SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB


|X|      ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(D)  OF THE  SECURITIES
         EXCHANGE ACT OF 1934 [FEE  REQUIRED] 
         FOR THE FISCAL YEAR ENDED JUNE 30, 1996

|_|      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(D) OF THE  SECURITIES
         EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                         Commission file number: 0-28704

                     CLASSIC RESTAURANTS INTERNATIONAL, INC.
                 (Name of small business issuer in its charter)

         COLORADO                                              84-1122431
(State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                           Identification No.)

                3500 PARKWAY LANE, SUITE 435, NORCROSS, GA 30092
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number: (770) 729-9010

       Securities registered under Section 12(b) of the Exchange Act: NONE

         Securities registered under Section 12(g) of the Exchange Act:
               Title of class: CLASS A COMMON STOCK, NO PAR VALUE

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to the filing requirements for the past 90 days. Yes X No

Check if disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is 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.[ ]

          Issuer's revenues for its most recent fiscal year. $1,372,352
                      (for six months ended June 30, 1996)

    Aggregate market value of the voting stock held by non-affiliates of the
                registrant as of September 13, 1996: $8,121,400

                  Number of shares outstanding of registrant's
                  Class A Common Stock, no par value: 3,218,592
                  Number of shares outstanding of registrant's
                   Class B Common Stock, no par value: 200,000
                            as of September 13, 1996

                    Documents incorporated by reference: NONE

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

Exhibit index on consecutive  __                          Page 1 of    Pages
                                                                    --

                                        1

<PAGE>



                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

FORMATION AND INITIAL PUBLIC OFFERING

         Classic   Restaurants   International,   Inc.   (the   "Company")   was
incorporated under the laws of the State of Colorado on August 3, 1989 under the
name  Regional  Equities  Corporation.  In May 1990,  the Company  completed  an
initial  public  offering of units  consisting  of its Class A Common  Stock and
three  separate  classes of warrants.  All of the warrants  issued in connection
with the offering expired without any being exercised.

         Effective  upon the close of  trading  on July 12,  1994,  the  Company
effected  a  1-for-10,000  reverse  stock  split of its  Class A  Common  Stock.
Effective  on the close of trading on November 7, 1994,  the Company  effected a
10-for-1  forward  stock  split  of its  Class A and  Class B Common  Stock.  In
September 1995, the Company declared a 50% share dividend payable to the holders
of record of its Class A and Class B Common Stock on October 13,  1995.  All per
share  amounts  herein  have been  adjusted  to reflect the effects of the stock
splits and the share dividend.

GREAT AMERICAN RESORTS, INC.

         In April 1993, the Company  entered into an agreement to merge with and
into Great American Resorts,  Inc. ("GAR"). In May 1994, the boards of directors
of GAR and the Company both voted to terminate the merger agreement.

         In  connection  with the proposed  merger with GAR, GAR paid a total of
$12,763 (the "Option Price") to obtain  irrevocable  options to purchase a total
of  67,260  shares  of  the  Company's  Class  A  Common  Stock  held  by  seven
shareholders  for a total price of $127,632 (the  "Purchase  Price").  Under the
terms of the options,  the Option Price was to be credited  against the Purchase
Price when the options were  exercised.  In early 1994, GAR exercised all of the
options to acquire  67,260  shares of Class A Common  Stock in the  Company.  In
addition, GAR purchased additional shares of Class A Common Stock of the Company
on the open market  which  resulted  in GAR's  owning  approximately  78% of the
Company's  Class A Common  Stock.  GAR later  sold some of its  shares  which it
acquired on the open market. In addition, GAR acquired 7,500,000 shares of Class
A Common  Stock and  150,000  shares of Class B Common  Stock of the  Company in
connection  with  the  merger  of a  wholly-owned  subsidiary  with and into the
Company in October 1994.  See "Merger with Casinos  International,  Inc." below.
Immediately prior to the share exchange with Classic Restaurants  International,
Inc. in January 1996, GAR owned 7,567,260  shares of Class A Common Stock (93.2%
of the total outstanding) and 150,000 shares of Class B Common Stock (50% of the
total outstanding).

IRISH LAND TRANSACTION

         On August 21, 1994, the Company entered into a contract to purchase two
tracts of land in Ireland  from  Caragh  Holdings,  Ltd.  ("Caragh"),  which the
Company intended to develop into a resort.  The contract provided that one tract
of land would be  purchased  on or before  December  31,  1994 for 27,500  Irish
Pounds and 270,000  shares of Class A Common Stock,  and the other tract of land
would be purchased on or before  December 31, 1996 for 150,000  Irish Pounds and
1,230,000  shares of Class A Common  Stock.  As an earnest  money  deposit,  the
Company  issued all of the stock to the  seller,  but the seller was  prohibited
from selling the stock until the Company  completed its purchase of the tract of
land to which the stock related. In the event a tract of land was not purchased,
the seller was obligated to return the stock to the Company,  less 15,000 shares
as liquidated damages in the event closing did not occur due to a default by the
Company.

         In October  1994,  the Company  purchased the first tract of land under
the contract for $334,800, consisting of $41,723 in cash and $293,077 in Class A
Common Stock which was valued at the  appraised  value of the land.  Thereafter,
the Company  assigned its rights in the first tract to GAR for  $384,877,  which
consisted of the  purchase  price  originally  paid by the Company plus a fee of
$50,077 to the Company as  reimbursement  for the time and  expense  incurred to
purchase  the land.  In July  1995,  the  Company  and  Caragh  entered  into an
agreement to terminate the

                                        2

<PAGE>



contract to purchase the second tract of land.  Under the agreement,  as amended
in September 1995,  Caragh agreed to return 1,230,000 shares, of which 1,050,000
were returnable  immediately  while the remaining  180,000 shares continue to be
held by Caragh pursuant to an option to acquired said shares for $2.67 per share
at any time until September 30, 1997.

MERGER WITH CASINOS INTERNATIONAL, INC.

         On September 13, 1994,  the Company  entered into an Agreement and Plan
of Merger  ("Merger  Agreement")  with  Casinos  International,  Inc., a Georgia
corporation (" Casinos"),  under which Georgia  Casinos agreed to merge with and
into the Company.  The Merger  Agreement was approved by the shareholders of the
Company  at  a  shareholders  meeting  held  on  September  30,  1994,  and  was
consummated  in October  1994.  Under the Merger  Agreement,  all  nondissenting
holders  of Class A Common  Stock of  Casinos  were  issued  1.5  shares  of the
Company's  Class A  Common  Stock  for each  share  of  Class A Common  Stock of
Casinos.  At the time of the merger,  GAR held all  5,000,000  shares of Class A
Common  Stock of Casinos  which were  outstanding,  and  therefore  GAR acquired
7,500,000  shares  of the  Company's  Class A Common  Stock in the  merger.  All
nondissenting  holders of Class B Common Stock of Casinos were issued 1.5 shares
of the Company's  Class B Common Stock for each share of Class B Common Stock of
Casinos. At the time of the merger,  there were 200,000 shares of Class B Common
Stock of  Casinos  outstanding,  100,00 of which were held by Edward L Bates and
100,000 of which were held by GAR. As a consequence  of the merger,  GAR and Mr.
Bates each acquired  150,000 shares of the Company's  Class B Common Stock.  Mr.
Bates was an officer and director of GAR at the time of the merger.

         As part of the merger, the Company's shareholders also approved certain
amendments to the Company's  Articles of Incorporation.  The amendments  divided
the  Company's  single class of common  stock into two  classes:  Class A Common
Stock, of which  1,800,000,000  shares are authorized for issuance,  and Class B
Common Stock, of which 200,000,000 shares are authorized for issuance. The Class
A Common  Stock and the Class B Common  Stock have an equal right to receive the
net assets of the Company  upon  dissolution  and  liquidation,  but the Class A
Common Stock has only one (1) vote per share, while the Class B Common Stock has
forty (40)  votes per  share,  on each  matter  voted upon by the  shareholders,
except to the extent state or federal law provides  otherwise.  In addition,  to
the extent there are any shares of Class B Common Stock outstanding, the holders
thereof  have the right to elect a  majority  of the board of  directors  of the
Company. All of the Company's  outstanding common stock before the amendment was
considered Class A Common Stock after the amendment. The name of the Company was
changed to Casinos International, Inc.

CHEERS HOTEL AND CASINO

         On January 20, 1995, the Company  purchased the Cheers Hotel and Casino
(the "Cheers Hotel") in Reno, Nevada, from Baylocq Nevada Corp., a nonaffiliated
entity. The Cheers Hotel is a ten-story, 113-room hotel, with a casino, cabaret,
restaurant,  and bar  facilities,  which is located in the  downtown  section of
Reno, Nevada. The purchase price of the Cheers Hotel was $3,750,000 plus closing
costs and prorations.

         A  portion  of the  purchase  price  was paid by the  assumption  of an
existing first mortgage loan held by American  Federal  Savings Bank against the
Cheers Hotel in the amount of $1,944,804.12. The remainder of the purchase price
was paid  $750,00 in cash and by  executing a note  payable to the seller in the
amount of $1,055,195.88, secured by a second mortgage on the Cheers Hotel.

         Contemporaneous  with the  purchase  of the Cheers  Hotel,  the Company
entered into a lease agreement with the seller under which the seller originally
leased  approximately  7,600  square  feet of space in the Cheers  Hotel for two
years.  The  seller  intended  to use the  leased  space to operate a casino and
cabaret.  Effective  July 1, 1995,  the Company  reached an  agreement  with the
seller to eliminate the cabaret  operations  from the sublease and to reduce the
monthly rent.

         Great American Casinos,  Inc., a Nevada corporation,  was formed by the
Company to own the Cheers Hotel.



                                        3

<PAGE>



SHARE EXCHANGE WITH CLASSIC RESTAURANTS AND SPINOFF

         Effective  upon the close of  business  January 31,  1996,  the Company
acquired (the "Share Exchange") all of the issued and outstanding  capital stock
of Classic Restaurants  International,  Inc., a Florida  corporation  ("Classic-
Florida"),  in exchange for 2,173,665 restricted shares of the Company's Class A
Common  Stock and  200,000  restricted  shares of the  Company's  Class B Common
Stock. Classic-Florida now operates as a wholly-owned subsidiary of the Company.

         Simultaneous with the effectiveness of the Share Exchange,  the Company
transferred  all of the issued and  outstanding  shares of common stock of Great
American Casinos,  Inc. to GAR. Great American Casinos,  Inc. was a wholly-owned
subsidiary of the Company. The sole asset of Great American Casinos, Inc. is the
Cheers Hotel.  The Company's  common stock interest in Great  American  Casinos,
Inc.  constituted  substantially  all of its assets.  The  consideration for the
transfer of the common stock of Great American Casinos,  Inc. to GAR was (1) the
return for  cancellation  by GAR and by former officers of the Company of all of
their stock in the  Company,  which  consisted  of  7,578,075  shares of Class A
Common Stock and 300,000 shares of Class B Common Stock; (2) the cancellation of
any indebtedness owed by the Company to GAR, which was approximately  $1,567,389
as of December 31, 1995;  and (3) the mutual  release of any claims  between GAR
and the Company.

         After the  transfer of stock and assets  described  above and the Share
Exchange   (giving   effect   to   the   exercise   of   dissenters'    rights),
Classic-Florida's  former  shareholders and the Company's existing  shareholders
owned  2,173,665  shares  (80.1%) and 538,967  shares  (19.9%) of the  Company's
outstanding Class A Common Stock,  respectively,  and  Classic-Florida's  former
shareholder  owned 200,000  shares (100%) of the Company's  outstanding  Class B
Common Stock.

         The Company filed an amendment to its Articles of  Incorporation  which
changed its name to Classic  Restaurants  International,  Inc. effective January
31, 1996.

         All of the Company's former officers and directors  resigned.  Officers
and directors of Classic-Florida were appointed to fill the vacancies created by
the resignations.

         There was no relationship between the Company and Classic-Florida prior
to the Share Exchange.

CLASSIC-FLORIDA

         Classic-Florida was organized under the laws of the State of Florida on
April 7, 1992, for the purpose of developing and operating  restaurants  using a
dinner theater  concept.  On December 1, 1992,  Classic-Florida  opened Musicana
Supper Club in Boca  Raton,  Florida.  Classic-Florida  opened  Musicana  Dinner
Theater in Clearwater, Florida on May 14, 1994.

         Classic-Florida also provides  entertainment  production services for a
dinner  theater in Naples,  Florida.  Management  hopes to increase this line of
business and provide entertainment production services for other restaurants and
cruise lines.

MUSICANA SUPPER CLUB OF BOCA RATON

         This  restaurant,  which opened on December 1, 1992,  seats 270 persons
and offers  dinner and live  entertainment  for a price  ranging  from $21.95 to
$29.95,  depending  upon the menu item ordered.  The Company uses the concept of
employing  talented young performers to perform  Broadway and nostalgic  musical
revues.  These  performers also serve as waiters and waitresses.  By using young
performers,  management  believes that it can keep its overhead costs lower,  as
compared to using equity entertainers. Because the entertainers play a dual role
as  performers/waiters,  the majority of their compensation comes from a portion
of the service charge.


                                        4

<PAGE>



         The restaurant  aspect of the business  involves a menu offering a wide
variety of dinner selections starting from $21.95.  There is no cover charge for
the show if customers  dine at the  restaurant.  If customers  come for the show
only,  there is a $15.00 cover  charge.  All other  revenues  come from food and
drink purchases.

         Musicana  offers 7  performances  per week.  The show  consists  of two
40-minute acts, with dessert and coffee served during intermission. A live band,
which includes piano, bass and drums, plays  instrumental  back-up for the shows
and also plays before the show and during the  intermission  for  listening  and
dancing.  Each show is  considered  to be a "musical  review"  from  Broadway or
different eras, usually from the 1930's to the 1950's.  Some of the shows in the
Musicana  Library  include:  "Broadway  Follies,"  "New  York  Times,"  "West of
Broadway," "Hurrah for Hollywood," "The Fabulous Forties (When Radio was King),"
"The Good Ole Summertime," and "The Fabulous Fifties."

         Most of the customers for Musicana are over 50 years of age. Management
believes that it has carved a special niche in the market for this age group, as
evidenced by the popularity of the restaurant since its opening.

MUSICANA DINNER THEATER OF CLEARWATER

         This  restaurant,  which  opened May 14,  1994,  seats 370.  Management
believes  that  the  location  is  easily  accessible  from  the  Tampa  and St.
Petersburg  area.  The operation in Clearwater is  substantially  the same as in
Boca Raton.

FUTURE DEVELOPMENT

         The  Company  intends to pursue  other  acquisition  opportunities  for
restaurant  theme  formats.  Management  believes  that the Share  Exchange with
Casinos having been  consummated,  management has been given the  flexibility to
acquire assets or businesses using stock, as well as cash.

COMPETITION

         The restaurant  business is highly competitive and is often affected by
changes  in the  taste  and  eating  habits of the  public,  local and  national
economic  conditions  affecting  spending  habits,  and  population  and traffic
patterns.  The  principal  basis of  competition  in the industry is quality and
price of the  food  products  offered.  Site  selection,  quality  and  speed of
service,  advertising,  and  the  attractiveness  of  the  facilities  are  also
important.  Management of the Company believes that the Company's dinner theater
restaurant will be competitive in each of these respects.

EMPLOYEES

         As of June 30, 1996, there were 64 full-time and 10 part-time employees
of the Company, including certain officers of the Company.

ITEM 2.  DESCRIPTION OF PROPERTY.

         The Company  leases  approximately  10,000 square feet of space at 2200
N.W. 2nd Avenue, Boca Raton,  Florida pursuant to the terms of a five-year lease
which expires in November 1997. The monthly lease payment is $7,000. The Company
has a renewal option for another five-year term.

         The Company  leases  approximately  12,000  square feet of space at the
Bayside Bridge Plaza, Unit G, in Clearwater,  Florida pursuant to the terms of a
five-year, six-month lease which expires August 31, 1999. Rent for the first six
months was waived.  Rent is $6,000 for each of months 7 through  18,  $6,500 for
each of months 19 through 30, and $7,000 for each of months 31 through 66.


                                        5

<PAGE>



         The  temporary  executive  offices of the Company  were located at 3091
Governors  Lake  Drive,   Building  100,  Suite  500,  Norcross,   Georgia,   in
approximately 200 square feet of office space. The Company paid $1,187 per month
for this space.

         Effective  October 1, 1996, the Company relocated its executive offices
to 3500  Parkway  Lane,  Suite 435,  Norcross,  Georgia.  The Company is leasing
approximately  938  square  feet of office  space for  monthly  rent of  $1,521,
pursuant to the terms of a five-year lease which expires October 1, 2001.

ITEM 3.  LEGAL PROCEEDINGS.

         None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         None.

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<PAGE>



                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The  Company's  Class A Common Stock is traded on the  over-the-counter
market  under the symbol  "CRET".  The range of high and low bid prices for each
fiscal  quarter for the last two fiscal  years,  as reported by the OTC Bulletin
Board, and as adjusted to reflect all stock splits and dividends, is as follows:

<TABLE>
<CAPTION>
                                                                                   BID PRICES
1995 FISCAL YEAR                                                       HIGH                           LOW

<S>                                                                    <C>                           <C>  
Quarter Ending 09/30/94...................................             $5.80                         $4.33
Quarter Ending 12/31/94...................................             $6.33                         $4.67
Quarter Ending 03/31/95...................................             $5.33                         $4.67
Quarter Ending 06/01/95...................................             $5.33                         $3.33
1996 FISCAL YEAR

Quarter Ending 09/30/95...................................             $3.67                         $3.33
Quarter Ending 12/31/95...................................             $5.25                         $2.50
Quarter Ending 03/31/96...................................             $4.88                         $4.00
Quarter Ending 06/30/96...................................             $4.75                         $4.50

</TABLE>

         The last  reported  high and low bid prices for the  Company's  Class A
Common  Stock were both $3.00 as of September  13, 1996,  as reported by the OTC
Bulletin Board.

         The  above  quotations  reflect  inter-dealer  prices,  without  retail
mark-up,  mark-down,  or commission  and may not  necessarily  represent  actual
transactions.

         As of September 10, 1996 there were 295 record holders of the Company's
Class A Common Stock.

         During the last two fiscal years,  no cash dividends have been declared
on the Company's Common Stock.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

GENERAL

         The  Share   Exchange   transaction   has  been   accounted  for  as  a
recapitalization  of Classic-Florida and the issuance of 538,967 shares of Class
A Common  Stock for the net assets of the  Company  and the  forgiveness  of the
liability  due to the  Company  by  Classic-Florida.  This  method is similar to
accounting for a reverse acquisition,  and accordingly, the financial statements
presented prior to the date of the Share Exchange are those of  Classic-Florida.
No adjustment of assets of either company to "fair value" has been made.

         Prior to the Share Exchange, the fiscal year end of Classic-Florida was
December  31. It elected  to change its fiscal  year end to June 30 (that of the
Company's).  Accordingly,  statements of operations and cash flows for the years
ended  December 31, 1994 and 1995 are  presented,  together with a statement for
the six months ended June 30, 1996.

LIQUIDITY AND CAPITAL RESOURCES

         All of the capitalization of Classic-Florida has resulted from the sale
of stock and loans from its  principal  shareholder,  Crown  Resources,  Inc., a
company  controlled  by the  President of the Company.  At present,  the Company
still  remains  dependent  upon  proceeds  from the sale of stock  and  loans to
provide  sufficient cash to meet its needs. At June 30, 1996,  $320,641 was owed
to Crown Resources, Inc. In addition, at June 30, 1996, $338,448 was owed to

                                        7

<PAGE>



various  shareholders  of the Company  pursuant to promissory  notes that either
were  in  default  or  will  be due by  December  1996.  See  Item  12.  CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS.

         Through December 31, 1995,  Classic-Florida lacked management personnel
who could  implement  proper  financial  and  accounting  controls  to  minimize
operating losses during the  start-up/development  phase. As of January 1, 1996,
Caroline Anderson assumed these  responsibilities for the Company.  Accordingly,
at June 30, 1996,  the Company had a working  capital  deficit of  $976,147,  as
compared to a deficit of $1,415,432 at December 31, 1995.

         Due to the working capital  deficiency as well as the operating  losses
described below, the notes to the financial statements express uncertainty about
the  Company's  ability to continue as a going  concern.  See Note 11.  BASIS OF
PRESENTATION  of the Notes to  Consolidated  Financial  Statements.  The Company
proposes to obtain  additional  cash during the current  fiscal year through the
sale of its stock to provide sufficient liquidity for the Company's needs.

RESULTS OF OPERATIONS

         For the year ended  December 31, 1995,  sales  increased  38% over 1994
sales. The increase was due primarily to the opening of the Clearwater location.
Sales for the six months ended June 30, 1996, on an annualized  basis, show a 4%
increase  from 1995 sales.  Management  believes,  without  assurance,  that its
efforts  to hire the  proper  sales  and  marketing  personnel  will  result  in
increased sales for the 1997 fiscal year. In the past,  Classic-Florida  has not
focused its efforts on marketing to tours and other large groups.

         Operating  expenses,  as a  percentage  of sales,  were 90.6% for 1994,
94.9%  for  1995,   and  90.9%  for  1996.   Operating   expenses  were  higher,
proportionately,  for 1995 due to certain  penalties  and interest  assessed for
unpaid payroll  taxes.  All of the taxes,  penalties,  and interest were paid in
1996.  Management  expects such expenses to decrease as a percentage of sale due
to its efforts to increase sales for fiscal 1997.

         General and  administrative  expenses,  as a percentage of sales,  were
51.8% for  1994,  46.5% for 1995,  and  35.0% for 1996.  The  decrease  in these
expenses in 1996 is due to stronger  management  control  over cash.  Management
expects general and  administrative  expenses to maintain at the decreased level
for 1997.

ITEM 7.  FINANCIAL STATEMENTS.

         Please refer to pages beginning with page 16.

ITEM 8.  CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON ACCOUNTING  AND
         FINANCIAL DISCLOSURE.

         On July  1,1996,  the Company and its Board of  Directors  approved the
engagement of Stark Tinter & Associates,  LLC, of Englewood,  Colorado, to audit
the Company's financial statements.  During the Company's two most recent fiscal
years and the subsequent  interim period  preceding the engagement of this firm,
the Company did not consult this firm regarding any of the matters identified in
Item 304(a)(2) of Regulation S-K.

         Stark Tinter &  Associates,  LLC was selected by new  management of the
Company.  As  reported  in the Form 8-K dated  January  31,  1996,  the  Company
experienced a change of control.

         The former  accountants  were  Mitchell  Finley and  Company,  P.C. The
report of Mitchell Finley and Company,  P.C. on the financial statements for the
fiscal year ended June 30, 1995 contained an explanatory paragraph regarding the
Company's  ability  to  continue  as a going  concern.  The  decision  to change
accountants  was approved by the Board of Directors on May 21, 1996.  During the
Company's  two most  recent  fiscal  years  and the  subsequent  interim  period
preceding the resignation,  there were no disagreements with Mitchell Finley and
Company,  P.C. on any matter of accounting  principles  or practices,  financial
statement disclosure,  or auditing scope or procedure,  which disagreements,  if
not resolved to the  satisfaction  of Mitchell Finley and Company,  P.C.,  would
have caused it to make reference to the subject matter of the  disagreements  in
connection with its report.


                                        8

<PAGE>



         Effective January 1, 1996,  Mitchell Finley and Company,  P.C. combined
its practice with BDO Seidman LLP. In addition,  the license of Mitchell  Finley
and Company, P.C. to practice accountancy with the Colorado Board expired on May
31, 1996. Accordingly,  the firm can no longer practice under the name Mitchell,
Finley & Company, P.C.


                                        9

<PAGE>



                                    PART III

ITEM 9.  DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

         The following  table sets forth the names and ages of all directors and
executive officers of the Company as of the date of this report,  indicating all
positions and offices with the Company held by each such person:

NAME                                       AGE    POSITION
James R. Shaw                              43     President, Treasurer,
                                                  and Director
Caroline P. Anderson                       45     Executive Vice President, 
                                                  Secretary and Director
Jerry W. Carter                            55     Director
Daniel Howell                              45     Director

         The  holders  of the  Class B Common  Stock  have the  right to elect a
majority  of the  board of  directors  of the  Company.  Cumulative  voting  for
directors is not permitted in either class of common  stock.  The term of office
of  directors of the Company  ends at the next annual  meeting of the  Company's
shareholders or when the successors are elected and qualify.  The annual meeting
of shareholders is specified in the Company's bylaws to be held on a date and at
a time and place to be determined  by resolution of the Board of Directors.  The
Company has tentatively  scheduled the annual meeting for January 1997. The term
of office of each officer of the Company ends at the next annual  meeting of the
Company's Board of Directors,  expected to take place immediately after the next
annual meeting of shareholders,  or when his successor is elected and qualifies.
Except as otherwise  indicated  below,  no  organization by which any officer or
director previously has been employed is an affiliate,  parent, or subsidiary of
the Company.

         JAMES R. SHAW has been the President,  Treasurer, and a director of the
Company since February 1, 1996, and the President,  Treasurer, and a director of
Classic-Florida  since  December  1993.  Mr.  Shaw also  served as a director of
Classic-Florida  from its  inception  to July 1992.  He was the  executive  vice
president,  co-manager,  and co-franchise owner of a Schneider Securities,  Inc.
office  in  Atlanta,  Georgia,  from  April  1992 to  February  1994.  Schneider
Securities,  Inc. is a securities broker-dealer firm. From January 1990 to April
1992, he was the manager and franchise  owner of a Pacific  Southern  Securities
office  in  Atlanta,  Georgia.  From  1986  to  January  1990,  Mr.  Shaw  was a
stockbroker  with several other  broker-dealer  firms. He received a Bachelor of
Music  degree from  Carson-Newman  College in 1979 and a Master of Music  degree
from Southern Baptist Theological Seminary in 1986.

         CAROLINE P. ANDERSON has been the Executive Vice  President,  Secretary
and a director of the Company since  February 1, 1996,  and the  Executive  Vice
President, Secretary, and a director of Classic-Florida since October 1995. From
July 1991 to June 1995, Ms. Anderson was a financial planner for Forth Financial
Securities  Corp./Life of Virginia.  She was a stockbroker with Pacific Southern
Securities Corp. in Atlanta,  Georgia,  from April 1991 to July 1991. From April
1990 to April 1991, Ms.  Anderson was an auditor during the merger of C&S/Sovran
Trust Co. in  Atlanta,  Georgia,  auditing  institutional  trust  accounts.  She
received a Bachelor  of Science  degree in  accounting  from the  University  of
Cincinnati in 1978.

         JERRY W. CARTER has been a director of the  Company  since  February 1,
1996.  He has been a director of Classic-  Florida  since its inception in 1992.
Since 1968,  Mr.  Carter has been  self-employed  as an artist.  He has had solo
exhibitions in Moscow,  Helsinki,  Munich, and Cologne,  sponsored by the Moscow
Artists Union,  United States Information Agency, and the American Ambassador to
what was  formerly  the Soviet  Union.  Mr.  Carter is the  project  manager and
director of the Human Rights Center and Monument to be constructed in Moscow. He
has also served as culture  chairman of the Finlandia  Foundation and has served
on the board of directors of the  Washington  Music  Ensemble.  Mr. Carter has a
Master  degree in Fine Arts from  Antioch  University  and  studied in  Finland,
France, and Italy.


                                       10

<PAGE>



         DANIEL HOWELL has been a director of the Company since February 1, 1996
and a director of  Classic-Florida  since  February  1995.  Mr.  Howell has been
self-employed  as a private  investor since February 1993. From February 1988 to
February  1993,  he  was  the  president  of  a  subsidiary  of  Helen  of  Troy
Corporation, a beauty products company located in El Paso, Texas.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         The Company's  Class A Common Stock was registered  under Section 12(g)
of the  Exchange  Act on June  28,  1996,  and  thereby  became  subject  to the
reporting  requirements  of Section  16(a) on that date.  Initial  Statements of
Beneficial  Ownership of  Securities  on Form 3 were required to be filed by the
directors, officers, or beneficial owners of more than ten percent of securities
of the Company by June 28, 1996. Form 3's were filed as follows: James R. Shaw -
July 5, 1996;  Carolyn A. Shaw - July 5, 1996,  Caroline  P.  Anderson - July 5,
1996, Jerry S. Carter - July 2, 1996; and Daniel Howell - July 9, 1996.

ITEM 10.          EXECUTIVE COMPENSATION.

         The  following  table  sets forth  information  for the  current  Chief
Executive  Officer  ("CEO") of the Company,  James R. Shaw from February 1, 1996
through June 30, 1996,  and for former CEOs.  The former CEOs,  Edward L. Bates,
served as such from October 1994 through  January 31, 1996,  and M. James Herbic
served from the Company's inception through October 25, 1994. No disclosure need
be provided for any executive  officer,  other than the CEO,  whose total annual
salary and bonus for the last  completed  fiscal  year did not exceed  $100,000.
Accordingly,  no other  executive  officers of the  Company are  included in the
table.

<TABLE>
<CAPTION>
                                                                                LONG TERM COMPENSATION
                                        ANNUAL COMPENSATION                      AWARDS               PAYOUTS
                                                             OTHER      RESTRICTED
NAME AND                                                    ANNUAL         STOCK          OP            LTIP        ALL OTHER
PRINCIPAL                                                   COMPEN       AWARD(S)     TIONS/SARS    PAYOUTS ($)      COMPEN
POSITION           YEAR         SALARY         BONUS        SATION ($)      ($)           ($)                        SATION ($)
<S>                <C>           <C>            <C>           <C>           <C>           <C>           <C>            <C>
James R.           1996          -0-            -0-           -0-           -0-           -0-           -0-            -0-
Shaw,
President
Edward L.          1996          -0-            -0-           -0-           -0-           -0-           -0-            -0-
Bates,             1995          -0-            -0-           -0-           -0-           -0-           -0-            -0-
President
M. James           1995          -0-            -0-           -0-           -0-           -0-           -0-            -0-
Herbic,            1994          -0-            -0-           -0-           -0-           -0-           -0-            -0-
President

</TABLE>
         There are no outstanding stock options.

         There are no employment  agreements with any of the Company's executive
officers.

         The Company does not pay  non-officer  directors for their  services as
such nor does it pay any director's  fees for attendance at meetings.  Directors
are reimbursed for any expenses  incurred by them in their  performance as direc
tors.

ITEM 11.         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following table sets forth  information,  as of September 10, 1996,
with respect to the beneficial  ownership of the Company's  Class A Common Stock
and  Class B  Common  Stock  by  each  person  known  by the  Company  to be the
beneficial  owner of more than five  percent of the  outstanding  Class A Common
Stock and Class B Common Stock, by each of the Company's officers and directors,
and by the officers and directors of the Company as a group:

                                       11

<PAGE>



<TABLE>
<CAPTION>
                                   CLASS A COMMON STOCK            CLASS B COMMON STOCK          EFFECTIVE VOTING POWER
                                 NUMBER OF      PERCENT OF      NUMBER OF       PERCENT OF      NUMBER OF      PERCENT OF
BENEFICIAL OWNER                  SHARES        CLASS (1)<F1>     SHARES        CLASS (1)<F1>   VOTES (2)<F2>  VOTES (1)<F1>
<S>                             <C>               <C>            <C>              <C>           <C>              <C>  
James R. Shaw                   522,469 (3)<F3>   16.2%          200,000          100.0%        8,522,469        76.0%
1817 Ballybunion Drive
Duluth, Georgia 30136
Diversified Corporate           400,000 (4)<F4>   11.4%             --              --           400,000          3.5%
Consulting Group, LLC
237 Main Street
Tannersville, New York 12485
James Buford Salmon               238,723          7.4%             --              --           238,723          2.1%
1525 Lakesite Drive
Birmingham, Alabama 35285
Crown Resources, Inc.             172,469          5.4%             --              --           172,469          1.5%
1817 Ballybunion Drive
Duluth, Georgia 30136
Caroline P. Anderson              75,000           2.3%             --              --           75,000           0.7%
Jerry W. Carter                   40,000           1.2%             --              --           40,000           0.4%
Daniel Howell                     22,000           0.7%             --              --           22,000           0.2%
Officers and Directors as a       659,469         20.5%          200,000          100.0%        8,659,469        77.2%
  group (4 persons)
---------------
<FN>
<F1>
(1)      Based on 3,218,592 shares of Class A Common Stock and 200,000 shares of
         Class B Common  Stock  outstanding  on September  10,  1996.  Where the
         persons listed on this table have the right to obtain additional shares
         of  common  stock  within  60  days  from  September  10,  1996,  these
         additional  shares  are  deemed to be  outstanding  for the  purpose of
         computing the  percentage  of class owned by such persons,  but are not
         deemed to be outstanding for the purpose of computing the percentage of
         any other person.

<F2>
(2)      Class A Common Shares have 1 vote per share while Class B Common Shares
         have 40 votes per share.

<F3>
(3)      Includes 172,469 shares owned of record by Crown Resources, Inc.

<F4>
(4)      Includes 300,000 shares issuable pursuant to stock options.  The shares
         and stock  options  were issued  pursuant to the terms of a  consulting
         agreement.  In September  1996, the Company and  Diversified  Corporate
         Consulting Group, LLC mutually terminated the consulting agreement. The
         shares  and  stock   options  will  be  returned  to  the  Company  for
         cancellation.
</FN>
</TABLE>

         The Company is not aware of any  arrangement  which  could  result in a
change in control of the Company.

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         From  time  to  time,  Crown  Resources,   Inc.  has  loaned  funds  to
Classic-Florida. Crown Resources, Inc. is owned and controlled by James R. Shaw,
the President,  director, and principal shareholder of the Company. In September
1994, Crown Resources,  Inc. was issued 93,750 shares of Class A Common Stock at
a price of $3.20 per share as partial repayment of amounts due to Crown. At June
30, 1996, the Company owed Crown Resources,  Inc.  $320,641.  The balance due to
Crown  Resources is unsecured  and has no set  interest or repayment  terms.  To
comply with Internal  Revenue  Service  requirements  and  financial  accounting
standards,  $10,000 of interest  was accrued  and charged to  operations  during
1996.

         At  June  30,  1996,  Classic-Florida  owed  $113,948  to  stockholders
pursuant to 8% convertible promissory notes due December 31, 1995. The notes are
in default.  Interest on the notes is due monthly and the notes are  convertible
at anytime into Class A Common Stock at $3.20 per share. Payment of the notes is
guaranteed personally by the Company's president, James R. Shaw.

                                       12

<PAGE>



         On February 2, 1996, the Company borrowed $31,000 from a shareholder of
the Company.  The  promissory  note is due December 31, 1996,  bears interest at
10%, and is personally guaranteed by Mr. Shaw.

         From April 1996 through May 1996, the Company  borrowed an aggregate of
$188,500 from various  shareholders of the Company. The promissory notes are due
at various times from July 1996 to November 1996 and bear interest at 18.25% per
annum. Repayment of the notes is personally guaranteed by Mr. Shaw.

ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K.


<TABLE>

         (a)      Exhibits:

<CAPTION>
    REGULATION                                                                                        CONSECUTIVE
    S-B NUMBER                                         EXHIBIT                                        PAGE NUMBER
       <S>          <C>                                                                                   <C>
       2.1          Agreement and Plan of Share Exchange among Casinos International, Inc.,               N/A
                    Great American Resorts, Inc. and Classic Restaurants International, Inc.
                    dated June 30, 1995, as amended (1)<F1>(2)<F2>
       3.1          Articles of Incorporation, as amended (2)<F1>(3)<F3>(4)<F4>                           N/A
       3.2          Bylaws (3)                                                                            N/A
       10.1         Amendment to Real Estate Purchase Agreement dated July 17, 1995 (2)<F2>               N/A
       10.2         Amendment to Real Estate Purchase Agreement dated September 29, 1995                  N/A
                    (2)<F2>
       10.3         Lease for Boca Raton restaurant                                                       ___
       10.4         Lease for Clearwater restaurant P                                                     ___
       10.5         Convertible promissory notes                                                          ___
       10.6         Promissory note to Carl Simpson                                                       ___
       10.7         Robert B. Farrow loan agreement                                                       ___
       10.8         Promissory note to BMI & Associates                                                   ___
       10.9         18.25% Promissory notes                                                               ___
       16           Letter from Mitchell Finley and Company, P.C. re change in certifying                 N/A
                    accountant (5)<F5>
       21           List of Subsidiaries                                                                  ___
       27           Financial Data Schedule                                                               ___
----------------------------
<FN>
<F1>
(1)      Incorporated  by  reference to the  Exhibits  filed with the  Company's
         Current Report on Form 8-K dated June 30, 1995,  Commission file number
         033-33556-D.

<F2>
(2)      Incorporated  by  reference to the  Exhibits  filed with the  Company's
         Annual  Report on Form 10-KSB for the fiscal year ended June 30,  1995,
         Commission file number 033-33556-D.

<F3>
(3)      Incorporated  by  reference to the  Exhibits  filed with the  Company's
         Annual  Report on Form 10-KSB for the fiscal year ended June 30,  1994,
         Commission file number 033-33556-D.


                                       13

<PAGE>


<F4>
(4)      Incorporated  by  reference to the  Exhibits  filed with the  Company's
         Current  Report on Form 8-K dated  January 31,  1996,  Commission  file
         number 033-33556-D.
<F5>
(5)      Application has been made under Rule 437 to waive this letter.


</FN>
</TABLE>

         (b)      The  following  reports on Form 8-K were filed during the last
                  quarter of the period covered by this report: None

                                       14

<PAGE>


                                   SIGNATURES

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

                                         CLASSIC RESTAURANTS INTERNATIONAL, INC.



Dated: October 15, 1996                     By:/s/James R. Shaw
                                            James R. Shaw, President

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







                            President and Treasurer (Prin-
                            cipal Executive Officer) and
/s/James R. Shaw            Director                        October 15, 1996
James R. Shaw                                                    Date



                           Executive Vice President,
                           Secretary (Principal Financial
/s/Caroline P. Anderson    Officer) and  Director           October 15, 1996
Caroline P. Anderson                                            Date



/s/Jerry W. Carter         Director                         October 15, 1996
Jerry W. Carter                                                 Date



                           Director
Daniel Howell                                                   Date




1:1996.10K

                                       15

<PAGE>


                         REPORT OF INDEPENDENT AUDITORS


Shareholders and Board of Directors
Classic Restaurants International, Inc.


We  have  audited  the  accompanying   balance  sheet  of  Classic   Restaurants
International,  Inc.  as of  June  30,  1996,  and  the  related  statements  of
operations,  stockholders' equity, and cash flows for the six months then ended.
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 audit.

We conducted our audit 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  by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material   respects,   the  financial   position  of  Classic   Restaurants
International,  Inc. as of June 30, 1996, and the results of its operations, and
its cash  flows for the six  months  then  ended in  conformity  with  generally
accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in Note 11 to the
financial statements,  the Company has suffered recurring losses from operations
and  has a net  capital  deficiency  that  raise  substantial  doubt  about  the
Company's ability to continue as a going concern.  Management's  plans in regard
to these matters are also described in Note 11. The financial  statements do not
include any adjustments that might result from the outcome of this uncertainty.


/s/Stark Tinter & Associates, LLC

Stark Tinter & Associates, LLC
Certified Public Accountants

Englewood, Colorado
August 28, 1996
                                       16
<PAGE>


[Letterhead of James Moore & Co.]

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Classic Restaurants International, Inc.:

We  have  audited  the  accompanying   balance  sheet  of  Classic   Restaurants
International,  Inc. as of December  31,  1995,  and the related  statements  of
operations,  stockholders'  equity  (deficit) and cash flows for the years ended
December 31, 1995 and 1994. 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  finanacial  statements  are  free of
material  mistatement.  An audit includes examining,  on a test basis,  evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material   respects,   the  financial   position  of  Classic   Restaurants
International,  Inc. as of December 31, 1995,  and the results of its operations
and its cash flows for the years ended December 31, 1995 and 1994, in conformity
with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern. As shown in the accompanying financial
statements,  the  Company  incurred  a net loss of  $1,247,695  for 1995 and has
incurred  substantial net losses since inception.  At December 31, 1995, current
liabilities  exceed current assets by $1,415,432  and total  liabilities  exceed
total  assets by  $804,564.  These  factors  raise  substantial  doubt about the
Company's  ability to continue as a going concern.  The financial  statements do
not include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts and  classification of liabilities that might be
necessary in the event the Company cannot continue in existence.

                                                  /s/James Moore & Co.

Gainesville, Florida
March 20, 1996

                                       17
                                      
<PAGE>


<TABLE>
                    Classic Restaurants International, Inc.
                          Consolidated Balance Sheets


<CAPTION>
                                                                                        December 31,           June 30,
                                                                                            1995                 1996
                                                           ASSETS
<S>                                                                                           <C>               <C>    
Current assets:
   Cash and cash equivalents                                                                   $ 19,666          $ 22,759
   Inventory                                                                                     15,971            16,080
   Prepaid expenses                                                                              13,133            13,945
   Due from officers and stockholders (Notes 4 and 10)                                           51,735            52,088
   Other receivables                                                                              6,882             3,685
                                                                                                 ------            ------
      Total current assets                                                                      107,387           108,557

Property and equipment - net of accumulated
     depreciation (Note 2)                                                                      539,437           476,935

Other assets:
   Intangibles net of accumulated amortization
    of $6,167 and $7,167                                                                         23,833            22,833
   Deposits                                                                                      47,598            37,418
                                                                                                -------           -------
                                                                                              $ 718,255         $ 645,743
                                                                                               ========          ========
<CAPTION>
                                      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
<S>                                                                                           <C>               <C>
Current liabilities:
   Checks written against future deposits                                                      $ 35,035              $ -
   Accounts payable                                                                             275,663           187,094
   Accrued expenses                                                                             309,987           151,019
   Notes payable-affiliates (Note 3)                                                            441,455           338,448
   Due to stockholder                                                                           351,911           320,641
   Advance banquet deposits                                                                      31,591            34,433
   Deferred revenue                                                                              41,175            19,521
   Deferred rent                                                                                 36,002            33,548
                                                                                                 ------           -------
     Total current liabilities                                                                1,522,819         1,084,704

Commitments and contingencies (Notes 4, 7, and 9)

Stockholders' equity (deficiency) (Note 6):
   Common stock, Class A no par value,
     1,800,000,000 shares authorized 2,173,665 and
     3,018,592 shares issued and outstanding                                                  1,751,087         2,563,157
   Common stock, Class B no par value, 200,000,000
     shares authorized, 200,000 shares issued
     and outstanding                                                                                200               200
   Accumulated deficit                                                                       (2,555,851)       (3,002,318)
                                                                                             ----------        ----------
       Total stockholders' deficit                                                             (804,564)         (438,961)
                                                                                              ---------         ---------

                                                                                              $ 718,255         $ 645,743
                                                                                               ========          ========

</TABLE>
                See accompanying notes to financial statements.
                                       18
<PAGE>
<TABLE>
                     Classic Restaurants International, Inc.
                      Consolidated Statements of Operations
               For The Years Ended December 31, 1994 and 1995 and
                       The Six Months Ended June 30, 1996

<CAPTION>

                                                                1994                  1995                    1996
                                                              --------              --------                --------

<S>                                                       <C>                     <C>                     <C>
Net sales                                                 $ 1,902,543              $ 2,632,151            $ 1,372,352

Operating expenses:
   Operating and maintenance                                1,724,435                2,497,044              1,247,567
   General and administrative                                 985,134                1,223,793                480,960
   Depreciation and amortization                               99,535                  142,291                 71,711
                                                             --------                 --------                -------
    Total operating expenses                                2,809,104                3,863,128              1,800,238
                                                            ---------                ---------              ---------

Loss from operations                                         (906,561)              (1,230,977)              (427,886)

Other income (expense):
   Other income                                                 4,357                       -                     300
   Interest expense                                            (6,483)                 (16,718)               (18,881)
                                                              -------                 --------              ---------
                                                               (2,126)                 (16,718)               (18,581)

Net loss                                                   $ (908,687)            $ (1,247,695)            $ (446,467)
                                                            =========              ============             =========

Per share information:

 Weighted average shares
 outstanding                                                1,744,964                2,042,036              2,799,791
                                                            =========               ==========              =========

 Net loss per share                                        $     (.52)             $      (.61)            $     (.16)
                                                            =========               ==========              =========

</TABLE>



                See accompanying notes to financial statements.
                                       19
<PAGE>
<TABLE>
                     Classic Restaurants International, Inc.
          Consolidated Statements of Stockholders' Equity (Deficiency)
                  For The Two Years Ended December 31, 1995 and
                       The Six Months Ended June 30, 1996


<CAPTION>


                                           COMMON STOCK CLASS A               COMMON STOCK CLASS B                    Accumulated
                                        SHARES             AMOUNT        SHARES              AMOUNT                    DEFICIT
<S>                                  <C>                <C>             <C>                   <C>                      <C>
Balance December 31, 1993            1,599,100          $ 782,974       200,000           $     200                    $ (399,469)

Issuance of shares for cash             78,852            221,688            -                    -                            -
Issuance of shares for no
 consideration                          39,013                 -             -                    -                            -
Issuance of shares for
 repayment of shareholder
 loan                                   93,750            300,000            -                    -                            -
Net loss for the year                       -                  -             -                    -                      (908,687)
                                     ---------          ---------       -------             --------                 ------------

Balance December 31, 1994            1,810,715          1,304,662       200,000                  200                   (1,308,156)

Issuance of shares for cash            133,400            223,425            -                    -                            -
Issuance of shares for no
 consideration                           5,050                 -             -                    -                            -
Issuance of shares for
 services                              225,000            225,000            -                    -                            -
Shares canceled                           (500)            (2,000)
Net loss for the year                       -                  -             -                    -                    (1,247,695)
                                     ---------          ---------       -------             --------                 ------------  

Balance December 31, 1995            2,173,665          1,751,087       200,000                  200                   (2,555,851)

Shares issued for services             150,000            150,000            -                    -                            -
Shares issued for cash                 155,960            334,563            -                    -                            -
Shares issued for
 reorganization (Note 9)               538,967            327,507            -                    -                            -
Net loss for the period                     -                  -             -                    -                      (446,467)
                                     ---------          ---------       -------             --------                 ------------

Balance June 30, 1996                3,018,592         $2,563,157       200,000            $     200                $  (3,002,318)
                                     =========          =========       =======             ========                 ============

</TABLE>
                See accompanying notes to financial statements.
                                       20
<PAGE>
<TABLE>
                     Classic Restaurants International, Inc.
                      Consolidated Statements of Cash Flows
               For The Years Ended December 31, 1994 and 1995 and
                       The Six Months Ended June 30, 1996

<CAPTION>




                                                                          1994                  1995                  1996
                                                                         ------                ------                ------
<S>                                                                   <C>                   <C>                   <C>        
Cash flows from operating activities:
Net loss                                                              $ (908,687)           $ (1,247,695)         $ (446,467)
Adjustments to reconcile net loss
 to net cash provided by (used in)
 operating activities:
    Depreciation and amortization                                         99,535                 142,291              71,711
    Common stock issued for services                                          -                  225,000             150,000
 Changes in assets and liabilities:
  (Increase) decrease in inventory                                        (7,995)                  1,854                (109)
  (Increase) decrease in prepaid expenses                                  9,458                 (12,507)               (812)
  (Increase) decrease in other receivables                                15,333                  (3,605)              3,197
  (Increase) decrease in deposits                                         17,595                 (11,168)             10,180
  Increase (decrease) in accounts
   payable and accrued expenses                                          259,139                 230,859            (250,100)
  Increase (decrease) in advance deposits                                 (1,345)                   (891)              2,842
  Increase (decrease) in deferred rent                                    36,910                    (908)             (2,454)
  Increase in deferred costs                                              15,000                      -                    -
  Increase (decrease) in deferred revenue                                 40,777                 (14,602)            (21,654)
                                                                         -------                 -------             -------
      Total adjustments                                                  484,407                 556,323             (37,199)
                                                                        --------                 -------             --------
      Net cash (used in) operating activities                           (424,280)               (691,372)           (483,666)

Cash flows from investing activities:
  Purchase of fixed assets                                              (672,691)                 (5,436)             (8,209)
                                                                        --------                 --------            -------
     Net cash (used in) investing activities                            (672,691)                 (5,436)             (8,209)
                                                                        --------                 --------            -------

Cash flows from financing activities:
  Net proceeds from issuance of common
   stock                                                                 223,022                 223,425             334,563
  Gross proceeds from notes payable                                       93,949                 347,506             222,063
  Stockholder advances (repayments)                                      474,428                 177,483             (26,270)
  Advances to stockholders                                                    -                  (36,735)               (353)
  (Advances) repayments on note
   receivable - stockholder                                              309,550                 (15,000)                  -
  Principal payments on notes payable                                     (5,313)                     -                    -
  Increase (decrease) in bank overdraft                                      959                  19,901             (35,035)
  Refund of canceled stock                                                    -                   (2,000)                  -
                                                                             ---                 -------                  --
      Net cash provided by financing
      activities                                                       1,096,595                 714,580              494,968
                                                                       ---------                 -------              -------

Net increase (decrease) in cash and
 and cash equivalents                                                       (376)                 17,772                3,093
Beginning - cash and cash equivalents                                      2,270                   1,894               19,666
                                                                          ------                  ------              -------
Ending - cash and cash equivalents                                     $   1,894              $   19,666           $   22,759
                                                                        ========               =========            =========
<CAPTION>
                See accompanying notes to financial statements.
                                       21
<PAGE>

                     Classic Restaurants International, Inc.
                      Consolidated Statements of Cash Flows
               For The Years Ended December 31, 1994 and 1995 and
                       The Six Months Ended June 30, 1996


<S>                                                                   <C>                   <C>                   <C>
Supplemental cash flow information:

    Cash paid for :       Interest                                     $   3,698             $   9,506             $    8,881
                          Income taxes                                 $      -              $      -              $       -


Non-cash investing and financing activities:

Common stock issued for the cancellation
 of related party debt                                                 $ 300,000             $      -              $      -
Common stock issued in reorganization                                   $     -              $      -              $ 327,507


</TABLE>

                See accompanying notes to financial statements.
                                       22
<PAGE>

                     CLASSIC RESTAURANTS INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1996


1.     Summary of Significant Accounting Policies:

ORGANIZATION:   Classic  Restaurants  International,   Inc.  (the  Company)  was
organized  under  the laws of the State of  Florida  on April 7,  1992,  for the
purpose of developing and operating  restaurants using a dinner theater concept.
On December  1, 1992,  the Company  opened  Musicana  Supper Club in Boca Raton,
Florida.  The Company opened Musicana  Dinner Theater in Clearwater,  Florida on
May 14, 1994. The financial  statements  include the accounts of the Company and
its wholly owned subsidiary.  All intercompany transactions have been eliminated
in consolidation.

Certain  classifications  from prior year financial statements have been changed
to conform to the current period presentation.

CASH AND CASH EQUIVALENTS:  For the purpose of reporting cash flows, the Company
considers all highly liquid  investments with an original maturity date of three
months or less to be cash equivalents.

PROPERTY AND EQUIPMENT:  Property and equipment consists primarily of restaurant
equipment and leasehold improvements which are recorded at cost. Depreciation on
restaurant  equipment  is  computed  using  the  straight-line  method  over the
estimated  useful lives of the assets.  Leasehold  improvements  are depreciated
using the straight-line  method over the lesser of the term of the related lease
or the estimated  useful lives of the assets.  Depreciation  expense  charged to
operations  was $140,291  and $97,535 for the years ended  December 31, 1995 and
1994, and $70,878 for the six months ended June 30, 1996.

Periodically, management evaluates the estimated useful life of its property and
equipment to determine  whether  intervening  economic events and  circumstances
have affected the remaining  useful  lives.  In light of the current  conditions
noted in Note 12, it is reasonably  possible that the Company's estimate that it
will recover the  carrying  amount of its  property  and  equipment  from future
operations will change in the near term.

INTANGIBLE ASSETS AND  AMORTIZATION:  Intangible assets include amounts paid for
the Musicana  tradename and music  library.  Amortization  is computed using the
straight-line  method  over  fifteen  years.  Amortization  expense  charged  to
operations was $2,000 for the years ended December 31, 1995 and

1994 and $1,000 for the six months ended June 30, 1996.

DEFERRED RENT: The lease agreement for a restaurant building contains provisions
for no initial  monthly rent and for scheduled  rent increases (see Note 7). The
deferred rent amount  represents the difference  between amounts paid and rental
expense computed on a straight-line basis over the entire lease term.
                                       23
<PAGE>

                     CLASSIC RESTAURANTS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996



1.     Summary of Significant Accounting Policies (continued):

REVENUE  RECOGNITION:  Revenues are  recognized  in the period when the customer
attends the dinner  theater and  receives  the  service.  Revenues  collected in
advance are recorded as advance banquet deposits and deferred revenue.


INVENTORY:  Inventory  is recorded  at cost and  consists of food and bar items.
Cost is determined on the first-in, first-out (FIFO) method.

ESTIMATES:  Management  uses estimates and  assumptions  in preparing  financial
statements.  These  estimates  and  assumptions  affect the reported  amounts of
assets and liabilities, the disclosure of contingent assets and liabilities, and
the  reported  revenues and  expenses.  Actual  results  could differ from those
estimates.

ADVERTISING:  The Company  expenses costs of advertising as incurred.  The costs
related to  brochures  and other  printed  materials  are  amortized  over their
estimated useful lives.  Advertising  costs charged to operations were $174,891,
$273,146, and $46,904 during 1994, 1995, and 1996 respectively.

2.     Property and Equipment:

Property and equipment consists of the following:

                                        December 31,            June 30,
                                           1995                   1996
Leasehold improvements                  $ 519,946              $ 519,946
Equipment                                 251,987                260,196
Furniture                                  22,694                 22,694
                                          -------                -------
                                          794,627                802,836
Less: Accumulated depreciation            255,190                325,901
                                         --------               --------
                                        $ 539,437              $ 476,935
                                          -------               --------

                                       24
<PAGE>

                    CLASSIC RESTAURANTS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996



3.     Notes Payable-affiliates:

Notes payable consist of the following:

                                         December 31,                June 30,
                                             1995                      1996

Non-interest  bearing  loan from a
shareholder,    due   on   demand,
unsecured                                $     -                    $     5,000



8% convertible promissory notes to
stockholders,     interest     due
monthly,  principal  due  December
31, 1995.  Convertible  at anytime
into Class A common stock at $3.20
per share by the  holder.  Payment
of notes is guaranteed  personally
by   the   Company's    president,
unsecured (in default)                     113,948                      113,948

Non-interest  bearing loan payable
to  Casino's  International,  Inc.
made in conjunction with agreement
and   plan  of   share   exchange,
unsecured (See Note 9)                     327,507                           -

10%  promissory  note  due  during
December,  1996, guaranteed by the
Company's president                             -                        31,000

18.25%  promissory  notes due from
July,  1996  to  November,   1996,
unsecured                                       -                       188,500
                                           -------                      -------
                                         $ 441,455                  $   338,448
                                           =======                      =======

The weighted average interest rate for short-term  borrowings was  approximately
13% at June 30, 1996.

4.     Concentrations of Credit Risk:

Significant concentrations of credit risk for all financial instruments owned by
the Company as of December 31, 1995, and June 30, 1996 are as follows:

                                       25
<PAGE>

                     CLASSIC RESTAURANTS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996


4.     Concentrations of Credit Risk (continued):

DEMAND  DEPOSITS:  The Company has demand  deposits with local banks in Atlanta,
Georgia;  Clearwater,  Florida and Boca Raton,  Florida,  with bank  balances of
$29,465 and $22,757 at December 31, 1995 and June 30,  1996.  The Company has no
policy requiring  collateral or other security to support its deposits  although
all demand deposits with banks are federally insured up to $100,000 by the FDIC.

DEPOSITS:  The  Company's  deposits  are  comprised  of amounts  held by various
lessors of real  property for  security,  last month's rent and  utilities.  The
Company  has no policy  requiring  collateral  or other  security to support its
deposits.

The Company has  short-term  receivables  due from three  stockholders  totaling
$51,735  and  $52,088  as of  December  31,  1995.  and  June  30,  1996.  These
receivables are  uncollateralized.  The Company's policy of requiring collateral
or other security on loans made to officers or  stockholders  is determined on a
case-by-case basis.

5.     Income Taxes:

Deferred income taxes may arise from temporary differences resulting from income
and  expense  items  reported  for  financial  accounting  and tax  purposes  in
different  periods.  Deferred  taxes are  classified as current or  non-current,
depending on the  classifications  of the assets and  liabilities  to which they
relate.  Deferred taxes arising from temporary  differences that are not related
to an asset or liability are classified as current or  non-current  depending on
the periods in which the temporary differences are expected to reverse.

At June 30, 1996,  the Company has a net operating  loss  carryforward  totaling
approximately  $3,000,000  that may be  offset  against  future  taxable  income
through  2011. No tax benefit has been  reported in the  accompanying  financial
statements,  however,  because the Company  believes  there exists a substantial
possibility  that the  carryforward  will expire  unused.  Accordingly,  the tax
benefit of the loss carryforward has been offset by a valuation allowance of the
same amount.  The expected tax benefit that would result from  applying  federal
statutory  tax rates to the pre-tax loss  differs  from amounts  reported in the
financial statements because of the increase in the valuation allowance.

6.     Stockholders' Equity:

During 1994,  the Company  issued  78,852  shares of its Class A common stock in
exchange for cash aggregating $221,688 net of related costs.

During 1994 the Company  issued 39,013 shares of its Class A common stock for no
consideration.

                                       26
<PAGE>

                     CLASSIC RESTAURANTS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996



6.     Stockholders' Equity (continued):

During  September 1994, the Company issued 93,750 shares of Class A common stock
valued at $300,000 to its majority shareholder,  as partial repayment of amounts
due said shareholders.

During 1995, the Company issued 133,400 shares of its Class A common stock.  Net
proceeds received for these shares was $223,425.

In December,  1995, the Company issued 200,000 shares of Class A common stock to
its  President,  and 25,000 shares of Class A common stock to its Executive Vice
President  and  Secretary,  for services  rendered.  These shares were valued at
$225,000 based on other stock sales during the month of December, 1995.

During 1995 the Company  issued  5,050 shares of its Class A common stock for no
consideration and canceled 500 shares of Class A common stock valued at $2,000.

During  January,  1996 the Company  issued  538,967 shares of its Class A common
stock in conjunction with the share exchange agreement described in Note 9.

During  February,  1996 the Company  issued 150,000 shares of its Class A common
stock in exchange for services valued at $150,000.

During March,  1996 through May, 1996 the Company  issued  155,960 shares of its
Class A common stock for cash aggregating $334,563.

7.     Leases:

The  Company  entered  into a  non-cancelable  operating  lease on a building in
November 1992. The lease expires in November 1997 with an option to renew for an
additional five years.  The Company also had a  nonrefundable  $25,000 option to
purchase the building for $1,300,000 which expired June 1, 1994. The Company did
not exercise the option and recorded an expense of $25,000 in 1994.

In addition,  the Company  entered into a  non-cancelable  operating  lease on a
building in December 1993. The lease expires in August,  1999, with an option to
renew for an  additional  five years.  The lease  provides that no rent is to be
paid in the initial six months.  Thereafter,  the monthly  rental amount will be
$6,000, increasing to $6,500 and $7,000 in the nineteenth and thirty-first month
of the lease,  respectively.  The Company is also  responsible  for its share of
related property taxes and common area maintenance costs.

The Company also leases certain office equipment under various operating leases.

                                       27
<PAGE>

7.     Leases (continued):

Minimum future rental  payments  under  non-cancelable  operating  leases having
remaining  terms in  excess of one year as of June 30,  1996,  for the next five
years and thereafter are as follows:

                           Year ended June 30:
                           1997                               $ 170,852
                           1998                                 130,852
                           1999                                  78,359
                           2000                                  31,744
                           2001                                   3,120
                                                                 ------
                           Total                              $ 414,927
                                                               --------

The  Company  also rents  various  apartments  under one year  operating  leases
expiring through June, 1997 for total monthly rentals of $2,475.

Rent expense was $229,655,  $256,922,  and $126,732 during 1994,  1995, and 1996
respectively.

8.     Related Party Transactions:

During 1994, the Company's majority shareholder, repaid $309,550 on a promissory
note owed to the Company. This shareholder also made $474,428 in advances to the
Company  during 1994,  of which  $300,000 was repaid with the issuance of Common
stock (see Note 6).  During  1995,  this  shareholder  advanced  the  Company an
additional  $177,483.  During 1996  $31,270 was repaid.  The  balances  due this
shareholder  at December 31, 1995, and June 30, 1996 were $351,911 and $320,641,
are unsecured and have no set interest or repayment terms. In addition,  another
shareholder  made a $5,000  working  capital  advance to the Company during 1996
(see Note 3).

During 1996 $10,000 of interest was accrued and charged to operations related to
these advances.
                                       28
<PAGE>

                     CLASSIC RESTAURANTS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996



9.     Recapitalization:

In June 1995,  the Board of Directors  of the Company  entered into an agreement
and  plan  of  share   exchange   with  two  unrelated   corporations,   Casinos
International,  Inc.  (Casinos)  and Great  American  Resorts,  Inc. The parties
agreed  that the  Company  will be merged with and into  Casinos,  with  Casinos
continuing its corporate existence and being the corporation surviving the share
exchange.  The  effective  date of the  agreement  was January 31, 1996.  At the
effective  date,  the Company became a wholly owned  subsidiary of Casinos,  and
Casinos  changed its name to Classic  Restaurants  International,  Inc.  and the
existing members of the Board of Directors of Casinos resigned and were replaced
by existing  members of the Board of Directors of the Company.  On the effective
date,  Casinos issued shares of its Casinos  common stock to all  non-dissenting
shareholders  of the Company in exchange  for all of the issued and  outstanding
Company  stock at an exchange  rate of: one share of Casino Class A common stock
for each one share of Company Class A common stock;  one share of Casino Class B
common stock for each one share of Company Class B common  stock;  and one share
of Casino Class A common  stock for each one share of Company  Class A preferred
stock.  Shareholders  of the  Company  had the right to  dissent  from the share
exchange provided in this agreement and to obtain payment for their shares.

Pursuant to this agreement the  shareholders of the Company  received  2,173,665
shares of Class A common  stock and  200,000  shares of Class B common  stock in
exchange  for its  issued  and  outstanding  common  and  preferred  shares.  In
addition,  538,967  shares  of  Class A  common  stock  are  held  by the  prior
shareholders  of  Casinos.   This  transaction  has  been  accounted  for  as  a
recapitalization  of the Company and the  issuance of 538,967  shares of Class A
common stock for the net assets of Casinos and the  forgiveness of the liability
due to Casinos by the Company.

10.    Fair Value of Financial Instruments:

The fair value of the Company's cash and cash equivalents, employee advances and
other  receivables,  deposits,  accounts  payable,  accrued expenses and advance
banquet deposits,  approximates carrying value due to the short-term maturity of
the instruments.

It was not practicable to estimate the fair value of the asset "Due from officer
and  stockholders"  since these instruments are with related parties and have no
set repayment terms.  Additionally,  it was not practicable to estimate the fair
value of the liabilities  "Notes payable and "Due to  stockholders  for the same
reasons. See Note 3 for the terms of these liabilities.
                                       29
<PAGE>

                     CLASSIC RESTAURANTS INTERNATIONAL, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996


11.    Basis of Presentation:

The  accompanying  financial  statements  have been prepared in conformity  with
generally accepted accounting principles,  which contemplate continuation of the
Company as a going  concern.  However,  the  Company has  sustained  substantial
operating losses in recent years. In addition,  the Company has used substantial
amounts of working capital in its operations. Further, at June 30, 1996, current
liabilities exceed current assets by $976,147 and total liabilities exceed total
assets by $438,961.

These factors create an uncertainty about the Company's ability to continue as a
going  concern.  Management is planning to raise  additional  equity  capital by
undertaking  a private  offering of its common  stock under  Regulation D of the
Securities  Act of  1933  and  raising  up to  $5,000,000.  Management  also  is
currently working on increasing revenues and reducing expenses.

In view of these  matters,  realization  of a major portion of the assets in the
accompanying  balance  sheet  is  dependent  upon  continued  operations  of the
Company,  which in turn is  dependent  upon the  Company's  ability  to meet its
financing  requirements,  and the success of its future  operations.  Management
believes  that  actions  presently  being  taken to raise  capital  and  improve
operating results provide the opportunity for the Company to continue as a going
concern.
                                       30


<PAGE>