UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                                450 Fifth Street
                             Washington, D.C. 20549

                                   Form 10-KSB
                                   -----------

                   ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


                    For the Fiscal Year Ended March 31, 1998
                                              --------------

                           Commission File No. 0-3858
                                           ----------

                        INTERNATIONAL LEISURE HOSTS, LTD.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)



          Wyoming                                       86-0224163
-------------------------------                ---------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

3207 S. Hardy Drive., Tempe, AZ                            85282
---------------------------------------        ---------------------------------
(Address of principal executive office)                  (Zip Code)

Issuer's telephone number, including area code (602) 829-7600
                                               --------------

1702 East Highland Avenue, Suite 312, Phoenix, Arizona 85016 (Former address)

Securities registered under Section 12(b) of the Act:

                                                       Name of each exchange
            Title of Each Class                         on which registered
            -------------------                        ---------------------

                  NONE
            -------------------                        ---------------------

Securities registered pursuant to Section 12(g) of the Act:

                           Common Stock $.01 par value
                     --------------------------------------
                                (Title of Class)
                                        1
<PAGE>
Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Securities  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 in response to Item 405 of
Regulation  S-B.  If not  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. [ X ]

State issuer's revenues for its most recent fiscal year.  $4,630,786
                                                          ----------

As of June 4, 1998,  there were 694,577 shares of common stock  outstanding  and
the aggregate market value of the common shares (based on the average of the bid
and ask price of these  shares on the NASDAQ  over the  counter  market) of ILHL
held by non-affiliates was approximately $2,023,000.
                                        2
<PAGE>
                                     PART I

                                                                            Page
                                                                            ----

Item 1.             Business                                                   4

Item 2.             Properties                                                 6

Item 3.             Legal Proceedings                                          7

Item 4.             Submission of Matters to a Vote of                         7
                    Security Holders

                                    PART II

Item 5.             Market for the Registrant's Common                         8
                    Stock and Related Security Holder Matters

Item 6.             Management's Discussion and Analysis                       9
                    of Financial Condition and Results of Operations

Item 7.             Financial Statements and Supplemental Data                13

Item 8.             Changes in and Disagreements with                         23
                    Accountants on Accounting and Financial
                    Disclosure

                                    PART III

Item 9.             Directors and Executive Officers of the                   24
                    Registrant

Item 10.            Executive Compensation                                    25

Item 11.            Security Ownership of Certain                             26
                    Beneficial Owners and Management

Item 12.            Certain Relationships and Related Transactions            27

                                    PART IV

Item 13.            Exhibits (including Exhibit Index),                       28
                    Financial Statements, Schedules and
                    Reports on Form 8-K
                                        3
<PAGE>
                                     PART I
                                     ------

Item 1.           Business

         The  statements   contained  in  this  Report  regarding   management's
anticipation  of  the  Company's  facility  completion  schedules,   quality  of
facilities, fulfillment of National Park Service requirements, consumer response
to marketing  efforts,  ability to offset  inflation  and adequacy of financing,
constitute  "forward-looking"  statements  within  the  meaning  of the  Private
Securities  Litigation  Reform Act of 1995.  Management's  anticipation is based
upon assumptions  regarding  levels of competition,  acceptance of facilities by
consumers,   favorable   weather   conditions,   ability  to  complete  facility
construction,  the market in which the Company  operates,  the  stability of the
economy and stability of the regulatory  environment.  Any of these  assumptions
could  prove  inaccurate,  and  therefore  there  can be no  assurance  that the
forward-looking information will prove to be accurate.

         International  Leisure  Hosts,  Ltd. (the  "Company")  was formed under
Wyoming law as a corporation on October 18, 1962. The principal  business of the
Company is the  ownership  and  operation of Flagg Ranch  Village  ("Flagg"),  a
full-service  resort motel and trailer  park located in the John D.  Rockefeller
Jr. Memorial Parkway approximately four miles north of Grand Teton National Park
("Grand  Teton") and two miles  south of the  southern  entrance of  Yellowstone
National Park ("Yellowstone").

         Flagg  undertook a major  redevelopment  plan in fiscal year 1995 which
included construction of a new main lodge building, plus 50 new cabin units. The
new lodge and cabins opened for business in May 1995. The lodge,  which replaced
existing  facilities,  includes a restaurant,  lounge, gift shop, grocery store,
front desk and gasoline station. The 50 new cabin units replaced 42 rustic cabin
units,  which will be removed from the property.  During  fiscal year 1996,  the
Company began  construction  of an additional 42 new cabin units,  a maintenance
building and a laundry facility.  The 42 new cabins were substantially  complete
in December  1996.  Although  these cabins were ready for  occupancy  during the
winter, certain finish items on the outside of the cabins could not be completed
until the summer of 1997. The 42 cabins will replace the Company's 54-unit motel
which was used for  visitors  through the summer of 1998 and then  converted  to
employee housing.  The new maintenance and laundry  facilities were completed by
August 31, 1997.

         During fiscal year 1998,  Flagg provided  overnight  accommodations  to
national park visitors for up to 536 persons per night via its 54-unit motel and
92 cabins.  In  addition  to the motel and cabin  units,  Flagg  operates a full
service trailer park and campground  that provides  water,  electrical and sewer
connections  for 97  recreational  vehicles,  plus 74 campsites  without utility
hookups.

         Flagg is operated as a seasonal  resort.  The two  seasons,  summer and
winter,  coincide with the opening and closing dates of the two national  parks.
The summer season,  which runs from  approximately May 15th through October 15th
of each year,  is the height of activity at Flagg.  In addition to the motel and
trailer park/campground accommodations, Flagg offers numerous services
                                        4
<PAGE>
and  activities  for the guests'  enjoyment  including  Snake River float trips,
horseback  riding  and a variety of scenic  hiking  trails.  The  summer  season
accounted for 73% and 74% respectively of Flagg's fiscal 1998 and 1997 operating
revenues.

         Prior to the recently completed redevelopment of its facilities,  Flagg
was not a destination  stop in the summer,  but instead  provided basic services
for visitors to the two  national  parks.  Most of the guests  stayed one to two
nights and the majority of the patrons represented  overflow from other national
park facilities similar to those provided by Flagg. However, with the completion
of the new main lodge and cabin units, management believes that Flagg now offers
facilities equal or superior to those of other national park concessionaires. As
a result,  Flagg intends to develop a reputation  as a destination  location for
visitors in addition to catering to guests staying only one to two nights.

         The winter  season,  which  runs from  mid-December  through  mid-March
accounted  for  27%  of  Flagg's  fiscal  1998  and  1997  operating   revenues.
Yellowstone receives  approximately 150 to 400 inches of snowfall per year which
turns the park into a winter recreational destination. The National Park Service
("NPS")  grooms,  but does not plow,  the snow on the roads inside the park. The
only modes of transportation into the park are snowmobile and snowcoach.

         Management  believes  that  Flagg's  location at the south  entrance to
Yellowstone makes it a premiere  location for winter visitors.  The road is well
plowed from  Jackson,  Wyoming to the entrance to Flagg  offering easy access to
Flagg  for  visitors.  However,  visitors  cannot  proceed  past  Flagg and into
Yellowstone unless they are traveling via snowmobile or snowcoach.  Flagg is the
only vendor  licensed  by the NPS with  unguided  snowmobile  tours at the south
entrance  to  Yellowstone.  In  fiscal  year  1998,  Flagg had a fleet of 85 new
Polaris  snowmobiles  available  to the public for rental.  In  addition,  Flagg
offers daily trips to Old Faithful  Lodge in  Yellowstone  via its  11-passenger
snowcoach. Cross-country skis and snowshoes are also available for rental.

         The Company receives its operating  authorization from the NPS. The NPS
Contract (the "Contract")  which became effective on January 1, 1990 will expire
on December 31,  2009.  The  Contract  requires  the Company to provide  certain
services to the public and  authorizes  other  services that may be offered each
year. It grants the NPS the right to regulate the adequacy, types and charges of
all services offered to the public. The terms and conditions of the Contract are
under the direct supervision of the Superintendent of Grand Teton National Park.
The fee  payable  to the NPS  under  the  Contract  is  subject  to  review  and
adjustment  every five years.  For fiscal 1998,  the fee was calculated at 2% of
the Company's gross receipts (as defined in the Contract).

         Flagg  faces  competition  from  hotels,   camping  areas  and  trailer
facilities in  Yellowstone  and in Grand Teton as well as from a large number of
hotels and motels in Wyoming,  Montana and Idaho offering some facilities  which
are similar to those  offered by Flagg.  In  addition,  the business of Flagg is
susceptible  to weather  conditions and  unfavorable  trends in the economy as a
whole.
                                        5
<PAGE>
         Business  could be  significantly  affected  negatively  depending upon
actions which might be taken by the NPS if cutbacks are made to their budget. If
the NPS decides to close  Yellowstone  for the winter  months,  then Flagg would
have to  discontinue  its  winter  operations.  NPS budget  cutbacks  could also
negatively  impact the length of the summer season and the number of visitors to
the parks and have a corresponding negative impact on Flagg revenues.

         On May 20, 1997, the Fund for Animals,  Biodiversity  Legal  Foundation
et.  al.  filed a lawsuit  against  the NPS  challenging  the  action of the NPS
regarding  winter  use of  Yellowstone  and  Grand  Teton  National  Parks.  The
plaintiffs  have asked the Federal  Court to stop winter  activities,  primarily
snowmobiling  and  related  snow  grooming,   until  environmental  impacts  are
documented.  A settlement agreement was reached that requires the NPS to prepare
an  environmental  impact  statement  ("EIS") over the next three years,  during
which time period the parks will continue  activities  under the existing winter
visitor-use  plan.  If the  NPS is  required  to  suspend  or  terminate  winter
activities in Yellowstone  National  Park,  Flagg Ranch would have to suspend or
discontinue its winter operations.


Item 2.           Properties

         The Flagg  facilities are located on approximately 70 acres in the John
D. Rockefeller Jr. Memorial Parkway. This entire tract of land which the Company
utilizes  is owned by the  Federal  Government  and its usage is governed by the
terms of the Contract.

         Proprietary rights to certain facility improvements  constructed by the
Company  (including  the new lodge and new cabin units) have been granted to the
Company  under the terms of the  Contract;  however,  the NPS may  terminate the
Contract and purchase the Company's improvements,  upon a determination that the
public interest requires Federal  Government  ownership of the improvements.  In
such  event,  the  Federal  Government  is  required  to pay a  price  for  said
improvements equal to the cost of reconstruction less depreciation.  If, however
the Contract is terminated by the Federal  Government for default by the Company
for  unsatisfactory  performance  as defined in the  Contract,  then the Federal
Government  is  required  to  pay  a  price  equal  to  the  tax  basis  of  the
improvements.  At the end of the Contract,  if the Company is not the successful
bidder on a new  contract  for the  property,  then the  Federal  Government  is
required to purchase from the Company the improvements  (including the new lodge
and new  cabin  units)  made to the  property  at a price  equal  to the cost of
reconstruction less depreciation.

         During  fiscal year 1997 the Company  incurred  costs of  approximately
$1,200,000 to substantially  complete  construction of the 42 new cabins as well
as other  related  improvements.  During  fiscal year 1998 the Company  incurred
costs of approximately $216,000 related to the above construction projects. With
the  completion  of the 42 new cabin units in December  1996,  the Company had a
total of 146 lodging units consisting of 92 cabin units and a 54-unit  riverside
motel  complex  available  during the majority of fiscal year 1998.  The 54-unit
riverside motel, which was converted to employee housing in December 1997, is no
longer available for guest lodging and the number of lodging units available for
rent is now 92.
                                        6
<PAGE>
         Under the terms of the  Contract,  the  Company is required to move the
existing 54-unit riverside motel,  which has been converted to employee housing,
from its  current  location  to the high  ground  above the river and make other
improvements  prior to December  31,  1999.  The cost is estimated to be between
$1,200,000  and  $2,100,000  depending on the extent of additional  improvements
required by the NPS. If the Company elects to build new lodging units to replace
the converted  54-unit riverside motel, the additional cost to build these units
will be between $1,000,000 and $1,200,000.  This would result in a total cost of
relocation and new construction combined of between $2,200,000 and $3,300,000.

         During  fiscal year 1997,  the Company  commenced  construction  of new
laundry and maintenance facilities,  which were completed by August 31, 1997 for
a cost of $180,000.

         On  a  temporary  basis,   during  the  summer  of  1997,   twenty-five
recreational  vehicle  sites and one tent site were not  available for rental to
the  public.  These  sites were  utilized  by  construction  workers  during the
construction period and by employees until the new employee recreational vehicle
sites  were  completed.  This  reduced  the  campground  facility  from 97 to 72
recreational  vehicle  sites and from 74 to 73 tent sites,  and thus  negatively
impacted campground revenues during fiscal year 1998.

Item 3.           Legal Proceedings

         There are no material legal proceedings against  International  Leisure
Hosts, Ltd.

Item 4.           Submission of Matters to a Vote of Security Holders

         None
                                        7
<PAGE>
                                     PART II
                                     -------

Item 5.           Market for Registrant's Common Stock and Related Security
                  Holder Matters

         International  Leisure  Hosts,  Ltd.  common stock is traded on the OTC
bulletin  board,  quoted by NASDAQ under the symbol "ILHL".  The following table
sets forth the high and low bid prices for the stock for each quarter for fiscal
years 1997 and 1998.

                                         Bid
                                         ---
                                   High        Low
                                   ----        ---
         Quarter Ended
         -------------
         June 30, 1996             5 3/8       5 3/8
         September 30, 1996        5 7/8       5
         December 31, 1996         5 1/2       4 3/4
         March 31, 1997            5 1/2       5
         June 30, 1997             6 1/8       5 1/4
         September 30, 1997        7           5 1/2
         December 31, 1997         7 1/4       6 3/8
         March 31, 1998            6 3/4       5 3/4

         Over-the-counter market quotations reflect inter-dealer prices, without
retail markup,  markdown or commissions and may not necessarily represent actual
transactions.  As of March 31,  1998 there were  694,577  shares of  outstanding
common stock and an estimated 900 shareholders of record.

         The level of trading  during fiscal year 1998 was  approximately  3,250
shares the first quarter, no shares the second quarter,  12,450 shares the third
quarter, and 2,400 shares the fourth quarter ending March 31, 1998. In addition,
120,000 shares of restricted  stock was traded in a private  transaction  during
the fourth quarter.  Trading  activity with respect to the common stock has been
limited  and the  volume  of  transactions  should  not of  itself  be deemed to
constitute an  "established  public  trading  market." A public  trading  market
having the  characteristics of depth,  liquidity and orderliness  depends on the
existence  of market  makers  as well as the  presence  of  willing  buyers  and
sellers, which are circumstances over which the Company does not have control.

         It is the policy of the  Company  not to pay  dividends  but instead to
retain earnings for use in the operation and expansion of its business.

Selected Financial Data

         The  selected  financial  data for each of the five years in the period
ended March 31, 1998 have been  derived  from the  Company's  audited  financial
statements, and should be read in conjunction
                                        8
<PAGE>
with the financial  statements  and related  notes  thereto and other  financial
information  appearing  elsewhere  herein and in Item 6. The selected  financial
data is not  required  by Form 10-KSB and is  included  herein as an  unnumbered
item.

                           FISCAL YEAR ENDED MARCH 31,
                     (In thousands except per share amounts)
                     ---------------------------------------


                                   1998      1997       1996      1995      1994
                                   ----      ----       ----      ----      ----

Total Revenues                  $ 4,631   $ 4,094    $ 3,976   $ 3,781   $ 3,694

Net Income (Loss)                   156      (113)       199       458       536

Net Income (Loss) Per Share-        .23      (.16)       .29       .66       .77
   Basic

Total Assets                      5,393     5,363      4,266     4,431     3,568

Long-Term Obligations                 0       446          0         0         0

Shareholders' Equity              3,828     3,672      3,785     3,604     3,147

Book Value Per Share               5.51      5.29       5.45      5.16      4.50


Item 6.           Management's Discussion and Analysis of Financial
                  Condition and Results of Operations

         The  Company's  net  income was  $156,000,  $.23 per share for the year
ended March 31, 1998. This compares to a net loss of $113,000, ($.16) per share,
in 1997 and net income of $199,000, $.29 per share, in 1996. The primary factors
contributing  to the  $269,000  increase in 1998 net income were the  relatively
mild winter weather  conditions in 1998 compared to 1997 which resulted in fewer
airport,  road and national park closures  plus the increased  costs  associated
with the  construction  and  initial  start up of the 42 new cabin units in 1997
were not duplicated in 1998.  Changes in the Company's revenues and expenses for
the fiscal years 1998 and 1997 are  summarized  below.  All  references to years
represent fiscal years ended March 31.

         Total revenues for 1998 increased by $538,000 or 13% over 1997. Of this
increase,  $295,000 was from lodging,  $74,000 from food  service,  $58,000 from
float trip revenue,  $25,000 from trail ride revenue,  $165,000 from  snowmobile
revenue,  $38,000 from snowcoach revenue and $2,000 from transportation revenue.
Decreases of $52,000 in gift shop sales,  $35,000 in grocery store sales, $1,000
in  interest  income,  $17,000 in gasoline  sales and  $15,000 in  miscellaneous
revenue partially offset the above increases. The increase in lodging revenue is
mainly  attributable  to the increase in total number of rental units  available
during the summer season from 104 in fiscal 1997 to 146 in
                                        9
<PAGE>
fiscal 1998. The increased number of guests contributed to the increases in food
service,  trail ride and float trip revenue.  Decreases in gift shop and grocery
store revenue is mainly  attributable to a higher than normal employee  turnover
in those areas which resulted in less  continuity of operations,  less attention
to the merchandise mix and a resulting decrease in sales.

         The 1998 winter  season was longer  than the 1997 winter  season due to
mild weather which resulted in fewer road,  airport and park closures.  The 1998
winter season  consisted of 81 days  compared to 67 days in 1997.  The number of
winter visitors through the south entrance of Yellowstone  increased 46% in 1998
compared to 1997. As a result,  the number of snowmobile  rentals increased from
3,995 in 1997 to 4,622 in 1998.

         Total  revenues for 1997 increased by $117,000 or 3% over 1996. Of this
increase,  $93,000 was from  grocery  store sales,  $31,000 from food  services,
$29,000 from gift shop sales,  $17,000 from  snowmobile  parts revenue,  $12,000
from  insurance  proceeds  and $7,000 from the sale of old cabins.  Decreases of
$48,000 in snowmobile revenue,  $15,000 in interest income,  $12,000 in gasoline
sales and $10,000 in snowcoach  revenue  offset the above  increases.  The total
number of visitors  through the south  entrance of  Yellowstone  decreased 4% in
1997 from  1966.  While  total  revenues  from room and cabin  rentals  remained
basically  unchanged from 1996 to 1997, the relative mix between motel and cabin
units and the average daily rates changed.  In 1996,  motel unit rentals totaled
6,308 with an average  daily rate of $91 and cabin unit  rentals  totaled  7,283
with an average  daily rate of $94. In 1997,  motel unit rentals  totaled  5,367
with an average  daily rate of $89 and cabin unit rentals  totaled 7,759 with an
average daily rate of $100. In 1997, the Company increased its marketing efforts
to have tour buses stop at Flagg for lunch and dinner.  The increased  number of
tour buses  contributed to the  improvement in grocery store,  food services and
gift shop revenues.

         Although the  national  parks were closed for 19 days during the winter
of 1996 because of the Federal Government  shutdown,  the 1997 winter season was
shorter than the 1996 winter season. The 1997 winter season consisted of only 67
days compared to 75 days in 1996. In 1996 the national  parks opened on December
15, 1995 and closed on March 17, 1996, whereas in 1997 the national parks opened
on December 20, 1996 and closed on March 9, 1997.  In addition,  extreme  winter
weather  conditions  in 1997  caused the  closure of local  airports,  roads and
national parks for 13 days,  primarily during the Christmas holiday season.  The
number of winter visitors through the south entrance of Yellowstone decreased 7%
in 1997  compared  to 1996.  As a  result,  the  number  of  snowmobile  rentals
decreased from 4,610 in 1996 to 3,995 in 1997.

Costs and Expenses
------------------

         The ratio of cost of merchandise  sold to sales of merchandise  was 59%
in 1998, 61% in 1997, and 56% in 1996. Ending merchandise  inventories decreased
from  $118,000 at March 31, 1997 to $50,000 at March 31, 1998  primarily  due to
the sale of old and discontinued  gift shop  merchandise  which was not replaced
prior to the end of the fiscal year.
                                       10
<PAGE>
          Operating expenses increased by $266,000 or 11% in 1998 as compared to
1997. In addition,  the ratio of operating costs to operating revenues decreased
to 56% in 1998 from 57% in 1997.  The major  increases  consisted of $257,000 in
labor, $92,000 in interest,  $69,000 in outside services,  and $20,000 in credit
card/collection  fees. These increases were offset in part by the elimination of
snowmobile   rental  expense  of  $169,000   (which  was  partially   offset  by
depreciation  of  snowmobiles  of  $31,000  and loss on sale of  snowmobiles  of
$94,000) and minor  decreases in other  expenses.  The labor increase was mainly
the result of increased  managerial  costs due to guaranteed  bonus payments and
severance  agreements.  The  increase  in  interest  expense  was due to  higher
outstanding  loan balances during the year due to working capital  requirements.
The increase in outside services costs were due to increased revenue in both the
float and horse  activities  which  resulted  in higher  payments  due per lease
agreements  with the operators.  The higher credit  card/collection  fees were a
result of higher gross revenues and corresponding increases in the use of credit
cards.  Snowmobile  rental expense was  eliminated  this year with the Company's
decision to purchase the snowmobiles.

          Operating expenses increased by $392,000 or 20% in 1997 as compared to
1996. In addition,  the ratio of operating costs to operating revenues increased
to 57% in 1997 up from 49% in 1996. The major increases consisted of $137,000 in
labor, $51,000 in supplies,  $48,000 in utilities,  $44,000 in snowmobile parts,
$40,000 in repairs and maintenance,  $22,000 in transportation rentals,  $21,000
in advertising and $20,000 in property taxes. In general the operating  expenses
increased due to the addition of 42 new cabin units during 1997, expanded winter
services  provided  to guests  and the  impact of the  unusually  severe  winter
weather  conditions in 1997.  The labor increase was the result of a 9% increase
in the federal minimum wage, in conjunction  with increasing the number of staff
in accounting, marketing,  housekeeping, motel front desk, reservations and food
services. The bulk of the increase in supplies came from the purchase of initial
start-up  supplies for the 42 new cabin units  completed in 1997.  The number of
cabins opened  during the winter season went from 50 in 1996 to 92 in 1997.  The
increase in  utilities  was  generated  by the 84%  increase in cabin units open
during the winter season.  In addition,  the riverside  motel units,  which were
closed  during the winter of 1996,  were opened for the 1997  winter  season and
used as extra employee housing.

         General and  administrative  expenses  decreased  by $230,000 or 47% in
1998 as compared to 1997.  The decrease  consisted  primarily of  reductions  in
telephone  expense of $10,000 and management fees of $253,000 which was a result
of a change in management philosophy and structure. These reductions were offset
by increases in professional fees of $33,000.

         General and administrative expenses decreased by $66,000 or 12% in 1997
as  compared  to  1996.  The  decrease  consisted  primarily  of  reductions  in
management fees of $24,000, professional fees of $24,000 and travel of $23,000.

         During 1998 the Company had a loss on asset disposals of $94,000 partly
resulting from the sale to a related party of the snowmobiles used in the winter
operation.  Previously the Company had rented  snowmobiles  from a related party
and had included the rental cost in operating expenses.
                                       11
<PAGE>
Inflation
---------

         The Company expects that it will be able to offset  increased costs and
expenses,  principally labor,  caused by inflation,  by increasing prices on its
services with minimal effect on operations.

Liquidity and Capital Resources
-------------------------------

         During fiscal 1998 the Company incurred costs of approximately $216,000
related to the completion of certain construction projects. As a result, working
capital  decreased  to a  negative  $945,000  at March 31,  1998 from a negative
$677,000 at March 31, 1997.  The Company may incur  additional  costs of between
$1,200,000  and  $2,100,000  prior to December  31,  1999 to  relocate  employee
housing units as required under the NPS Contract.

         The Company intends to fund these  improvements  through  existing cash
funds and cash  generated  from  operations,  plus  additional  borrowings  from
lenders. Cash generated from operations was $432,000, $430,000, and $139,000 for
the fiscal years ended 1998, 1997 and 1996, respectively. The construction funds
will have to be  obtained  from  outside  sources to the extent they exceed cash
generated from  operations.  There is no guarantee that the Company will be able
to procure financing on favorable terms.
                                       12
<PAGE>
Item 7.      Financial Statements and Supplemental Data

INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
International Leisure Hosts, Ltd.
Tempe, Arizona

We have audited the  accompanying  consolidated  balance sheets of International
Leisure  Hosts,  Ltd.  (the  "Company")  as of March 31, 1998 and 1997,  and the
related consolidated  statements of operations,  shareholders'  equity, and cash
flows for each of the three  years in the period  ended  March 31,  1998.  These
financial  statements are the  responsibility of the Company'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,  such consolidated  financial  statements present fairly, in all
material  respects,  the financial position of the Company at March 31, 1998 and
1997, and the results of its operations and its cash flows for each of the three
years in the period ended March 31, 1998 in conformity  with generally  accepted
accounting principles.

DELOITTE & TOUCHE LLP
Phoenix, Arizona

June 8, 1998
                                       13
<PAGE>
INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------

                                                                                             1998           1997
                                                                                             ----           ----
<S>                                                                                      <C>            <C>        
ASSETS (Note 5)
CURRENT ASSETS:
    Cash & cash equivalents                                                              $   212,593    $    48,258
    Accounts receivable                                                                       23,300         31,828

    Accounts receivable - from related party (Note 4)                                         82,800          9,800
    Income tax refund receivable                                                              23,471          6,726
    Merchandise inventories                                                                   50,394        118,418
    Prepaid expenses and other                                                                10,491         17,045
    Deferred income taxes (Note 2)                                                            19,603         79,140
                                                                                         -----------    -----------
        Total current assets                                                                 422,652        371,753
                                                                                         -----------    -----------

PROPERTY AND EQUIPMENT (Note 3):
    Buildings and improvements                                                             5,017,059      4,616,051
    Equipment                                                                              1,421,234      2,728,178
    Leasehold improvements                                                                   325,600        310,000
    Construction in progress                                                                  48,145        213,899
                                                                                         -----------    -----------
        Total property and equipment                                                       6,812,038      7,868,128
    Less accumulated depreciation and amortization                                         1,845,325      2,879,362
                                                                                         -----------    -----------
        Property and equipment - net                                                       4,966,713      4,988,766
                                                                                         -----------    -----------
DEPOSITS                                                                                       3,402          2,478
                                                                                         -----------    -----------
TOTAL                                                                                    $ 5,392,767    $ 5,362,997
                                                                                         ===========    ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
    Accounts payable
      Trade                                                                              $    70,570    $   128,027
       Related party (Note 4)                                                                 17,929
      Construction                                                                            29,226
      Note payable under line of credit (Note 5)                                           1,105,000
    Accrued liabilities                                                                       61,323         79,347
    Accrued liabilities - to related party (Note 4)                                          163,209
    Advance deposits                                                                         113,093        159,791
    Current portion of long-term debt (Note 5)                                               489,500
                                                                                         -----------    -----------
        Total current liabilities                                                          1,367,915      1,049,100
DEFERRED INCOME TAXES (Note 2)                                                               196,589        196,589
LONG-TERM DEBT (Note 5)                                                                      445,500
                                                                                         -----------    -----------
        Total liabilities                                                                  1,564,504      1,691,189
                                                                                         -----------    -----------
SHAREHOLDERS' EQUITY:
    Preferred stock, $5 par value - authorized 100,000 shares: issued none
    Common stock, $.01 par value - authorized 2,000,000 shares: issued, 718,373 shares         7,184          7,184
    Additional paid-in capital                                                               656,426        656,426
    Retained earnings                                                                      3,242,565      3,086,110
    Common stock in treasury - at cost, 23,796 shares                                        (77,912)       (77,912)
                                                                                         -----------    -----------
        Total shareholders' equity                                                         3,828,263      3,671,808
                                                                                         -----------    -----------
TOTAL                                                                                    $ 5,392,767    $ 5,362,997
                                                                                         ===========    ===========
</TABLE>
See notes to consolidated financial statements
                                       14
<PAGE>
INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------

                                                           1998          1997           1996
<S>                                                    <C>           <C>            <C>        
REVENUES:
 Sales of merchandise                                  $ 1,821,890   $ 1,874,158    $ 1,710,931
 Room, cabin and trailer space rentals                   1,810,328     1,515,218      1,522,645
 Snowmobile rentals                                        670,537       505,973        553,555

 Interest                                                    3,511         4,043         19,008
 Other rentals and income                                  324,520       194,167        169,954
                                                       -----------   -----------    -----------
    Total revenues                                       4,630,786     4,093,559      3,976,093
                                                       -----------   -----------    -----------

COSTS AND EXPENSES:
 Cost of merchandise                                     1,080,088     1,147,788        960,687
 Operating (Note 3)                                      2,615,190     2,179,595      1,787,110
 Operating - related party (Note 4)                        169,100       169,100
 General and administrative                                100,816        78,200        120,575
 General and administrative - related party (Note 4)       159,464       412,286        436,384
 Loss on asset disposals (Note 4)                           94,387
 Depreciation and amortization                             364,848       291,329        232,050
                                                       -----------   -----------    -----------
    Total costs and expenses                             4,414,793     4,278,298      3,705,906
                                                       -----------   -----------    -----------

INCOME (LOSS) BEFORE INCOME TAXES                          215,993      (184,739)       270,187

PROVISION (BENEFIT) FOR INCOME TAXES                        59,538       (71,975)        71,000
   (Note 2)

NET INCOME (LOSS)                                      $   156,455   ($  112,764)   $   199,187
                                                       ===========   ===========    ===========
NET INCOME (LOSS) PER COMMON SHARE-                    
   BASIC  (Note 1)                                     $      0.23   ($     0.16)   $      0.29
                                                       ===========   ===========    ===========
</TABLE>

See notes to consolidated financial statements
                                       15
<PAGE>
INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED MARCH 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------

                                         Common Stock             Additional                                
                                 ---------------------------       Paid-in         Retained         Treasury
                                   Shares           Amount         Capital         Earnings          Stock
                                                                                                
<S>                                 <C>           <C>             <C>             <C>             <C>        
BALANCE, APRIL 1, 1995              718,373       $    7,184      $  656,426      $2,999,687      ($  59,228)
  Purchases of common stock                                                                          (18,284)
  Net income                                                                         199,187    
                                 ----------       ----------      ----------      ----------      ----------
BALANCE, MARCH 31, 1996             718,373            7,184         656,426       3,198,874         (77,512)
  Purchases of common stock                                                                             (400)
  Net loss                                                                          (112,764)   
                                 ----------       ----------      ----------      ----------      ----------
BALANCE, MARCH 31, 1997             718,373            7,184         656,426       3,086,110         (77,912)
  Purchases of common stock                                                                     
  Net income                                                                         156,455    
                                 ----------       ----------      ----------      ----------      ----------
BALANCE, MARCH 31, 1998             718,373       $    7,184      $  656,426      $3,242,565      ($  77,912)
                                 ==========       ==========      ==========      ==========      ==========
</TABLE>

See notes to consolidated financial statements
                                       16
<PAGE>
INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------

                                                                     1998           1997           1996
                                                                     ----           ----           ----
<S>                                                              <C>            <C>            <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                              $   156,455    ($  112,764)   $   199,187
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
      Depreciation and amortization                                  364,848        291,329        232,050
      Deferred income taxes                                                          18,737         (3,000)
      Loss (gain) on sale of assets                                   94,387           (120)
  Changes in assets and liabilities:
      Accounts receivable                                              8,528        (26,195)         2,209
      Accounts receivable - from related party                       (73,000)        (5,000)        (1,787)
      Merchandise inventories                                         68,024         48,586        (52,489)
      Income tax refund receivable                                    43,793         14,028        (66,145)
      Deferred tax asset                                              59,538        (79,140)
      Prepaid expenses and other                                       6,554         (6,024)        (4,683)
      Deposits                                                          (925)
      Accounts payable - trade                                       (57,457)        68,284       (181,375)
      Accounts payable - related party                                17,929
      Accounts payable - construction                                (29,226)
      Accrued liabilities                                            (18,024)       198,206        (18,655)
      Accrued liabilities - to related party                        (163,209)
      Advance deposits                                               (46,698)        19,856         33,415
                                                                 -----------    -----------    -----------
          Net cash provided by operating activities                  431,517        429,783        138,727
                                                                 -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchases of property and equipment                           (652,117)    (1,340,235)      (885,049)
      Sale of marketable investment securities                                                     300,000
      Cash and accounts payable segregated for construction of                      (30,293)       (59,028)
        replacement property
      Proceeds from sale of property and equipment                   214,935          4,758
                                                                 -----------    -----------    -----------
        Net cash used in investing activities                       (437,182)    (1,365,770)      (644,077)

CASH FLOWS FROM FINANCING ACTIVITIES:
      Common stock purchased for treasury                                              (400)       (18,284)
      Proceeds from long-term debt                                    60,000        935,000
      Proceeds from line of credit                                 1,105,000
      Payments on long-term debt                                    (995,000)
                                                                 -----------    -----------    -----------
        Net cash provided by (used in) financing activities          170,000        934,600        (18,284)
</TABLE>

                                                                     (Continued)
                                       17
<PAGE>

INTERNATIONAL LEISURE HOSTS, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------

                                                                      1998          1997           1996

<S>                                                                   <C>            <C>          <C>      
NET INCREASE (DECREASE) IN CASH AND                                   164,335        (1,387)      (523,634)
CASH EQUIVALENTS                                                  
                                                                  
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                           48,258        49,645        573,279
                                                                  -----------   -----------    -----------
                                                                  
CASH AND CASH EQUIVALENTS, END OF YEAR                            $   212,593   $    48,258    $    49,645
                                                                  ===========   ===========    ===========
                                                                  
SUPPLEMENTAL DISCLOSURE OF CASH FLOW                              
  INFORMATION - Cash paid for interest                            $    96,284   $    14,594
                                                                  ===========    ===========
</TABLE>

                                                                     (Concluded)

See notes to consolidated financial statements
                                       18
<PAGE>
INTERNATIONAL LEISURE HOSTS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1998, 1997 AND 1996
--------------------------------------------------------------------------------


1.       BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

         International  Leisure  Hosts,  Ltd.  (the  "Company")  operates in one
         business  segment,  the  ownership  and  operation  of Flagg  Ranch,  a
         full-service  resort  motel and  trailer  park  located  in the John D.
         Rockefeller Jr.  Memorial  Parkway,  approximately  four miles north of
         Grand Teton National Park and two miles south of the southern  entrance
         to Yellowstone National Park.

         As of March 31, 1997 and 1996,  the  financial  statements  include the
         accounts of International  Leisure Hosts, Ltd. and Lewis & Clark Lodge,
         its wholly-owned subsidiary. All intercompany transactions and accounts
         were eliminated in consolidation.

         During  1998,  a majority  of  outstanding  shares of the  Company  was
         purchased by an  unrelated  third party.  Subsequent  to the  purchase,
         Lewis & Clark Lodge was dissolved and its assets and  liabilities  were
         transferred to the Company at their historical cost basis.

         Significant accounting policies are as follows:

         a.       Merchandise  inventories  are stated at the lower of aggregate
                  cost (first-in, first-out basis) or market.

         b.       Property and  equipment  are stated at cost.  Depreciation  is
                  computed primarily by an accelerated method over the estimated
                  useful lives,  which range from 5 years to 40 years,  for such
                  assets.   Leasehold   improvements  are  amortized  using  the
                  straight-line  method over the lesser of the estimated  useful
                  life of the related asset or the term of the lease.

         c.       Income  taxes  have  been  accounted  for in  accordance  with
                  Statement of Financial  Accounting Standards ("SFAS") No. 109,
                  Accounting for Income Taxes.  Deferred  income taxes have been
                  provided  for  the  temporary  differences  between  financial
                  statement and income tax reporting on certain transactions.

         d.       Use of Estimates - The preparation of financial  statements in
                  conformity  with  generally  accepted  accounting   principles
                  necessarily   requires   management  to  make   estimates  and
                  assumptions  that  affect the  reported  amounts of assets and
                  liabilities   and   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.
                                       19
<PAGE>
         e.       Net  income  (loss) per common  share - In 1998,  the  company
                  adopted and  retroactively  applied SFAS No. 128, Earnings per
                  Share,  which had no effect on the computation or presentation
                  of earnings per share data. Net income (loss) per common share
                  is  computed by dividing  net income by the  weighted  average
                  number of common  shares  outstanding.  The  weighted  average
                  number of common shares  outstanding was 694,577,  694,610 and
                  697,510 shares for 1998, 1997 and 1996, respectively.

         f.       Statements  of Cash Flows - For  purposes of the  consolidated
                  statements of cash flows, cash and cash equivalents  represent
                  cash in banks, money market funds, and certificates of deposit
                  with initial maturities of three months or less.

         g.       Estimated  Fair Value of Financial  Instruments  - The Company
                  has  estimated  the fair  value of its  financial  instruments
                  using available market data. However, considerable judgment is
                  required in interpreting  market data to develop  estimates of
                  fair  value.  The  use  of  different  market  assumptions  or
                  methodologies  may have a material  effect on the estimates of
                  fair values. The carrying values of cash,  receivables,  lines
                  of credit,  accounts payable,  accrued expenses, and long-term
                  debt approximate fair values due to the short-term  maturities
                  or market rates of interest.

         h.       New Accounting  Pronouncements - In June 1997, the FASB issued
                  SFAS  No.  130,  Reporting   Comprehensive  Income,  which  is
                  effective for financial  statements for fiscal years beginning
                  after  December  15,  1997  and   established   standards  for
                  reporting  and  display  of   comprehensive   income  and  its
                  components  (revenues,  expenses,  gains and losses) in a full
                  set of general-purpose financial statements.  The Company does
                  not believe the  adoption of SFAS No. 130 will have a material
                  impact on its  financial  statement  presentation  or  related
                  disclosures.

                  In June 1997, the FASB issued SFAS No. 131,  Disclosure  about
                  Segments of an Enterprise  and Related  Information,  which is
                  effective for fiscal years  beginning  after December 15, 1997
                  and  establishes  standards  for the way that public  business
                  enterprises  report  information  about operating  segments in
                  annual   financial   statements   and   requires   that  those
                  enterprises   report  selected   information  about  operating
                  segments in interim  financial reports issued to shareholders.
                  It also establishes  standards for related  disclosures  about
                  products and services,  geographic  areas and major customers.
                  The  Company  operates  in one  business  segment and does not
                  believe that the adoption of SFAS No. 131 will have a material
                  impact on its financial statements or related disclosures.

         i.       Reclassifications - Certain  reclassifications  have been made
                  to the 1997 and 1996  financial  statements  to conform to the
                  1998 presentation.
                                       20
<PAGE>
2.       INCOME TAXES

         The provision  (benefit)  for federal  income taxes for the years ended
         March 31 consists of the following:


                                       1998              1997              1996
         
         Current                   $ 59,538          ($53,238)         $ 74,000
         Deferred                                     (18,737)           (3,000)
                                   --------          --------          --------
         
         Total                     $ 59,538          ($71,975)         $ 71,000
                                   ========          ========          ========

         A  reconciliation  of the provision  (benefit) for income taxes and the
         amount that would be computed using statutory  federal income tax rates
         on income before income taxes for the years ended March 31 is set forth
         below:


                                                     1998       1997       1996
                                               
         Income taxes at federal rates           $ 73,500   ($63,000)  $ 92,000
         Tax-exempt income                                               (1,000)
         Other - net                              (13,962)    (8,975)   (20,000)
                                                 --------   --------   --------
                                               
         Provision (benefit) for income taxes    $ 59,538   ($71,975)  $ 71,000
                                                 ========   ========   ========
                                              
         Deferred  income  taxes  result  from  temporary   differences  on  the
         recognition of certain  revenue and expense items for tax and financial
         statement  purposes,  principally the gain on settlement of involuntary
         conversion in 1982, which resulted from fire damage,  which resulted in
         a deferred tax liability of $194,990. The recognized deferred tax asset
         is based upon expected utilization of net operating loss carryforwards,
         which expire in varying amounts beginning 1998 through 2012 for federal
         income tax  purposes.  The Company paid income  taxes of  approximately
         $18,250,  $50,000 and  $140,000  during the years ended March 31, 1998,
         1997 and 1996, respectively.

3.       COMMITMENTS AND CONTINGENCIES

         The Company receives its operating authorization from the National Park
         Service  ("NPS").  The  NPS  Contract  (the  "Contract")  which  became
         effective on January 1, 1990,  will expire on December 31, 2009.  Under
         the terms of the Contract,  prior to December 31, 1999,  the Company is
         required to move its existing 54-unit  riverside motel from its current
         location  to the high  ground  above  the  river,  to  provide  for new
         employee housing and make certain other  improvements.  The Company has
         chosen to meet these requirements by moving the riverside
                                       21
<PAGE>
         motel and converting it into employee housing, plus building additional
         employee support facilities, which is scheduled to begin in summer 1998
         with  expected  completion  in  summer  1999.  The  cost  to do this is
         estimated  to be between  $1,200,000  and  $2,100,000  depending on the
         number  of  employee   housing  units  and  the  extent  of  additional
         improvements  required by the NPS.  If the  Company  builds new lodging
         units to replace the 54-unit  riverside  motel,  the additional cost to
         build these units will be between $1,000,000 and $1,200,000. This would
         result in a total cost of relocation and new  construction  combined of
         between $2,200,000 and $3,300,000.  The Company has not made a decision
         at this time regarding  replacing the riverside  motel with new lodging
         units.

         The fee expense,  which has been recorded as operating expense,  to the
         NPS  under the  Contract  is  calculated  at 2% of gross  receipts  (as
         defined),  subject to review and possible  adjustment every five years.
         For the years ended March 31, 1998, 1997 and 1996, this fee amounted to
         $88,374, $76,041 and $73,543, respectively.

         Flagg Ranch faces  competition  from hotels,  camping areas and trailer
         facilities in Yellowstone  and Grand Teton National  Parks,  as well as
         from a large number of hotels and motels in Wyoming, Montana and Idaho,
         offering  some  facilities  which are similar to those offered by Flagg
         Ranch.  In  addition,  the  business of Flagg Ranch is  susceptible  to
         weather  conditions and  unfavorable  trends in the economy as a whole.
         Business could be significantly  affected  depending upon actions which
         might be taken by the NPS if cutbacks are made to their budget.  If the
         NPS decides to close  Yellowstone  National Park for the winter months,
         then Flagg Ranch would have to discontinue its winter  operations.  NPS
         budget cutbacks could also  negatively  impact the length of the summer
         season and the number of visitors to the Parks and have a corresponding
         negative impact on Flagg Ranch revenues.

         On May 20, 1997, the Fund for Animals,  Biodiversity  Legal  Foundation
         et. al. filed a lawsuit  against the NPS  challenging the action of the
         NPS regarding winter use of Yellowstone and Grand Teton National Parks.
         The plaintiffs have asked the Federal Court to stop winter  activities,
         primarily  snowmobiling and related snow grooming,  until environmental
         impacts  are  documented.  A  settlement  agreement  was  reached  that
         requires the NPS to prepare an environmental  impact statement  ("EIS")
         over the next three  years,  during  which  time  period the parks will
         continue  activities under the existing winter visitor-use plan. If the
         NPS  is  required  to  suspend  or  terminate   winter   activities  in
         Yellowstone  National  Park,  Flagg  Ranch  would  have to  suspend  or
         discontinue its winter operations.

4.       TRANSACTIONS WITH RELATED PARTIES

         General and administrative - related party expenses for the years ended
         March  31,  1998,   1997  and  1996  represent   management   fees  and
         administrative   expenses   paid  to  related   parties   and   totaled
         approximately  $160,000,  $412,000  and  $436,000,   respectively.  All
         related parties referred to in these financial statements were owned by
         family  members of Elizabeth A. Nicoli who were the majority  owners of
         the  Company  for the  years  ended  March 31,  1997 and 1996.  
                                       22
<PAGE>
         Related  parties  during the year ended March 31, 1998 are owned by the
         Company's majority owner, Robert Walker, or family members.

         Operating - related party expenses  represent leased  snowmobiles under
         short-term  leases from a related party. As of March 31, 1997 and 1996,
         snowmobile lease expense totaled $169,100.

         During October 1997, the Company  incurred  borrowings  under a line of
         credit  from a  related  party.  For the year  ended  March  31,  1998,
         outstanding borrowings totaled $1,105,000 (Note 5).

         In March 1998,  the Company sold 96  snowmobiles  for total proceeds of
         $144,000  and a loss  of  $94,387.  A  related  party  of  the  Company
         purchased  46  snowmobiles  for a total of  $82,800,  of which  all was
         recorded as a receivable at March 31, 1998.

         At March 31,  1998,  the  Company  recorded  a payable  of $17,929 to a
         related party for certain operating  expenses paid by the related party
         on behalf of the  Company.  At March 31, 1997,  the Company  recorded a
         liability  of  $163,209  to  a  related  party  related  to  leases  of
         snowmobiles.

5.       NOTE PAYABLE UNDER LINE OF CREDIT

         During  October  1997,  the  Company  entered  into  a line  of  credit
         agreement  ("Agreement")  with an affiliated company expiring September
         30, 1998, which provides for secured  borrowings of up to $1,200,000 at
         an  interest  rate of  prime  plus .5  percent.  Borrowings  under  the
         Agreement are  collateralized  by the assets and  improvements of Flagg
         Ranch. The Company has borrowed $1,105,000 on this line of credit as of
         March  31,  1998.  The  terms of the  Agreement  contain,  among  other
         provisions, requirements for maintaining minimum cash flows (as defined
         in the  Agreement) and places  limitations on the Company's  ability to
         make loans.  As of March 31,  1998,  the Company was not in  compliance
         with the minimum cash flow  requirement.  On June 8, 1998,  the Company
         received a waiver of  noncompliance  for the year ended March 31, 1998.
         The  Company  used,  in part,  the  proceeds  from the  drawdown on the
         Agreement to refinance  the bank debt which  totaled  $935,000 at March
         31, 1997.

Item 8.           Changes In and Disagreements with Accountants on Accounting
                  and Financial Disclosures

                  None
                                       23
<PAGE>
                                    PART III
                                    --------

Item 9.           Directors and Executive Officers of the Registrant

         NAME                   AGE    POSITIONS WITH COMPANY    TERM AS
                                                                 DIRECTOR

         Elizabeth A. Nicoli    68     Chairman/Director         10/75 - Present
         Robert L. Walker       64     President/Director        12/97 - Present
         A. Clarene Law         64     Director                  6/92 - Present
         F. Ray Evarts          72     Director/Secretary        9/22 - Present
         Michael P. Perikly     46     Director/Treasurer/CFO    12/97 - Present

         Mrs.  Elizabeth  A.  Nicoli was  elected to the Board of  Directors  in
October,  1975, and has been associated with the Company in various  capacities.
Upon the death of Mr. Nicoli, the former Chairman, Treasurer,  President and CEO
of the Company,  on October 22, 1996, she was elected as President and Chairman,
served as President until September 29, 1997 and continues to serve as Chairman.

         Robert L. Walker was elected as President on September 30, 1997 and was
elected to the Board of  Directors  in December,  1997.  Mr.  Walker has been an
executive  with  numerous  companies  over the last 35  years.  From 1976 to the
present,  he has been  President  of PNI,  Inc.,  a privately  owned  investment
company. From 1989 to 1994 he was President and Chairman of Turf Paradise, Inc.,
an Arizona based,  publicly traded company that owns and operates a thoroughbred
horse racing facility conducting pari-mutuel wagering.

         A. Clarene Law was elected to the Board of  Directors on September  11,
1992. She is the owner and Chief  Executive  Officer of Elk Country Motels which
operates four motel properties  aggregating 270 rooms in Jackson,  Wyoming. Mrs.
Law has over 34 years experience in the hospitality industry.

         F. Ray Evarts was elected to the Board of Directors  on  September  11,
1992.  He was  elected  Assistant  Secretary  of the Company on June 6, 1994 and
Secretary  on August 5, 1997.  He is  currently  self-employed  as a real estate
consultant in Arizona and  California,  for planning,  developing and leasing of
commercial  and  multi-family  properties as well as consulting in all phases of
the  restaurant  business.  From 1982 to 1992 he was Project  Manager for Warren
Properties,  Inc.,  a  California  based,  privately  held  hotel and  apartment
developer and owner with properties in 18 states.

         Michael P. Perikly,  CPA, was elected as Treasurer and Chief  Financial
Officer of the  Company on  September  30,  1997 and was elected to the Board of
Directors  in  December,  1997.  From  1990 to the  present  he has  been  Chief
Financial Officer of PNI, Inc., a privately owned investment company.  From 1989
to 1994 Mr. Perikly was the Chief Financial Officer,  Secretary and Treasurer of
Turf  Paradise,  Inc., an Arizona based,  publicly  traded company that owns and
operates a thoroughbred 
                                       24
<PAGE>
horse racing facility conducting pari-mutuel wagering.

Item 10.          Executive Compensation

SUMMARY COMPENSATION TABLE

          (A)                       (B)              (C)
Name and principal
Position                            Year             Salary
------------------                  ----             ------

Robert L. Walker                    1998                -
President*

Elizabeth A. Nicoli                 1998                -
President and Chairman**            1997                -
                                    1996                -

John L. Bradley                     1997             $ 75,464
President***                        1996             $156,380

All executive officers
as a group (three)                  1998             $ 28,000
           (three)                  1997             $188,904
                                    1996             $194,630

All  executive  officers as a group  received  cash  compensation  for  services
rendered  to the  Company  over the three  years,  a  portion  of which was paid
pursuant  to the  management  contracts  described  under the  heading  "Item 12
Certain Relationships and Related Transactions."

There are no compensation arrangements for directors.

*        Robert L. Walker became President of the Company on September 30, 1997.

**       Elizabeth A. Nicoli became  Chairman of the Company on October 23, 1996
         and served as President from October 23, 1996 until her  resignation on
         September 29, 1997.

***      John  Bradley  served  as  President   until  the  termination  of  his
         employment  with the Company on July 31, 1996, at which time Anthony J.
         Nicoli became President.
                                       25
<PAGE>
Item 11.          Security Ownership of Certain Beneficial Owners and Management

         The following  table indicates as of June 11, 1998, the common stock of
the  Registrant  owned  beneficially  by each  director,  by all  directors  and
executive  officers as a group and by each person who is known by the Registrant
to own beneficially more than 5% of the outstanding common stock.


         Name and Address                           Common Stock       Percent
                                                                          Held

         Robert L. Walker                                351,669        50.63%
         Director
         3207 S. Hardy Drive
         Tempe, Arizona 85282
         
         A. Clarene Law                                    3,000             *
         Director
         1702 E. Highland Ave., #312
         Phoenix, Arizona 85016
         
         Michael P. Perikly                                2,500             *
         Director
         3207 S. Hardy Drive
         Tempe, Arizona 85282
         
         F. Ray Evarts                                       100             *
         Director
         1702 E. Highland Ave., #312
         Phoenix, Arizona 85016
         
         William S. Levine                               124,233 (A)     17.9%
         Levine Investments Limited Partnership
         2525 E. Camelback Rd., Suite #275
         Phoenix, Arizona 85016

         Krist A. Jake                                    73,800 (B)     10.6%
         P.O. Box 640219
         San Francisco, California 94164

         Bar-B-Bar Corporation                            37,307 (C)      5.4%
         Max C. Chapman, Jr.
         P.O. Box 194
         Scarborough, New York 10510
                                       26
<PAGE>
         All Executive Officers and                      357,269         51.44%
         Directors as a group (5 persons)

         *Less than 1%

(A)      Based on Schedule 13G filed with the Securities and Exchange Commission
         on March 12, 1998 by William S. Levine and Levine  Investments  Limited
         Partnership.
(B)      Based on Schedule 13D filed with the Securities and Exchange Commission
         on June 7, 1997 by Krist A. Jake.
(C)      Based on Schedule 13D filed with the Securities and Exchange Commission
         on December 6, 1991 by Bar-B-Bar Corporation and Max C. Chapman, Jr.

Item 12.          Certain Relationships and Related Transactions

General and  administrative  - related party  expenses for the years ended March
31, 1998, 1997 and 1996 represent  management fees and  administrative  expenses
paid to  related  parties  and  totaled  approximately  $160,000,  $412,000  and
$436,000,  respectively.  All related  parties  referred  to in these  financial
statements  were owned by family  members of  Elizabeth  A.  Nicoli who were the
majority  owners of the  Company  for the years  ended  March 31, 1997 and 1996.
Related  parties during the year ended March 31, 1998 are owned by the Company's
majority owner, Robert Walker, or family members.

Operating - related party expenses represent leased snowmobiles under short-term
leases  from a related  party.  For each of the years  ended  March 31, 1997 and
1996, snowmobile lease expense totaled $169,100.

During October 1997, the Company incurred borrowings under a line of credit from
PNI, Inc., a related party whose president is Robert Walker.  For the year ended
March 31, 1998, outstanding borrowings totaled $1,105,000 (Note 5).

In March 1998,  the Company sold 96  snowmobiles  for total proceeds of $144,000
and a loss of $94,387.  A related party of the Company  purchased 46 snowmobiles
for a total of $82,800,  of which all was recorded as a receivable  at March 31,
1998.

At March 31, 1998, the Company  recorded a payable of $17,929 to a related party
for  certain  operating  expenses  paid by the  related  party on  behalf of the
Company.  At March 31, 1997,  the Company  recorded a liability of $163,209 to a
related party related to leases of snowmobiles.
                                       27
<PAGE>
                                     PART IV
                                     -------

Item 13.          Exhibits, Financial Statements, Schedules and Reports on
                  Form 8-K

(a)      1.       Financial Statements                                      Page

The following  consolidated financial statements of International Leisure Hosts,
Ltd. and Subsidiary are included in Part II, Item 7:

                  Independent Auditors' Report                               13

                  Consolidated Balance Sheets - March 31, 1998
                  and 1997                                                   14

                  Consolidated Statements of Income - years ended
                  March 31, 1998, 1997 and 1996                              15

                  Consolidated Statements of  Shareholders' Equity -
                  years ended March 31, 1998, 1997 and 1996                  16

                  Consolidated Statements of Cash Flows-
                  years ended March 31, 1998, 1997 and 1996                  17

                  Notes to consolidated financial statements                 19

         3.       The  following  exhibits  are  incorporated  by  reference  as
                  indicated:
         3.1      By-Laws-Adopted June 22, 1992
                  Filed with  Form 10-K dated March 31, 1992
         3.2      Articles of Incorporation-filed with Form 10-K dated March 31,
                  1986, pages 32-41
         10.1     United States Department of the Interior National Park Service
                  Contract-filed with Form 10-Q dated December 31, 1989
         10.2     Pacific  West  Construction  Contract  for new lodge  building
                  filed with Form 10-KSB dated March 31, 1994
         10.3     Pacific West  Construction  Contract for 50 new lodging  units
                  filed with Form 10-QSB dated June 30, 1994
         10.4     Pacific West  Construction  contract for 42 new lodging  units
                  filed
                  with Form 10-QSB dated September 30, 1995
         22.      Subsidiaries of Registrant: incorporated by reference from the
                  Registrant's report on Form 10-KSB dated March 31, 1994
         (b)      None.
                                       28
<PAGE>
All other  schedules and exhibits for which  provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related  instructions or are inapplicable  and,  therefore,  have been
omitted.

SIGNATURES
----------

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

                          International Leisure Hosts, Ltd.
                          ---------------------------------

                          /s/ Robert L. Walker
                          ---------------------------------
                          Robert L. Walker,  President
                          Date:  6/30/98


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the date indicated.


/s/ Robert L. Walker                  /s/ Michael P. Perikly
-----------------------------         ---------------------------------
Robert L. Walker                      Michael P. Perikly
President                             Chief Financial Officer/Treasurer
Date:  6/30/98                        Date:   6/30/98


/s/ F. Ray Everts
-----------------------------
F. Ray Evarts, Director
Date:  6/30/98
                                       29