 1, 1996, the Company managed, operated and maintained
certain gaming and food and beverage operations in California on behalf of the
Barona Tribe in accordance with the terms and conditions of a certain Gaming
Management Agreement (the "Operations Agreement") with the Barona Tribe, under a
grant of authority from the Barona General Council. The National Indian Gaming
Commission (the "NIGC") has not approved the Operations Agreement. In March
1996, the Company entered into a Consulting Agreement with the Barona Tribe with
an effective date of April 1, 1996 relating to the operations of the Barona
Casino (the "Initial Consulting Agreement"). In May 1996, after the parties
recognized an inadvertent mistake in the provision relating to consulting fees
had been made, the Company and the Barona
 
                                       31
<PAGE>   34
 
                           INLAND CASINO CORPORATION
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
Tribe agreed to an Amended and Restated Consulting Agreement (the "Barona
Consulting Agreement" or "Consulting Agreement"). In addition, the Company and
the Barona Tribe entered into a Mutual Release releasing each other from certain
rights, duties and obligations set forth in the Operations Agreement (the
"Release"). The Barona Consulting Agreement and the Release have effective dates
of April 1, 1996.
 
     The Barona Consulting Agreement provides for an initial term of three
years, with an option to extend the agreement for an additional five year
period. Under the terms of the Barona Consulting Agreement, the Barona Tribe has
the right to draw from the gross revenues of the Barona Casino an annual income
stream at least equal to the distributions received by the Barona Tribe for the
twelve month period ended December 31, 1995, and fees paid or payable to the
Company may accordingly be reduced.
 
     In March 1996, the Barona Tribe submitted the Initial Consulting Agreement
to the NIGC and in May 1996, the NIGC determined that the Initial Consulting
Agreement was not a management agreement and, therefore, not subject to NIGC
approval, and forwarded such agreement to the Bureau of Indian Affairs (the
"BIA"). The Company intends to submit the Consulting Agreement to the NIGC and
the BIA. Although there can be no assurance that the NIGC will conclude that the
Consulting Agreement is not a management agreement, the Company believes that,
based upon its prior ruling with respect to the Initial Consulting Agreement,
the NIGC will make a similar determination with respect to the Consulting
Agreement. In addition, if the BIA determines that the Initial Consulting
Agreement and/or the Consulting Agreement is subject to its review there can be
no assurance that such Agreements will be approved by the BIA. Failure to
approve the Initial Consulting Agreement or the Consulting Agreement may have a
material adverse effect on the business and financial condition of the Company.
 
4. DEFERRED CONTRACT COSTS
 
     Pursuant to oral agreements with the Barona Tribe, the Company has agreed
to fund, or to arrange acceptable financing for, the construction of facility
improvements, furniture and equipment, the establishment of initial working
capital and the losses, if any, of the Barona Casino's operations. Because the
Barona Tribe will not allow its land to be encumbered, and has not assumed any
financial liability for costs associated with developing the Barona Casino, the
Company assumed all liability for these obligations. The Company capitalized
those costs incurred as deferred contract costs, since (i) the Company had the
ultimate responsibility for the costs incurred, and (ii) the Company believes
that these costs are fully recoverable over the life of the Operations Agreement
and the Consulting Agreement, through receipt of fee income from the Barona
Casino. However, given the nature of the asset, if the recoverability is
determined to be not probable, the Company will expense the unamortized portion.
 
     On an ongoing basis, management reviews the valuation and recoverability of
the unamortized deferred contract costs. As part of this review, the Company
estimates the discounted present value of the future projected net income
generated by the Barona Casino and the resulting revenue to the Company to
determine whether impairment has occurred.
 
     Through March 31, 1996, amortization of these deferred costs was calculated
as the greater of amortization using (i) the straight-line method over the
remaining term of the Operations Agreement or (ii) an accelerated method,
whichever is greater. The accelerated amortization was equal to the excess of
fees earned over 30% of Casino operating income. Beginning April 1, 1996,
amortization of these deferred costs is calculated using the straight-line
method over the remaining term of the Consulting Agreement. Under the terms of
the Operations Agreement and the Consulting Agreement, the title to the Casino
facilities, furniture and equipment rests solely with the Barona Tribe, unless
the Barona Tribe agrees otherwise.
 
     The Consulting Agreement can be terminated by the Barona Tribe for any
material breach by the Company, as defined in the agreement. Management is not
aware of any material breach of the Consulting Agreement.
 
                                       32
<PAGE>   35
 
                           INLAND CASINO CORPORATION
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
5. REVENUE RECOGNITION
 
     Contract revenue is recorded as earned under the terms of the Operations
Agreement through March 1996, and as earned under the terms of the Consulting
Agreement thereafter.
 
6. CREDIT CONCENTRATIONS, CASH AND CASH EQUIVALENTS
 
     For purposes of the statement of cash flows, cash equivalents include time
deposits and all highly liquid debt instruments with original maturities of
three months or less.
 
     The Company maintains its cash in bank deposit and checking accounts which,
at times, may exceed federally insured limits. The Company has not experienced
any losses in such accounts.
 
7. FURNITURE AND EQUIPMENT
 
     Furniture and equipment are stated at cost. Depreciation is being provided
by the straight-line method over the estimated useful lives (five years) of the
assets.
 
8. ADVANCES OF FUTURE CONSULTING FEES
 
     Advances of future consulting fees represent payments made to the Company
in excess of consulting fees earned. The advances were used to fund the cost of
improvements to the Barona Casino. Advances are repaid through reduction in
payment of future consulting fees and are anticipated to be paid within one year
of the advance. These advances are unsecured, noninterest bearing and are due on
demand.
 
9. DEFERRED INCOME TAXES
 
     The Company has adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes", (SFAS No. 109), which required a change from
the deferred method to the asset and liability method of accounting for income
taxes. Under SFAS No. 109, deferred income taxes are recognized for the tax
consequences of "temporary differences" by applying enacted statutory tax rates
applicable to future years to differences between the financial statement
carrying amounts and the tax bases of existing assets and liabilities. The
effect of a change in tax rates is recognized in earnings in the period that
includes the enactment date.
 
     The deferred income tax asset results principally from California franchise
taxes which are deductible when paid and from the excess of accelerated
amortization of consulting agreement acquisition costs for financial statement
purposes over that allowed for income tax purposes.
 
10. INCOME PER SHARE
 
     Income per common and common equivalent share for the years ended June 30,
1995 and 1996 is calculated using the weighted average number of shares
outstanding during the year. Equivalent shares are those issuable upon the
assumed exercise of stock options reflected under the treasury stock method
using the average market price of the Company's shares during the year.
 
11. RECLASSIFICATIONS
 
     Certain items in the 1995 financial statements have been reclassified to
conform with the 1996 presentation.
 
12. USE OF ESTIMATES
 
     In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
 
                                       33
<PAGE>   36
 
                           INLAND CASINO CORPORATION
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
13. FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     The financial statements include various estimated fair value information
as at June 30, 1996, as required by Statement of Financial Accounting Standards
No. 107, "Disclosures about Fair Value of Financial Instruments", (SFAS No.
107). Such information, which pertains to the Company's financial instruments,
is based on the requirements set forth in that Statement and does not purport to
represent the aggregate net fair value of the Company.
 
     Management has determined that the estimated fair value of the Company's
financial instruments, in accordance with the requirements of SFAS No. 107,
approximates the carrying amount of such financial instruments in all material
respects as of June 30, 1996.
 
14. CURRENT ACCOUNTING PRONOUNCEMENTS
 
     In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, "Accounting for Stock-Based Compensation" which requires entities to
calculate the fair value of stock awards granted to employees; the Company is
required to comply with this disclosure requirement with its fiscal year ending
June 30, 1997. This statement provides entities with the option of either
electing to expense the fair value of employee stock-based compensation, or
continue to recognize compensation expense under existing accounting
pronouncements and provide pro forma disclosures of net income and, if
presented, earnings per share, as if the above mentioned fair value method of
accounting was used in determining compensation expense. Additionally, the
statement requires that all equity awards granted to nonemployees such as
suppliers of goods and services be recognized based on fair value. The Company
has not yet determined the effect the statement will have upon the financial
statements.
 
NOTE B -- DEFERRED CONTRACT COSTS
 
     Deferred contract costs consist of the following at June 30, 1996:
 
<TABLE>
    <S>                                                                       <C>
    Deferred contract costs under Operations and Consulting Agreements......  $13,160,953
    Less: accumulated amortization..........................................   (6,655,626)
                                                                              -----------
                                                                              $ 6,505,327
                                                                              ===========
</TABLE>
 
NOTE C -- FURNITURE AND EQUIPMENT
 
     Furniture and equipment consist of the following at June 30, 1996:
 
<TABLE>
    <S>                                                                         <C>
    Furniture.................................................................  $ 94,908
    Equipment.................................................................    87,705
    Vehicle...................................................................    20,424
                                                                                --------
                                                                                 203,037
    Accumulated depreciation..................................................   (35,824)
                                                                                --------
                                                                                $167,213
                                                                                ========
</TABLE>
 
NOTE D -- STOCK REPURCHASE/LONG-TERM DEBT
 
     In March 1996, the Company entered into an agreement to repurchase
1,908,865 shares of its own common stock and an outstanding option to purchase
894,780 shares of common stock from Jack R. Smith, a former executive officer,
director, and principal shareholder for consideration totaling $1,400,000 and
continued benefits for the three-year period ended February 1999. The purchase
price consisted of a $500,000 cash payment and issuance of a $900,000, 7%
unsecured promissory note, payable in three equal installments of $342,947. In
addition, if the Company's common stock reaches certain levels during
measurement periods prior to March 1998 and 1999 Mr. Smith will be entitled to
up to $250,000 for each measurement period.
 
                                       34
<PAGE>   37
 
                           INLAND CASINO CORPORATION
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE E -- LINE OF CREDIT
 
     In October 1995, the Company negotiated a credit facility with a bank which
allows for total borrowings of $2 million. The credit agreement expires on
October 10, 1998, and is secured by all of the Company's personal property,
including but not limited to bank deposits, accounts receivable, inventory and
equipment. The agreement contains various covenants which must be met or waived
during any borrowing including restrictive covenants which require, among other
things, the maintenance of certain financial ratios, maintenance of $1,000,000
in the bank's deposit accounts (during any period in which the Company is
utilizing the facility), a limitation on the incurrence of future indebtedness
and a prohibition on declaring or making any cash dividends. As of June 30,
1996, the Company had no outstanding borrowings under this credit facility.
Under the terms of this agreement, amounts drawn on the line will convert into
notes payable over a number of months (the exact number of which depend upon the
date of disbursement) with interest at prime plus 2%. All of such notes become
due and payable no later than October 10, 1998. In connection with this credit
facility, the bank received an immediately exercisable warrant to purchase
40,000 shares of the Company's common stock, subject to certain anti-dilution
provisions, at an initial exercise price of $5. The warrant expires on October
10, 2000.
 
NOTE F -- INCOME TAXES
 
     Deferred taxes are comprised of the following at June 30, 1996:
 
<TABLE>
    <S>                                                                         <C>
    Excess of financial statement amortization over tax of deferred contract
      costs under Operations and Consulting Agreements......................    $315,192
    California franchise taxes..............................................      72,012
    Charitable Contributions................................................      68,903
    Allowance for doubtful accounts.........................................       6,019
                                                                                --------
      Deferred tax asset....................................................    $462,126
                                                                                ========
</TABLE>
 
     The composition of the Company's income tax provision is as follows:
 
<TABLE>
<CAPTION>
                                                                     YEAR ENDED JUNE 30,
                                                                  -------------------------
                                                                     1995           1996
                                                                  ----------     ----------
    <S>                                                           <C>            <C>
    Current tax:
      Federal...................................................  $2,882,000     $  404,701
      State.....................................................     771,000        178,165
                                                                  ----------     ----------
              Current tax.......................................   3,653,000        582,866
                                                                  ----------     ----------
    Deferred tax:
      Federal...................................................    (569,000)       391,558
      State.....................................................     (92,000)        45,576
                                                                  ----------     ----------
              Deferred tax......................................    (661,000)       437,134
                                                                  ----------     ----------
    Income tax provision........................................  $2,992,000     $1,020,000
                                                                  ==========     ==========
</TABLE>
 
     A reconciliation from the U.S. statutory federal income tax rate to the
effective tax rate follows:
 
<TABLE>
<CAPTION>
                                                                              YEAR ENDED
                                                                               JUNE 30,
                                                                             -------------
                                                                             1995     1996
                                                                             ----     ----
    <S>                                                                      <C>      <C>
    U.S. Federal statutory rate............................................  34.0%    34.0%
    State income taxes.....................................................   6.0      6.0
    Other..................................................................   2.7      1.2
                                                                             ----     ----
                                                                             42.7%    41.2%
                                                                             ====     ====
</TABLE>
 
                                       35
<PAGE>   38
 
                           INLAND CASINO CORPORATION
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE G -- COMMITMENTS AND CONTINGENCIES
 
  Lease Obligations
 
     During fiscal 1996 the Company entered into operating leases for
facilities, vehicles and equipment which expire at various dates through fiscal
2001. The minimum future payments due under operating lease contracts at June
30, 1996 for the years ending June 30 are as follows:
 
<TABLE>
    <S>                                                                         <C>
    1997......................................................................  $132,173
    1998......................................................................    26,988
    1999......................................................................     7,168
    2000......................................................................     5,736
    2001......................................................................     1,603
                                                                                --------
    Net minimum lease payments................................................  $173,668
                                                                                ========
</TABLE>
 
     Rental expense for the years ended June 30, 1995 and 1996 were $72,647 and
$136,235, respectively.
 
  Contingent Lease Obligations
 
     The Company has guaranteed lease obligations of the Barona Casino per the
Agreement. The payments are allowable as operating expenses of the Barona
Casino.
 
     The minimum future payments due under these contracts for the fiscal years
ending June 30 are as follows:
 
<TABLE>
<CAPTION>
                                                            CAPITAL     OPERATING      TOTAL
                                                            LEASES       LEASES       LEASES
                                                            -------     ---------     -------
    <S>                                                     <C>         <C>           <C>
    1997..................................................  $ 8,629      $31,687      $40,316
    1998..................................................    8,629       22,937       31,566
    1999..................................................    6,267       13,347       19,614
    2000..................................................                 6,262        6,262
    2001..................................................                   458          458
                                                            -------      -------      -------
    Net minimum lease payments............................   23,525      $74,691      $98,216
                                                                         =======      =======
    Less amounts representing interest....................   (6,546)
                                                            -------
    Present value of net minimum lease payments under
      capital leases......................................  $16,979
                                                            =======
</TABLE>
 
     The Company has guaranteed automobile lease payments on behalf of certain
employees. Assuming that all future payments were to be made by the Company
under this commitment, the Company would be obligated to pay, respectively, as
follows:
 
<TABLE>
    <S>                                                                         <C>
    1997....................................................................    $ 68,819
    1998....................................................................      56,454
    1999....................................................................      26,202
    2000....................................................................       4,981
                                                                                --------
                                                                                $156,456
                                                                                ========
</TABLE>
 
  Litigation and Industry Matters
 
     Indian gaming is the subject of numerous lawsuits in various court
jurisdictions at both Federal and State levels. These court cases are attempting
to define the permissible gaming activities on Indian reservations, the states'
right or limitations on control of gaming, the rights' of the tribes to compel
the states to negotiate compacts with them, and numerous other issues. The
Barona Tribe is not a party to these cases nor is the
 
                                       36
<PAGE>   39
 
                           INLAND CASINO CORPORATION
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
Barona Reservation within the jurisdiction of certain courts in which many of
these cases will be decided, therefore, the impact, if any, on the operations of
the Barona Casino cannot be determined at this time.
 
     The impact of decisions in various cases, however, could have a material
adverse effect on the operations of Barona Casino and Inland Casino Corporation
when decided. Specifically, current cases are addressing the legality of
electronic gaming equipment and certain card games in California (currently used
in the Barona Casino) and the enforcement rights applicable to Federal and State
governments. Various courts have ruled in different cases, or in different
hearings on the same case, both in the States' and the Tribes' favor on the same
or similar issues. There are appeals remaining in a number of cases and other
cases may arise. Until there are definitive rulings by the courts, the legality
of the gaming activities will not be known.
 
     On June 30, 1994, the U. S. Attorney of the Southern District of California
announced a verbal understanding with a number of Southern California Indian
tribes, including the Barona Tribe; that would allow the Barona Tribe to
continue to operate without expansion of gaming activities until one or more of
the following occurs:
 
     - A compact with the State of California is negotiated or the Secretary of
       the Interior expressly authorizes gaming, such as certain card or
       electronic/video gaming, which have not been previously addressed,
 
     - Entry of final judgments and exhaustion of all appellate remedies in
       certain cited suits pending before federal courts,
 
     - Enactment of federal legislation that authorizes the operation of the
       electronic/video games at issue without a tribal-state compact,
 
     - Amendment of the NIGC's regulations to include the electronic/video games
       within the definition gaming or permissible technologic aids thereto
       which are not subject to State compact, or
 
     - Material breach of the understanding by the tribes.
 
     Management is not aware of any violation of the verbal understanding by the
Barona Tribe or any other Indian tribe which is a party to such understandings.
 
     The Company is also subject to claims and lawsuits which arise in the
ordinary course of business. The Company does not anticipate any material losses
with respect to such existing or pending claims and lawsuits.
 
NOTE H -- STOCK OPTIONS
 
     In 1994, the Board of Directors and shareholders approved a Stock Option
Plan (the "1994 Plan") under which 27,838 Incentive Stock Options and 41,756
Nonstatutory Stock Options were granted. Upon the merger of ICC into and with
Twin Creek on May 22, 1995, the 1994 Plan was terminated but all options
outstanding under the plan were assumed by the Company, and are immediately
exercisable.
 
     In 1995, the Board of Directors and the shareholders of the Company
approved the Company's 1995 Stock Option Plan (the "1995 Plan"). Under the terms
of the 1995 Plan, options for up to 4,000,000 shares may be granted. Shares
covered by options which terminate without exercise are available for
reissuance. Options may be issued to employees, consultants and directors of the
Company either as (i) Incentive Stock Options; (ii) Nonstatutory Stock Options;
or (iii) as combinations of both types of options.
 
     Stock option grants are determined by the Stock Option Committee of the
Board of Directors. Options granted to any single individual cannot exceed
900,000 shares over any period of three consecutive fiscal years. Except under
certain limited circumstances noted below, Incentive Stock Options have a
maximum term of ten years and must have an exercise price of not less than fair
market value on the date of grant. Options granted under the 1995 Plan are
generally exercisable ratably over a four and one-half or five year period
following the date of grant.
 
     Any officer or key employee who owns more than 10% of the Company's common
stock may be granted an Incentive Stock Option if the exercise price is at least
110% of the fair market value at the date of grant,
 
                                       37
<PAGE>   40
 
                           INLAND CASINO CORPORATION
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
and such option is not exercisable after five years from date of grant.
Nonstatutory Options have a maximum term of ten years and must have an exercise
price of not less than 85% of the fair market value on the date of grant.
 
     Changes in stock options outstanding were as follows:
 
<TABLE>
<CAPTION>
                                                                 OPTIONS       OPTION PRICE
                                                               OUTSTANDING       PER SHARE
                                                               -----------     -------------
    <S>                                                        <C>             <C>
    Outstanding at July 1, 1994..............................          --           --
      Granted................................................      69,594          $1.00
      Cancelled..............................................          --           --
                                                                ---------
    Outstanding at June 30, 1995.............................      69,594
      Granted................................................   1,753,306      $3.50 -- $4.00
      Cancelled..............................................     (92,278)         $3.50
                                                                ---------
    Outstanding at June 30, 1996.............................   1,730,622
                                                                =========
</TABLE>
 
     There were no options exercised as of June 30, 1996.
 
NOTE I -- RELATED PARTY TRANSACTIONS
 
     In May 1995, payments of $40,000 and $193,000 were paid to two principal
shareholders for consulting services provided during the year ended June 30,
1995 under a verbal agreement with Inland.
 
     In March 1996, the Company repurchased 1,908,865 shares of its common stock
from Jack R. Smith, an executive officer, director and principal shareholder of
the Company pursuant to the terms of a Stock Purchase and Settlement and Release
Agreement dated February 23, 1996. The terms of such repurchase are described in
Note D herein.
 
NOTE J -- SUBSEQUENT EVENTS
 
     On September 30, 1996, pursuant to a Stock Purchase and Settlement and
Release Agreement, dated September 27, 1996 (the "Stock Purchase Agreement"), by
and among Jonathan Ungar, Alan Henry Woods, and the Company, the Company
purchased 3,424,913 shares of its common stock from Mr. Ungar and 3,353,331
shares of its common stock from Mr. Woods. The terms of the Stock Purchase
Agreement include (i) a cash payment of $200,000 upon closing, (ii) the issuance
of unsecured promissory notes in the principal amount of $3,500,000, with
interest at a rate of 10%, payments of interest only for the first three years,
followed by three equal annual installments of principal repayment, with
interest on the remaining balance, commencing September 30, 1997, (iii) a
contingent obligation (the "Initial Contingent Obligations") to issue a total of
$9,856,488 in unsecured promissory notes ($4,981,276 in principal amount to Mr.
Ungar and $4,875,212 in principal amount to Mr. Woods) including $2,000,000 in
principal amount of notes each year for four years, and $1,856,488 in principal
amount of notes to be issued in a fifth year, each note with interest at 10%,
payments of interest only for the first three years, followed by three equal
annual installments of principal plus interest on the remaining principal
balance, and (iv) another contingent obligation to issue an additional
$3,000,000 principal amount ($1,515,000 to Mr. Ungar, $1,485,000 to Mr. Woods)
in unsecured promissory notes (or cash, if the Company has closed a firm
commitment underwritten public offering of securities of not less than $35
million prior to the contingencies being met) when and if certain conditions are
met, with interest at the then "preferred" or "prime" rate of interest charged
to the Company by the Company's principal bank, with interest only for three
years from date of issuance, followed by two equal annual installments of
principal, plus interest on the remaining balance.
 
     The obligations to issue the Initial Contingent Obligations (i.e.,
$2,000,000 in notes for four years and $1,856,488 in notes for a fifth year) are
contingent upon the Company's retained earnings balance being at least
$4,000,000 for the fiscal year ending immediately prior to the date the notes
are to be issued. Dividends paid by the Company and certain other payments, if
any, are not to be added back to the retained earnings
 
                                       38
<PAGE>   41
 
                           INLAND CASINO CORPORATION
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
balance for purposes of this contingency calculation. The period for determining
the Company's obligation to issue each of the $2,000,000 and $1,856,488 in
principal amount of notes is an eight year period commencing with the fiscal
year ending June 30, 1997. If the $4,000,000 retained earnings test is not met
in one year, the Company is not obligated to issue the notes in that year.
However, the test is to be made each year for eight successive years commencing
with the fiscal year ending June 30, 1997, but each year can be used only once
during the eight year period, and only five out of the eight years may be used.
The Second Contingent Obligation is subject to the following conditions: (i) the
Barona Tribe enters into a Class III Gaming Compact (the "Compact") with the
State of California which permits the operation of video gaming machines at the
Barona Casino in San Diego County; (ii) at the time that the Barona Tribe enters
into the Compact, the Company has a consulting agreement or similar contractual
arrangement; and (iii) consulting fees paid to the Company by the Barona Tribe
relating to the Barona Casino for any consecutive 12-month period within five
years after the Barona Tribe has entered into the Compact, equals to or exceeds
one and one-half times such consulting fees for the year ended June 30, 1996.
The Company intends to record as an additional cost of the repurchase of its
common stock each contingent obligation as each contingency is met.
 
     All payments pursuant to the Stock Purchase Agreement are further subject
to compliance with certain state law provisions and the Company's Articles of
Incorporation concerning repurchase transactions.
 
     The proforma effect on stockholders' equity of the Company as if the
repurchase of shares discussed above had occurred on June 30, 1996 is as
follows: $3.5 million increase in long-term debt and a $3.7 million decrease in
stockholders equity.
 
                                       39
<PAGE>   42
 
ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE
 
     During Twin Creek's fiscal year ended September 30, 1994 and the subsequent
period up to May 22, 1995, the effective date of the Merger, Twin Creek's firm
of independent accountants was Tanner + Co. The Board of Directors of the
Company immediately following the Merger dismissed Tanner + Co. and appointed
Grant Thornton LLP ("Grant Thornton") as the Company's firm of independent
accountants for future periods. Grant Thornton also was engaged by ICC II to act
as its independent accounting firm for its fiscal year ended June 30, 1995.
Tanner + Co. is referred to herein as the "Prior Accountant."
 
     No adverse opinion or disclaimer of opinion was included in the Prior
Accountant's report during the Company's two most recent fiscal years or, within
the past two calendar years, or any other fiscal period applicable to the
Company (respectively, the "Applicable Period") and no opinion was qualified or
modified as to uncertainty, audit scope or accounting principles during the
Applicable Period.
 
     During the Applicable Period, Twin Creek (prior to the Merger) and the
Company (from the time of the Merger) did not have any disagreements with the
Prior Accountant as to matters of accounting principles or practices, financial
statement disclosure or auditing scope or procedures, which disagreement, if not
resolved to the satisfaction of the Prior Accountant, would have caused it to
make reference to such disagreement in connection with its reports. The Prior
Accountant has been provided a copy of the disclosures relating to this Item and
has furnished a letter addressed to the Securities and Exchange Commission
stating that it agrees with the disclosures concerning it contained herein. Such
letter is included as Exhibit 16.1 to this Report.
 
                                    PART III
 
ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
         PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
 
     The information set forth under the captions "ELECTION OF DIRECTORS," and
"TRANSACTIONS WITH MANAGEMENT AND OTHERS -- Compliance with Section 16(a) of the
Exchange Act" in Inland Casino's definitive proxy statement (the "Proxy
Statement") for the Annual Meeting scheduled to be held in December 1996 is
incorporated herein by reference. The Proxy Statement will be filed with the
U.S. Securities and Exchange Commission (the "Commission") not later than 120
days after the close of Fiscal 1996.
 
ITEM 10.  EXECUTIVE COMPENSATION
 
     The information set forth under the captions "COMPENSATION OF EXECUTIVE
OFFICERS" and "INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE
BOARD -- Compensation of Directors" in the Proxy Statement is incorporated
herein by reference.
 
ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     The information set forth under the caption "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT" in the Proxy Statement is incorporated herein
by reference.
 
ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     The information set forth under the caption "TRANSACTIONS WITH MANAGEMENT
AND OTHERS" in the Proxy Statement is incorporated herein by reference.
 
                                       40
<PAGE>   43
 
ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K
 
     (A) LIST OF EXHIBITS.
 
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C>           <S>
    3.1       Amended and Restated By-laws of the Company (formerly known as Twin Creek
              Exploration Co., Inc.), previously filed as Exhibit 3.1 to the Company's Quarterly
              Report on Form 10-QSB for the Quarterly Period Ended March 31, 1996, filed with
              the Commission on May 17, 1996 (File No. 0-11532) (the "March 1996 Quarterly
              Report"), which is hereby incorporated herein by reference.

   MATERIAL CONTRACTS RELATING TO MANAGEMENT COMPENSATION PLANS OR ARRANGEMENTS
   
   10.1       Corporate Guaranty between ICC II and Arthur R. Pfizenmayer, dated February 1,
              1995, previously filed as Exhibit 10.1 to the Company's Annual Report on Form
              10-KSB for the Fiscal Year Ended June 30, 1995, filed with the Commission on
              October 12, 1995 (File No. 0-11532) (the "Fiscal 1995 Annual Report"), which is
              hereby incorporated herein by reference.
   10.2       Corporate Guaranty between the Company and Fritz Opel, dated August 1, 1995.
   10.3       1994 Stock Option Plan of ICC II, previously filed as Exhibit 10.2 to the Fiscal
              1995 Annual Report, which is hereby incorporated herein by reference.
   10.4       The Company's 1995 Stock Option Plan, previously filed as Appendix A to the
              Company's Proxy Statement dated October 30, 1995 filed with the Commission on
              October 30, 1995 (File No. 0-11532) (the "1995 Proxy Statement"), which is hereby
              incorporated herein by reference.
   10.5       Verbal agreement between ICC II and Jonathan Ungar entered into in May 1995,
              pursuant to which ICC II paid $40,000 to Mr. Ungar in exchange for market research
              consulting services in the United States, previously filed as Exhibit 10.3 to the
              Fiscal 1995 Annual Report, which is hereby incorporated herein by reference.
   10.6       Verbal agreement between ICC II and Alan Henry Woods entered into in May 1995,
              pursuant to which ICC II paid $193,000 to Mr. Woods in exchange for market
              research consulting services in overseas markets, previously filed as Exhibit 10.4
              to the Fiscal 1995 Annual Report, which is hereby incorporated herein by
              reference.
   
   OTHER MATERIAL CONTRACTS

   10.7+      Amended and Restated Consulting Agreement by and between the Company and the
              Barona Group of Capitan Grande Band of Mission Indians (the "Barona Tribe"), dated
              as of April 29, 1996.
   10.8       Mutual Release by and between the Company and the Barona Tribe dated as of March
              27, 1996.
   10.9       Siletz Marketing Consulting Agreement by and between the Company and the
              Confederated Tribes of Siletz Indians of Oregon, dated May 28, 1996.
   10.10+     Consulting Agreement between the Klamath Tribes and the Company, dated June 1,
              1996.
   10.11      Assignment and Assumption of Lease between ICC II and Winland Corporation, dated
              as of January 1, 1995, previously filed as Exhibit 10.6 to the Fiscal 1995 Annual
              Report which is hereby incorporated herein by reference.
   10.12      Credit Terms and Conditions dated October 10, 1995 by and between Inland Casino
              Corporation and Imperial Bank.
   10.13      Note dated October 10, 1995 of Inland Casino Corporation to Imperial Bank, and
              Addendum to such Note.
   10.14      General Security Agreement dated October 10, 1995 by and between Inland Casino
              Corporation and Imperial Bank.
</TABLE>
 
                                       41
<PAGE>   44
 
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C>           <S>
   10.15      Warrant to Purchase Stock dated October 10, 1995 issued by Inland Casino
              Corporation to Imperial Bank.
   10.16      Amended and Restated Gaming Machine Location Agreement by and between SSK Game
              Enterprises and the Company, dated December 1, 1995.
   10.17      Amended and Restated Gaming Machine Location Agreement between Zino, Inc. and the
              Company, dated December 1, 1995.
   10.18      Amended and Restated Gaming Machine Location Agreement between American Heritage
              Amusement Corporation and the Company, dated December 1, 1995.
   10.19      Lease Agreement between Sprung Instant Structures, Inc. and Inland Casino Partners
              (d/b/a Barona Casino), dated December 14, 1993, previously filed as Exhibit 10.10
              to the Fiscal 1995 Annual Report, which is hereby incorporated herein by
              reference.
   10.20      Stock Purchase and Settlement and Release Agreement by and between the Company and
              Jack R. Smith dated February 23, 1996, previously filed as Exhibit 10.1 to the
              March 1996 Quarterly Report, which is hereby incorporated herein by reference.
   10.21      Promissory Note dated March 4, 1996 in favor of Jack R. Smith in the principal
              amount of $900,000, previously filed as Exhibit 10.2 to the March 1996 Quarterly
              Report, which is hereby incorporated herein by reference.
   10.22      Stock Purchase and Settlement and Release Agreement by and among the Company,
              Jonathan Ungar and Alan Henry Woods, dated September 27, 1996, previously filed as
              Exhibit 2.1 to the Company's Current Report on Form 8-K dated October 1, 1996,
              filed with the Commission on October 1, 1996 (File No. 0-11532) (the "October 1,
              1996 Current Report"), which is hereby incorporated herein by reference.
   10.23      Promissory Note dated September 30, 1996 in favor of Jonathan Ungar in the
              principal amount of $1,768,550, previously filed as Exhibit 2.2 to the October 1,
              1996 Current Report, which is hereby incorporated herein by reference.
   10.24      Promissory Note dated September 30, 1996 in favor of Alan Henry Woods in the
              principal amount of $1,731,450, previously filed as Exhibit 2.3 to the October 1,
              1996 Current Report, which is hereby incorporated herein by reference.
   10.25      Talent Agreement dated October 30, 1995 by and between Kenny Rogers Productions
              and the Company.
   16.1       Letter of Tanner + Co. regarding change in certifying accountant.
   27         Financial Data Schedule.
</TABLE>
 
---------------
+ Confidential treatment has been requested with respect to certain portions of
  this Agreement pursuant to Rule 24b-2 under the Securities Exchange Act of
  1934, as amended. Such portions of the Agreement have been omitted and filed
  separately with the Commission.
 
     (B) REPORTS ON FORM 8-K
 
     No reports on Form 8-K were filed with the Commission during the Company's
fourth quarter of the fiscal year covered by this Form 10-KSB.
 
                                       42
<PAGE>   45
 
                                   SIGNATURES
 
     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
                                          INLAND CASINO CORPORATION
                                          a Utah corporation
 
Dated: October 14, 1996                   By: /s/ L. DONALD SPEER, II
                                            ----------------------------------
                                            L. Donald Speer, II
                                            Chairman of the Board and
                                            Chief Executive Officer
                                            (Principal Executive Officer)
 
     In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
 
<TABLE>
<S>                                              <C>


/s/ L. DONALD SPEER, II                          October 14, 1996
---------------------------------------------
L. Donald Speer, II,
Chairman of the Board, Chief Executive
Officer and Director 
(Principal Executive Officer)


/s/ ARTHUR R. PFIZENMAYER                        October 14, 1996
---------------------------------------------
Arthur R. Pfizenmayer
President, Chief Operating Officer and
Director


/s/ ANDREW B. LAUB                               October 14, 1996
---------------------------------------------
Andrew B. Laub
Executive Vice President, Finance and
  Development and Director


/s/ G. FRITZ OPEL                                October 14, 1996
---------------------------------------------
G. Fritz Opel
Executive Vice President, Marketing and
  Consulting Services and Director


/s/ DUANE M. EBERLEIN                            October 14, 1996
---------------------------------------------
Duane M. Eberlein
Vice President, Chief Financial Officer,
  Secretary and Director (Principal Financial
  and Accounting Officer)


---------------------------------------------
Jana McKeag
Vice President, Governmental Relations
  and Director


---------------------------------------------
Forrest J. Gerard
Director


/s/ CORNELIUS E. SMYTH                           October 14, 1996
---------------------------------------------
Cornelius E. ("Neil") Smyth
Director
</TABLE>
 
                                       43
<PAGE>   46
 
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
                                                                                      SEQUENTIALLY
EXHIBIT                                                                               NUMBERED
  NO.                                   DESCRIPTION                                     PAGE
--------  ------------------------------------------------------------------------    --------
<S>       <C>                                                                         <C>
 3.1      Amended and Restated Bylaws of the Company (formerly known as Twin Creek
          Exploration Co., Inc.), previously filed as Exhibit 3.1 to the Company's
          Quarterly Report on Form 10-QSB for the Quarterly Period Ended March 31,
          1996, filed with the Commission on May 17, 1996 (File No. 0-11532) (the
          "March 1996 Quarterly Report"), which is hereby incorporated herein by
          reference.
MATERIAL CONTRACTS RELATING TO MANAGEMENT COMPENSATION PLANS OR ARRANGEMENTS.
10.1      Corporate Guaranty between ICC II and Arthur R. Pfizenmayer, dated
          February 1, 1995, previously filed as Exhibit 10.1 to the Company's
          Annual Report on Form 10-KSB for the Fiscal Year Ended June 30, 1995,
          filed with the Commission on October 12, 1995 (File No. 0-11532) (the
          "Fiscal 1995 Annual Report"), which is hereby incorporated herein by
          reference.
10.2      Corporate Guaranty between the Company and Fritz Opel, dated August 1,
          1995.
10.3      1994 Stock Option Plan of ICC II, previously filed as Exhibit 10.2 to
          the Fiscal 1995 Annual Report, which is hereby incorporated herein by
          reference.
10.4      The Company's 1995 Stock Option Plan, previously filed as Appendix A to
          the Company's Proxy Statement dated October 30, 1995, filed with the
          Commission on October 30, 1995 (File No. 0-11532) (the "1995 Proxy
          Statement"), which is hereby incorporated herein by reference.
10.5      Verbal agreement between ICC II and Jonathan Ungar entered into in May
          1995, pursuant to which ICC II paid $40,000 to Mr. Ungar in exchange for
          market research consulting services in the United States, previously
          filed as Exhibit 10.3 to the Fiscal 1995 Annual Report, which is hereby
          incorporated herein by reference.
10.6      Verbal agreement between ICC II and Alan Henry Woods entered into in May
          1995, pursuant to which ICC II paid $193,000 to Mr. Woods in exchange
          for market research consulting services in overseas markets, previously
          filed as Exhibit 10.4 to the Fiscal 1995 Annual Report, which is hereby
          incorporated herein by reference.
OTHER MATERIAL CONTRACTS.
10.7+     Amended and Restated Consulting Agreement by and between the Company and
          the Barona Group of Capitan Grande Band of Mission Indians (the "Barona
          Tribe"), dated as of April 29, 1996.
10.8      Mutual Release by and between the Company and the Barona Tribe dated as
          of March 27, 1996.
10.9      Siletz Marketing and Consulting Agreement by and between the Company and
          the Confederated Tribes of Siletz Indians of Oregon, dated May 28, 1996.
10.10+    Consulting Agreement between the Klamath Tribes and the Company dated
          June 1, 1996.
10.11     Assignment and Assumption of Lease between ICC II and Winland
          Corporation, dated as of January 1, 1995, previously filed as Exhibit
          10.6 to the Fiscal 1995 Annual Report, which is hereby incorporated
          herein by reference.
10.12     Credit Terms and Conditions dated October 10, 1995 by and between Inland
          Casino Corporation and Imperial Bank.
10.13     Note dated October 10, 1995 of Inland Casino Corporation to Imperial
          Bank, and Addendum to such Note.
</TABLE>
<PAGE>   47
 
<TABLE>
<CAPTION>
                                                                                      SEQUENTIALLY
EXHIBIT                                                                               NUMBERED
  NO.                                   DESCRIPTION                                     PAGE
--------  ------------------------------------------------------------------------    --------
<S>       <C>                                                                         <C>
10.14     General Security Agreement dated October 10, 1995 by and between Inland
          Casino Corporation and Imperial Bank.
10.15     Warrant to Purchase Stock dated October 10, 1995 issued by Inland Casino
          Corporation to Imperial Bank.
10.16     Amended and Restated Gaming Machine Location Agreement by and between
          SSK Game Enterprises and the Company, dated December 1, 1995.
10.17     Amended and Restated Gaming Machine Location Agreement between Zino,
          Inc. and the Company, dated December 1, 1995.
10.18     Amended and Restated Gaming Machine Location Agreement between American
          Heritage Amusement Corporation and the Company, dated December 1, 1995.
10.19     Lease Agreement between Sprung Instant Structures, Inc. and Inland
          Casino Partners (d/b/a Barona Casino), dated December 14, 1993,
          previously filed as Exhibit 10.10 to the Fiscal 1995 Annual Report,
          which is hereby incorporated herein by reference.
10.20     Stock Purchase and Settlement and Release Agreement by and between the
          Company and Jack R. Smith dated February 23, 1996, previously filed as
          Exhibit 10.1 to the March 1996 Quarterly Report, which is hereby
          incorporated herein by reference.
10.21     Promissory Note dated March 4, 1996 in favor of Jack R. Smith in the
          principal amount of $900,000, previously filed as Exhibit 10.2 to the
          March 1996 Quarterly Report, which is hereby incorporated herein by
          reference.
10.22     Stock Purchase and Settlement and Release Agreement by and among the
          Company, Jonathan Ungar and Alan Henry Woods, dated September 27, 1996,
          previously filed as Exhibit 2 to the Company's Current Report on Form
          8-K dated October 1, 1996, filed with the Commission on October 1, 1996
          (File No. 0-11532) (the "October 1, 1996 Current Report"), which is
          hereby incorporated herein by reference.
10.23     Promissory Note dated September 30, 1996 in favor of Jonathan Ungar in
          the principal amount of $1,768,550, previously filed as Exhibit 2.2 to
          the October 1, 1996 Current Report, which is hereby incorporated herein
          by reference.
10.24     Promissory Note dated September 30, 1996 in favor of Alan Henry Woods in
          the principal amount of $1,731,450, previously filed as Exhibit 2.3 to
          the October 1, 1996 Current Report, which is hereby incorporated herein
          by reference.
10.25     Talent Agreement dated October 30, 1995 by and between Kenny Rogers
          Productions and the Company.
16.1      Letter of Tanner + Company regarding change in certifying accountant.
27        Financial Data Schedule
</TABLE>
 
---------------
+ Confidential Treatment has been requested with respect to certain provisions
  of this Agreement pursuant to Rule 24b-2 under the Securities Exchange Act of
  1934, as amended. Such portions of the Agreement have been omitted and filed
  separately with the Commission.