UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-QSB

(Mark One)

[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended September 30, 1998.

[ ]  Transition  Report  Under  Section 13 or 15(d) of the  Exchange Act for the
transition period from _________ to _________

Commission File Number:  0-21070


                 International Tourist Entertainment Corporation
                 -----------------------------------------------
        (Exact name of small business issuer as specified in its charter)

   U.S. Virgin Islands                            66-0426648
------------------------                       ----------------
(State or other jurisdiction of                (IRS Employer 
incorporation or organization)                  Identification No.)

             3562 Shepherd of the Hills Expressway Branson, MO 65616
             -------------------------------------------------------
               (Address of principal executive offices) (ZIP Code)

                                 (417) 335-3533
                                 ---------------
                           (Issuer's telephone number)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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.
                                       1. Yes    X     No
                                                ---        ---
                                       2. Yes    X     No
                                                ---        ---

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Section 12, 13, or 15 (d) of the Securities  Exchange Act of 1934 after
the distribution of securities under a plan confirmed by a court. Yes X  No
                                                                     ---   ---



The number of shares  outstanding of the issuer's common stock,  $.001 par value
as of November 13, 1998 is 7,937,638 shares.

Transitional Small Business Disclosure Format (check one):  Yes      No   X
                                                                ---      ---

<PAGE>

                 INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION

                                TABLE OF CONTENTS


<TABLE>
PART I.   FINANCIAL INFORMATION
<S>                                                                                    <C>

Item 1.   Financial Statements
                                                                                       Page Number

Condensed Balance Sheet
   September 30, 1998 ..........................................................................1


Condensed Statements of Operations
   Three Months Ended September 30,1997
   and September 30,1998........................................................................2


Condensed Statements of Cash Flows
   Three Months Ended September 30, 1997
   and September 30, 1998.......................................................................3

Notes to Condensed Financial Statements ........................................................4


Item 2.  Management's Discussion and Analysis
   or Plan of Operation.........................................................................5


Part II.   OTHER INFORMATION....................................................................6
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                   INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION

                                                 Condensed Balance Sheet
                                                       (Unaudited)


                                                                                                       September 30
                         ASSETS                                                                            1998
                                                                                                     -----------------

          Current assets:
<S>                                                                                              <C>                 
             Cash and cash equivalents                                                           $            421,312
             Receivables                                                                                       56,487
             Inventories                                                                                       98,440
             Prepaid leases-current                                                                           166,915
                                                                                                     -----------------

                         Total current assets                                                                 743,154


          Property and equipment, net                                                                       5,889,752
          Prepaid leases-non current                                                                        1,173,832
          Deposits                                                                                             34,716
                                                                                                     -----------------


                         TOTAL ASSETS                                                            $          7,841,454
                                                                                                     =================

                         LIABILITIES AND STOCKHOLDERS' EQUITY

          Current liabilities:
             Accounts payable                                                                    $            169,284
             Accrued expenses                                                                                 309,979
             Current portion of long-term debt                                                                121,380
                                                                                                     -----------------

                         Total current liabilities                                                            600,643

          Accrued lease expense                                                                               295,826
          Long-term debt                                                                                    3,522,475
          Deposits                                                                                             20,500
                                                                                                     -----------------

                         Total liabilities                                                                  4,439,444

          Stockholders' equity
             Common stock, $.001 par value.  Authorized 40,000,000
                shares, issued and outstanding 7,937,638 shares as of
                September 30, 1998                                                                              7,859
             Additional paid-in capital                                                                    10,781,155
             Accumulated deficit                                                                           (7,387,004)
                                                                                                     -----------------

                         Net stockholders' equity                                                           3,402,010
                                                                                                     -----------------

                         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                              $          7,841,454
                                                                                                     =================


                                See accompanying notes to condensed financial statements.

                                                            1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                     INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
                                           Condensed Statements of Operations
                                                       (Unaudited)



                                                                                              Three Months Ended
                                                                                                  September 30

                                                                                            1998                1997

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

       Revenue:
<S>                                                                                   <C>                  <C>    
            Theater admissions                                                        $       742,480             637,092
            Restaurant and deli                                                               807,290             824,350
            Concession and retail sales                                                       209,275             140,856
            Retail rental income                                                              112,608             111,478
                                                                                        --------------     ---------------
                                                                                            1,871,653           1,713,776
                                                                                        --------------     ---------------
       Costs and expenses:
            Direct exhibition film costs                                                      127,156              83,590
            Direct restaurant and deli costs                                                  247,280             252,278
            Direct concession and retail costs                                                 78,852              76,339
            Other operating expenses                                                          141,046             142,527
            Selling, general and administrative expenses:
                Salaries and wages                                                            531,673             446,682
                Advertising                                                                    89,430              88,271
                Depreciation and amortization                                                 101,444             100,010
                Occupancy                                                                     108,317              98,954
                Other                                                                         227,606             211,833
                                                                                        --------------     ---------------
                                                                                            1,652,804           1,500,484
                                                                                        --------------     ---------------
                Operating income                                                              218,849             213,292

       Other income (expense):
            Interest income                                                                     5,792               6,914
            Interest expense                                                                  (82,891)            (85,464)
                                                                                        --------------     ---------------
                Other income (expense), net                                                   (77,099)            (78,550)
                                                                                        --------------     ---------------

                IncomeNbeforesprovision for income taxes                              $       141,750             134,742

                Provision for Income Taxes                                                          -                   -
                                                                                        --------------     ---------------

                Net income                                                                    141,750             134,742
                                                                                        ==============     ===============

       Net income per common share                                                    $           .02                 .03
                                                                                        ==============     ===============

       Weighted average common
          shares outstanding                                                                7,937,638           4,067,000


                                See accompanying notes to condensed financial statements.
                                                            2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                     INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
       
                                         Condensed Statements of Cash Flows
                                                       (Unaudited)

                                                                                           Three Months Ended
                                                                                              September 30

                                                                                        1998                 1997
                                                                                 -----------------       -------------
Cash flows from operating activities:
<S>                                                                              <C>                     <C>    
   Net income                                                                    $         141,750             134,742
   Adjustments to reconcile net income to net cash provided
     by operating activities:
      Depreciation and amortization                                                        101,444             100,010
      Changes in operating assets and liabilities:
        Decrease (increase) in receivables and notes receivable-tenants                    (18,876)              2,149
        (Increase) in inventories                                                          (20,735)            (15,805)
        Decrease (increase) in deposits and prepaid expenses                                12,734                 (59)
        Decrease in prepaid leases                                                          41,728              41,728
        Increase (decrease) in accounts payable and other accrued expenses                 (46,902)             40,647
                                                                                 ------------------      --------------
                         Net cash provided by operating activities                         211,143             303,412

Cash flows used in investing activities:
   Capital expenditures                                                                    123,004              43,369
                                                                                 ------------------      --------------
                         Net cash used in investing activities                             123,004              43,369

Cash flows from financing activities:
   Principal payments on long-term debt                                                    (17,620)            (32,134)
   Proceeds from issuance of common stock                                                        -             349,751
                                                                                 ------------------      --------------
                        Net cash provided by (used in) financing activities                (17,620)            317,617

Increase in cash and cash equivalents                                                       70,519             577,660

Cash and cash equivalents at beginning of period                                           350,793             260,774
                                                                                 ------------------      --------------

Cash and cash equivalents at end of period                                       $         421,312             838,434
                                                                                 ==================      ==============
Supplemental cash flow information:
  Cash paid during the period for interest                                       $          82,891              85,464




                               See accompanying notes to condensed financial statements.
                                                            3
</TABLE>
<PAGE>

                 INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION

                     Notes to Condensed Financial Statements
                               September 30, 1998
                                   (Unaudited)

NOTE 1.  BASIS OF PRESENTATION

International  Tourist  Entertainment   Corporation  (the  "Company")  commenced
operations  in  October  1993.  The  accompanying  interim  condensed  financial
statements  are  unaudited,  but  in  the  opinion  of  management  reflect  all
adjustments  (consisting  of normal  recurring  accruals)  necessary  for a fair
presentation of the results for such periods.  The results of operations for any
interim period are not necessarily indicative of results for the respective full
year. These condensed  financial  statements  should be read in conjunction with
the financial  statements  and notes thereto  contained in the Company's  annual
report  of form  10-KSB  for the  year  ended  June 30,  1998 as filed  with the
Securities and Exchange Commission.



NOTE 2.  NET INCOME OR LOSS PER SHARE

In February 1997, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting Standards No. 128, Earnings per Share (SFAS 128). SFAS 128
became effective for financial statements with interim and annual periods ending
after December 15, 1997.  Accordingly,  the Company has adopted SFAS 128 for the
quarter ended December 31, 1997.

SFAS 128 establishes a different method of computing earnings per share than was
required  under the  provisions of Accounting  Principles  Board Opinion No. 15.
Under SFAS 128, entities with publicly held common stock are required to present
basic  earnings  per share and diluted  earnings per share.  Basic  earnings per
share is the amount of earnings for the period available to each share of common
stock outstanding during the reporting period. Diluted earnings per share is the
amount of  earnings  for the  period  available  to each  share of common  stock
outstanding  during the reporting  period and to each share that would have been
outstanding  assuming  the  issuance  of common  shares  outstanding  during the
period.  Basic and fully diluted earnings per share are the same for all periods
presented.



                                        4

<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

ITEC  Attractions  (the trade name of the  Company)  began  operations  with the
opening of its giant screen  theater and mall  facility in Branson,  Missouri in
October,  1993. This facility is known as the IMAX  Entertainment  Complex.  The
Complex  contains a 532 seat IMAX theater with a screen that is 62 feet tall and
83 feet wide. In addition,  the facility includes an enclosed shopping mall with
approximately  22,000  square  feet  of  retail  space.  MCFARLAIN'S,  a  family
restaurant in the mall,  has been owned and operated by the Company since May 1,
1995.  During the quarter ended March 31, 1997, the Company  acquired  assets to
begin the operation of McFarlain's  Back Porch, an express deli and bakery which
is also in the mall.  In 1994,  the company  began selling gift items related to
the films which were being exhibited in the theater or which are  representative
of the  lifestyle of the Ozark's.  This  operation has evolved into the Legacy &
Legends Gift Shop,  which is one of the Company's  most  profitable  and fastest
growing  departments.  Seventeen other shops and kiosks are currently  leased to
third parties.  In December 1997,  the Company  installed a new 35mm  projection
system,  in  addition  to its IMAX giant  screen  projection  system,  and began
showing  feature  35mm films each  evening in addition to the IMAX giant  screen
film presentations.

In March 1998, the Company  completed the construction of a 210 seat theater for
live  performances  in its Branson  complex.  The Mike Radford's - Remember When
Show performs daily in this theater.

During thew current  reporting  period the Company  completed an addition to the
McFarlain's  restaurant,  which  increased  seating by 133  people.  This is the
second  expansion  of the  restaurant  during  the last two years and brings the
total seating to over 600 people.

RESULTS OF OPERATIONS

Revenues  for the quarter  ended  September  30, 1998  increased  9.2 percent to
$1,871,653 as compared to $1,713,776  for the same quarter of the previous year.
The Company reported revenue increases in most segments of its operations,  with
the largest  increases  coming from the Legacy & Legends Gift Shop,  from ticket
sales due to the  addition  of the 35mm  feature  films and the  addition of the
Remember When Show.

Costs and  expenses  increased  10.1  percent to  $1,652,804  for the  reporting
quarter ended  September 30, 1998 as compared to expenses of $1,500,484  for the
comparable  period of the  previous  year.  Costs  and  expenses  increased  due
primarily to the increase level of business generated at the Branson facility.


                                       5
<PAGE>


The  operating  income for the  reporting  quarter  was  $218,849 as compared to
$213,292 in the same quarter of the prior year.

Interest  expense  was  $82,891  for the  quarter  ended  September  30, 1998 as
compared to $85,464 for the comparable period of the prior year.

The net income for the reporting  quarter was $141,750  compared to a net income
of $134,742 in the same  quarter of the previous  year.  It should be noted that
non-cash expenses equaled  approximately  $52,000 per month. Thus, the cash flow
from  operations  for the  three  month  period  ended  September  30,  1998 was
approximately $211,000.


LIQUIDITY AND CAPITAL RESOURCES

As of  September  30,  1998  current  assets  totaled  $743,154,  while  current
liabilities totaled $588,119.  The Company's current ratio at September 30, 1998
was 1.2 to 1.

The  Company  maintains  a $200,000  unsecured  line of credit  facility  with a
commercial  bank.  No  borrowings  were made under the line of credit during the
reporting quarter.

Going  forward,  the Company  expects to be able to finance its  operations  and
immediate capital requirements from currently available capital,  cash flow from
operations, and available sources of borrowings including the line of credit.

The Company is in the process of ensuring that its internal computer systems are
Year  2000  compliant.  The  Company  does not  expect  any  material  Year 2000
compliance issues to arise related to its primary internal business  information
systems.  With respect to third-party  providers  whose services are critical to
the Company,  the Company intends to monitor the efforts of such  providers,  as
they become Year 2000  compliant.  Management is presently not aware of any Year
2000 issues that have been  encountered by any such  third-party  providers that
could materially affect the Company's operations. Notwithstanding the foregoing,
there can be no  assurance  that the  Company  will not  experience  operational
difficulties  as a result of Year 2000 issues,  whether  arising out of internal
operations,  or caused by third-party  service providers,  which individually or
collectively could have an adverse impact on business  operations or require the
Company to incur unanticipated expenses to remedy such problems.


PART II.  OTHER INFORMATION

Item 1            Legal Proceedings
                  ------------------
                  There are no material legal  proceedings  pending to which the
                  Company  is a party or of  which  any of its  property  is the
                  subject.
                                       6
<PAGE>

Item 2.           Changes in Securities
                  ---------------------
                           The Board of Directors  of the Company,  at a meeting
                  of the Board of  Directors  on October 30,  1998,  approved an
                  extension of the Exercise Deadline for the Company's currently
                  outstanding warrants from December 31, 1998 until December 31,
                  2000.  The  warrants  were  issued  subjects  to the terms and
                  conditions of a Warrant Agreement dated February 28, 1997, and
                  all other terms of the  warrants,  except for the extension of
                  the Exercise deadline, remain unchanged.

Item 3.           Defaults Upon Senior Securities
                  -------------------------------
                  Not applicable.

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

Item 5.           Other Information
                  -----------------
                  Not applicable.

Item 6.           Exhibits and Reports on Form 8-K
                  --------------------------------
                  A) Exhibits:
                  4.1  Specimen   Certificate   for  the  common  stock  of  the
                  Registrant  (incorporated  by  reference  to the  Registrant's
                  Registration   Statement   on  Form  S-1,   Registration   No.
                  33-48630).

                  10.3  Ground  Lease  Agreement  dated  July 27,  1993  between
                  Treasure Lake R.V. Resort Camping Club, Inc. and International
                  Tourist Entertainment  Corporation  (incorporated by reference
                  to  Registration  Statement  on  Form  S-1,  Registration  No.
                  33-64132).

                  10.4 Loan  Agreement  dated July 30,  1993  secured by Deed of
                  Trust for loan from  NationsBank  (formerly  Boatman's  Bank),
                  Branson,   Missouri  to  International  Tourist  Entertainment
                  Corporation   (incorporated   by  reference  to   Registration
                  Statement on Form S-1, Registration No. 33-64132).

                  10.5  Deed of  Trust  dated  July  30,  1993  for  benefit  of
                  NationsBank Bank, Branson, Missouri (incorporated by reference
                  to  Registration  Statement  on  Form  S-1,  Registration  No.
                  33-64132).
                                       7
<PAGE>
                  10.10 Distribution  Agreement dated July 14, 1995 between Imax
                  Corporation and the Company (incorporated by reference to Form
                  10-KSB for the year ended June 30, 1996).

                  10.11 Second Amended Plan of Reorganization dated December 18,
                  1996 and Second  Amended  Disclosure  Statement  in Support of
                  Proposed Second Amended Plan of Reorganization  dated December
                  18,  1996  (incorporated  by  reference  to Form 8-K  filed on
                  February 26, 1997).

                  10.12 Third Modification Agreement dated March 1, 1997 between
                  NationsBank   Bank  of  Southern   Missouri  and  the  Company
                  (incorporated  by  reference to Form 10-KSB for the year ended
                  June 30, 1996).

                  10.13 System Lease  Agreement as amended  dated August 1, 1993
                  between  IMAX  Corporation  and the Company  (incorporated  by
                  reference to Form 10-KSB for the year ended June 30, 1996).

                  27.1 Financial Data Schedule for the 3 months ended  September
                  30, 1998.

                  B) Reports on Form 8-K :
                     ----------------------

                  On  February 2, 1998,  the Company  filed a Report on Form 8-K
                  reporting a change in its fiscal  year end to  December  31. A
                  transitional  Report for the period  ending  December 31, 1998
                  will be filed on Form 10-KSB.


                                       8

<PAGE>




                                   SIGNATURES



In accordance with the requirements of the Securities  Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


Date         11/13/98                         /s/ Paul M. Bluto
             --------                         -----------------
                                              Paul M. Bluto
                                              Chairman and
                                              Principal Financial Officer


Date         11/13/98                         /s/ Kelvyn H. Cullimore
             ---------                        ------------------------
                                              Kelvyn H. Cullimore
                                              President
                                              Chief Executive Officer
                                              Duly Authorized Officer





                                       9