SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB/A

            (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

                   For the fiscal year ended December 31, 1998

          ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                           Commission file #: 33-87714

                        OLYMPIC ENTERTAINMENT GROUP, INC.
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Nevada                                             88-0271810
           ------                                             ----------
(State or other jurisdiction                                (IRS Employer
      of incorporation)                                  Identification Number)


             2550 E. Desert Inn Road, Suite 338, Las Vegas, NV 89121
             -------------------------------------------------------
               (Address of principal executive offices)     (Zip Code)

                  Registrant's telephone number: (702) 369-2588
                                                 ---------------

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

Common Stock $0.01 Par Value                                  NONE
----------------------------                         ---------------------
     (Title of Class)                               (Name of Each Exchange
                                                      on Which Registered)

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

                                      NONE
                                 --------------
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days. (1) Yes X No (2) Yes X No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not 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-K or any amendment to this
Form 10-K. [ X ]

At December 31, 1998 there were  2,973,080  shares of common stock  outstanding.
The  aggregate  market value of the common stock held by  non-affiliates  of the
registrant  (i.e.,  excluding shares held by executive  officers,  directors and
control persons as defined in rule 405).

Documents incorporated by reference:                 None.


<PAGE>


                                     PART I

Item 1. Business
----------------

(a) General Development of Business
    -------------------------------

Olympic  Entertainment  Group, Inc. (the "Company") is a multimedia  educational
company and was incorporated on May 21, 1987 in the State of Nevada. The Company
was originally  formed to finance,  produce  co-produce  and  distribute  motion
pictures and television  shows and pursued various  opportunities  through 1993,
when the Company's  management  decided to focus upon the development of a cable
television  network for the  distribution  of children's  nonviolent  television
programming.  From 1993 through 1995 the Company  developed  this concept and in
1995,  launched the Children's Cable Network  ("CCN").  To date, the Company has
had success in several markets but has experienced marginal or poor results from
the efforts of licensees and has  determined it to be in the Company's  interest
to seek to recapitalize the Company and to seek other venues of distribution.

(b) Narrative Description of Business
    ---------------------------------

The Company has created a  children's  educational  division  called  Children's
Cable  Network  ("CCN" or the  "Network").  Prior to January  1998,  the Company
acquired,  purchased,  and licensed  educational  programming for the Children's
Cable Network; specializing in nonviolent, educational,  informative and special
interest  preschool  programming,   children's  classics  programs  and  G-rated
children's  motion pictures.  The Company's  present lack of any revenue and any
cash reserves has resulted in cessation of these activities.

All  reference  to the  Company  in the  following  discussion  of the  business
activities of the Company includes Children's Cable Network.

Children's Cable Network

CCN provides  award-winning,  nonviolent,  educational,  informative and special
interest  children's  programming for television and in the process of providing
this   programming,   creates   business   opportunities   for  individuals  and
syndications looking to get into the cable television broadcasting business.

Federal Legislation

The Federal  Communications  Act of 1984  requires  cable  operators  to provide
channels  for lease to the  public in an attempt to  enhance  the  diversity  of
program choices available to cable  subscribers.  Generally,  such allocation of
channels is referred to as "leased  access."  Section 612 of the  Communications
Act of 1984  established  a federal  scheme  through  channel  leasing to assure
access to cable systems by third parties  unaffiliated  with the cable operator.
Under the  amendments to Section 612,  cable  operators  were also  permitted to
place programming from a qualified minority or educational programming source on
up to 33 percent of the cable system's designated leased access channels.

Additionally,  the Cable Act of 1992  mandated that every cable system with more
than thirty-six  channels and less than 55 activated  channels must designate 10
percent  of their  capacity  to leased  access.  Systems  with  greater  than 55
activated channels must set aside 15 percent of their capacity to leased access.
In addition,  the Federal  Communications  Act of 1984 provides  individuals and
groups the  opportunity to use the public,  educational  and  government  access
channels  offered by the cable  companies.  Systems with fewer than 36 activated
channels  are not  required  to make lease  channel  capacity  available  unless
otherwise  required to do so by terms of the franchise in effect on December 29,
1994.  The Cable  Television Act of 1992 renewed  government  supervision of the
franchised cable  television  industry which was deregulated by the Cable Act of
1984.  Both Acts are  amendments to the  Communications  Act of 1934.  The Cable
Television  Act of 1992 ("1992 Act")  authorized  the FCC to implement  rate and

<PAGE>

service  regulation  for certain basic cable  television  services and to create
regulations that will increase  competition to franchised  cable  operators.  On
April 1, 1993,  the FCC  announced  several  features of the rules it planned to
implement in connection with the 1992 Act. Most of the announced rules concerned
rate  regulation for franchised  services as well as a temporary rate freeze and
rollback.  In order to promote competition with franchised cable operators,  the
FCC announced  program access  regulations as part of the Act. These  provisions
essentially allow competitive cable operators to purchase television programming
at fair prices.  Management believes that these provisions of the Act may result
in lower  operating  costs for the Company,  however,  there can be no guarantee
that revisions in said regulation will not materially affect the Company.

The  cable  television  industry  is  subject  to both  regulatory  restrictions
implemented primarily by the Federal Communications Commission, ("FCC") and also
legislation which affects communications and broadcast industries in general.

The Children's  Television Act of 1990  established new  requirements  including
that each broadcasting  station must provide programs that serve the educational
and informational needs of young viewers.  Accordingly,  broadcasters must limit
the amount of advertising aired during  children's  programming and must provide
programs that meet the educational and informational needs of children.

Cable Affiliates

Prior to  January  1,  1998,  the  Company  licensed  its  programming  to Cable
Affiliates  who would  cablecast  this  programming on their local cable systems
through the purchase of time on a leased  access  channel.  The Company  obtains
Cable Affiliates  through business  opportunity shows and seminars,  direct mail
and business  opportunity  advertisements  in national  publications  and on the
internet.  The Company  licensed  only one Cable  Affiliate in each cable system
market.

Employees

The Company  currently  has no employees in the  corporate  office in Las Vegas,
Nevada,  having  reduced its staff from  eighteen  employees  in order to reduce
costs. The Company is being run by Directors.

Competition

The Company's  business is very competitive.  The Company is in competition with
many  cable  companies  none of  which  specialize  in  nonviolent,  educational
programming.  Many  competitors  exist which have  greater  financial  resources
and/or more  experience  in the delivery of  programming  than the Company.  The
Company competes with all other broadcasters of children's programming. On cable
television  competitors include The Family Channel,  The Learning Channel,  PBS,
Nickelodeon,  and The Disney Channel.  The Company intends to offer  programming
Monday through  Friday,  6:00 AM to 12:00 Noon which is potentially  more weekly
air  time  of  nonviolent,   educational  programming  than  all  of  the  other
competitors.

Programming

The  programs  consist  of  nonviolent,  educational,  informative  and  special
interest programming which teach positive character  development,  morality, and
introduction to numbers,  letters and music.  Each program is  approximately  25
minutes in length,  which  leaves 5 minutes of time for the Cable  Affiliate  to
sell commercial advertisements,  sponsorships, and/or create and produce locally
originated programming.

The Company, through its own research, has located many award-winning children's
series  produced  since 1950,  some of which the Company plans to obtain through
direct  acquisition  or  licensing,  provided  the  Company is able to raise the
capital  necessary so to do. The programming for children includes puppet shows,
live action and animated  characters,  children's classic stories and music that
is designed to teach children in a fun and entertaining way.

<PAGE>


Library

The library of programs,  many of which are award-winning,  focus on educational
value as well as character  and morality  development.  To date,  each series of
programs is aimed at the 1 1/2 to 6 year old  audience  assisting  them in their
preparation  for school.  The Company owns outright or licenses  under long term
leases each of the following programs.

           Olympic Entertainment Group, Inc.'s Library Of Programming

         The Shari Show
         26 1/2 hour episodes
         The Shari Show takes place in the TV station called Bearly Broadcasting
         where all of the  positions  are manned by puppets.  Shari Lewis is the
         secretary to the station manager,  Mr. Bearly.  As they put on the full
         range of typical shows at Bearly  Broadcasting,  human  interaction and
         value judgments are explored and revealed.  More than an  entertainment
         show for  children of all ages,  The Shari Show  stimulates  children's
         senses of curiosity  and humor,  which creates  involvement...  a basic
         measurement of the educational process.  Shari Lewis and The Shari Show
         have won  seven  (7)  Emmys,  the  Peabody  award  and  numerous  other
         prestigious awards for excellence. Programming on license.

         Bill Cosby's PicturePages
         80 1/2 hour episodes
         Bill  Cosby's  PicturePages,  winner of a Golden  Globe  award and Gold
         Medalist of the International Film Festival of New York, helps children
         develop important skills like following directions,  drawing,  hand-eye
         coordination,  clear thinking and numbers.  PicturePages is the epitome
         of educating  children  with love and  laughter.  Bill  Cosby's  unique
         approach,  which  delights  children and adults,  is recommended by the
         National Education Association. Programming on license.

         Dusty's Treehouse
         260 1/2 hour episodes
         Dusty's  Treehouse is a children's show designed for ages 2-6. The show
         uses both adult and children  mixed with  puppets.  Winner of eight (8)
         Emmys and the coveted George Foster Peabody award, Dusty's Treehouse is
         very entertaining,  while at the same time teaches children how to cope
         when someone was injured, what love is, to look both ways when crossing
         the street,  never let  strangers  into the house and other  social and
         practical skills for dealing with today's world. Owned by the Company.

         Achievements In African-American History
         10 1/2  hour programs
         Achievements  in  African-American  History  documents  in a  ten  part
         series,  the  historical  achievements  of black  women  and men in the
         fields  of  literature  and  poetry,  cinema,  religion,  medicine  and
         science.  This series features noted black  personalities such as Abbey
         Lincoln,  Roscoe Lee Browne,  Brock  Peters and Lou  Gossett,  Jr., who
         document through narration,  dramatic scenes and readings,  some of the
         important historical contributions made by African- Americans. Owned by
         the Company.

         Hot Fudge
         75 1/2 hour episodes
         Hot Fudge is the  recipient  of two  national  honors,  the  Action for
         Children's  Television  Award for  Outstanding  Contribution  to Mental
         Health  Programming  for children,  and the San Francisco State College
         Excellence in Broadcasting  Award. This nationally  recognized  program
         that  combines  live  action  and a  delightful  cast of  puppets  with
         lessons, music and fun. Join the Hot Fudge Gang as they learn about the

<PAGE>


         complexities of relationships,  friendship,  self esteem, feelings, and
         cooperation,  among many others,  through song, live action skits,  and
         game shows.  Each  energetic  show follows a single theme with engaging
         dialogue And lively performances. Owned by the Company.

         KidStreet
         130 1/2 hour episodes
         This highly  exciting  game show for children is also family  oriented.
         Three  pairs of  siblings,  the red  team,  the blue team and the green
         team,  vie for  victory and prizes by  guessing  how one  sibling  will
         answer a set of questions.  Points are awarded for correct  answers and
         the team  with the most  points  wins the  chance  to solve  the  final
         puzzle.  The show motivates kids to learn problem solving skills and to
         better understand their sisters and brothers. Programming on license.

         Coming To Ametrica
         2 1/2 hour episodes
         Coming To  Ametrica  is a  combination  of live  action  and  animation
         designed  to teach  children  as well as adults  the  metric  system of
         weights and  measures.  In this  series,  a spaceship  kidnaps  Admiral
         Gordon and six young  people who have been chosen to teach  America the
         metric system of  measurements.  While  detained aloft in the spaceship
         the Admiral and his young crew learn  everything there is to know about
         the metric system.

         The spaceship computer uses lively and entertaining  animation to teach
         the skeptical  Americans about liters,  meters,  and grams.  They learn
         that the metric system is used worldwide, and that once understood,  it
         is easier to use than  gallons,  yards and  pounds.  The series is fun,
         entertaining and most of all, highly educational. Owned by the Company.

         Metric Series
         38  15 minute episodes
         (approximately 600 minutes of animation)
         A series of animation  programs designed to teach children,  as well as
         adults,  the metric system of weights and  measures.  The Metric Series
         features  a mild  mannered  character  named  Newton  Joule  who,  when
         conversion problems arise, turns into the superhero Metric Man to teach
         children about liters,  meters and grams.  They learn the metric system
         is used worldwide,  and that once understood,  it is easier to use then
         gallons,  yards and pounds. The series is fun, entertaining and most of
         all, highly educational.

         Scott McGrout Inside Out
         1  30 minute special
         A highly  informative and  entertaining  film on body  awareness.  This
         beautifully  animated  story  introduces  Scott  McGrout  who  takes  a
         fascinating journey through the human body. This film teaches the child
         how important each part of the body is and how each part works together
         to keep the body healthy and strong. Owned by the Company.

         Kerchoo - What Really Happens When You Catch A Cold
         1  10 minute film short
         In this  imaginative  film, Scott McGrout learns about the common cold.
         Experiencing cold spells and sneeze quakes,  Scott and the viewer watch
         the body fight off Elvirus and her  vacation  companion,  Common  Cold.
         Owned by the Company.

         Rod Rocket
         135  5 minute episodes (675 minutes of animation)
         The exciting  adventures of two  astronauts in outer space in wonderful
         animation. Owned by the Company.

<PAGE>


         Feature-Length Films
         Fifteen movies with Tarzan, Abbott and Costello, Danny Kaye and Shirley
         Temple, among others.


Item 2. Properties
------------------

The Company  presently  leases no space and during the report period  terminated
its leases in Burbank, California, and subsequently in Las Vegas, Nevada.


Item 3. Legal Proceedings
-------------------------

The Company is currently involved in the following legal matters:

The  Company  is a  Defendant  in Civil  Action  96 CV 1930,  Capital  Funding &
Financial  Group,  Inc., et al. vs. Olympic  Entertainment  Group,  Inc. In this
cause,  Plaintiff seeks refund of approximately  $120,000 paid to the Company as
licensing  fees in 1996.  The  Company  intends to defend  itself and pursue its
claims for licensing  fees owed in excess of $100,000 and for damages  caused by
Capital Funding through tortuous interference with various contracts.  A default
judgment in excess of $1,000,000 was entered  against the Company on November 2,
1998 under allegedly improper  circumstances.  The default order was stayed at a
subsequent hearing. A motion to set aside the judgment is pending.

The Company is a Defendant  in Lee Van Dyke,  Judy Lynn  Kloepfer and William G.
Chandler vs.  Olympic  Entertainment  Group,  Inc.,  et al.,  which was filed in
Superior Court of Los Angeles County,  Case No.  BC189116,  seeking class action
status and alleging  various  allegations of violation of California  securities
laws,  breach  of  contract  and  violation  of  the  California   Business  and
Professions  Code. The Company intends to vigorously defend itself and deny that
it ever offered or sold any  securities  nor did it  participate  in the sale of
securities.  The Company  further intends to assert its rights to indemnity from
the other defendants which were licensed broadcast rights by the Company.

The Company is a defendant in Case No.  A394431 in the  District  Court of Clark
county, Nevada, entitled Desert Inn Office III, Limited Partnership,  et al. vs.
Olympic  Entertainment Group, Inc., et al. The alleged total for rent and "build
out"  charges is  $229,765.43  according  to the  lawsuit.  The  Company has not
started nor has it responded to any discovery motions in this case.


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

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter ended December 31, 1998.


                                     PART II

Item 5. Market for Registrant's Common Equity & Related Stockholder Matters
---------------------------------------------------------------------------
<TABLE>
<CAPTION>

(a)      Market Information
         (1)      (i)      None
                  (ii)     Not applicable
                  (iii)             Fiscal Year End                      Fiscal Year End
                                    December 31, 1998                    December 31, 1997
                                    -----------------                    -----------------
                                    Low Bid     High Ask               Low Bid     High Ask
                                    -------     --------               -------     --------
<S>                                 <C>          <C>                   <C>           <C>
         First Quarter              $0.25        $0.63                 $0.56         $1.13
         Second Quarter             $0.13         $0.44                $0.50         $1.31
         Third Quarter              $0.03         $0.16                $0.41         $0.88
         Fourth Quarter             $0.01         $0.04                $0.44         $1.14
</TABLE>

<PAGE>


                           (iv)             Not applicable
                           (v)              Not applicable
         (2)      (a)      Not applicable

(b) Holders
    -------
         (1)      Title of Class                     Number of Record Holders
                  --------------                     ------------------------
                  Common Stock,                      Approximately 300
                  $0.01 Par Value

         (2)      Not applicable

(c) Dividends
    ---------

         (1)     There have never been any dividends declared by the Registrant.
         (2)     Registrant's losses do not currently indicate the ability to
                 pay cash dividends.


Item 6. Selected Financial Data
-------------------------------

                                                       1998                 1997
                                                    ----------------------------
Income statement data:

Revenues                                               $2,800        $1,736,491

Income (loss)
  from Operations                                 ($1,779,890)        ($476,326)

Net interest expense                                 ($35,185)         ($28,680)

Income (loss)
  before income taxes                             ($1,779,890)        ($476,326)
Income taxes                                            --               --

Net income
  (loss)                                          ($1,779,890)        ($476,326)




                                                       1998                 1997
--------------------------------------------------------------------------------
Per share data:
Primary:
Net income (loss)                                      ($0.60)           ($0.18)
                                                       =========================
Weighted average shares
  outstanding                                        2,973,080         2,626,390

Fully diluted:
Net income (loss)                                      ($0.60)           ($0.18)
                                                       =========================
Weighted average shares
  outstanding                                        2,973,080         2,626,390

<PAGE>



Balance sheet data:

Working capital
(deficiency)                                      ($1,234,670)        ($404,694)
Total assets                                          $101.323        $1,093,232

Long-term debt                                            $-0-           $16,623
Redeemable preferred stock                            $203,000          $203,000
Total stockholders' equity
  (deficiency)                                    ($1,336,347)          $350,676

Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of  Operations
--------------------------------------------------------------------------------

The Company has continued to experience severe cash flow problems  occasioned by
(i) no revenue from license renewal fees or new Broadcast  Affiliates  licenses;
(ii) the failure of the Optimist Group  licensing  program  initiated in January
1998,  and  terminated by mutual consent on April 1, 1998; and (iii) the failure
of the TSR program to produce  significant  new revenue from its cause marketing
initiatives.  Since January 1998, the Company has sought to reduce  overhead and
expenditures by (i) eliminating all paid personnel; (ii) ceasing to pay salaries
to corporate officers;  and (iii) terminating its leasehold office space at 2755
East Desert Inn Road, Suite 200, Las Vegas, Nevada 89121.

The Company is seeking a strategic  financial  partner to provide the  necessary
capital to  continue  operations  at a  favorable  level.  Should the Company be
unsuccessful  by June 30, 1999, it would seek to reorganize its debt and to sell
its programming in an orderly bankruptcy proceeding.

Results of Operations

The following table sets forth, for the fiscal years ended December 31, 1998 and
1997, certain items from the Company's Statement of Operations.

                                                1998                      1997
------------------------------------------------------------------------------

Revenues                                     $2,800                $1,736,491
Expenses                                 $1,622,384                $2,184,137

Income (loss) from Operations           ($1,619,584)                ($447,646)
Other income (expense)                    ($160,306)                 ($28,680)

Income before taxes                     ($1,779,890)                ($476,326)
Provision for income taxes                         -                         -
Net income (loss)                       ($1,779,890)                ($431,326)
                                         ==========                  ========

Earnings per Share
Primary:
   Weighted Average
   Common Shares Outstanding               2,973,080                 2,626,390
                                           ===================================

   Income (Loss) per Common Share            ($0.60)                   ($0.18)
                                        ======================================
Fully Diluted:
Earnings per Share
   Weighted Average
   Common Shares Outstanding               2,973,080                 2,626,390
                                           ===================================

   Income (Loss) per Common Share            ($0.60)                   ($0.18)
                                             =================================

<PAGE>

Comparison of 1998 to 1997

The  Company's  activities  during  the  first  quarter  of 1998 and all of 1997
consisted of developing the Company's  products,  licensing cable affiliates and
negotiating  acquisitions of rights to various children's  television  programs.
Revenues were down in 1998 versus 1997 due to the fact that cable affiliates did
not  renew  their  licensing   rights,   a  marketing   program  with  Optimists
International  failed in April of 1998 and  there  were no new  affiliates.  The
Company  recognizes  revenue  from  the  network  license  agreements  when  all
specified  conditions  have been  made.  During  1998 and 1997,  the bulk of the
Company's sales were attributed to the sale of network license  agreements.  The
selling,  general  and  administrative  expenses  dropped in 1998 versus 1997 as
management  reduced  employees,  eliminated  salaries and  compensation,  ceased
advertising  and  marketing,  withdrew  from  its  offices  and  sought  outside
marketing and financial partners.

Comparison of 1997 to 1996

The  Company's  activities  during 1997 and 1996  consisted  of  developing  the
Company's products,  licensing cable affiliates and negotiating  acquisitions of
rights to various children's television programs.  Revenues were down thirty-one
percent (31%) in 1997 versus 1996 due to the fact that cable  affiliates did not
renew their  license  agreements  when all specified  conditions  had been made.
During 1997 and 1996,  the bulk of the  Company's  sales were  attributed to the
sale of network license  agreements.  The selling and general and administrative
expenses were almost the same from $2,139,137 in 1997 to $2,140,163 in 1996.

Capital Resources & Sources of Liquidity

During 1998, the Company's working capital decreased to a substantially  greater
deficiency compared to a deficiency of $404,694 at December 31, 1997,  primarily
due to a decrease in Affiliate sales.

The Company's  primary cash requirements are for operating  expenses  (primarily
labor and general and administrative expenses) and for the acquisition of rights
to additional  television  series. The Company's primary source of cash was from
Affiliate licensing fees.

At December 31, 1997, the Company's  working capital  increased was a deficiency
of  $434,364  compared  to a positive  working  capital  figure of  $162,294  at
December 31, 1996. This was primarily due to a substantial decrease in Affiliate
sales and  licensing  fees starting in July of 1997.  Approximately  $125,000 in
proceeds from a convertible  debt  financing  during 1997 reduced the deficiency
for the year.

The Company's primary cash requirements were for operating  expenses,  primarily
labor and general and administrative expenses, and for the acquisition of rights
to additional  television  series. In 1996, the Company's primary source of cash
was from Affiliate licensing fees. Historically, the Company's primary source of
cash has been through program licensing.


Related Party Transactions

All deferred compensation to Officers and Directors was continued to be forgiven
during 1998.

Major customers

The  Company  made  sales in  excess of 10% of total  revenues  in 1998 to major
customers as follows:

Customer:                                                      Sales/% of total
--------------------------------------------------------------------------------
Carousel Media Marketing                                      $2,800      100%

<PAGE>


Employment Contract

During  1998,  Mr.  Orsatti and the Company  mutually  agreed to  terminate  all
deferred  compensation features and a five-year  compensation  agreement entered
into on January 15, 1997.  Mr.  Orsatti  retains  executive  options to purchase
400,000  shares of common stock at an exercise price of 80% of the fair value of
the stock at the grant date.

Item 8. Financial Statements
----------------------------

The  following  financial  statements  are filed  with this  report as pages F-1
through F-9 following the signature page:

                                                                 Reference
         Report of independent public accountants                   F-1
         Balance sheets                                             F-2
         Statements of operations                                   F-4
         Statements of stockholders' equity                         F-5
         Statements of cash flows                                   F-6
         Notes to financial statements                              F-7


Item 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure.
--------------------------------------------------------------------------------

There  were no changes or  disagreements  with  accountants  on  accounting  and
financial disclosures.


                                    PART III

Item 10.  Directors and Executive Officers of the Registrant
--------  --------------------------------------------------

The following table sets forth the name, age, and position held of each director
and officer of Olympic Entertainment Group, Inc.:

Name                        Age           Position
----                        ---           --------

Dominic Orsatti             66            Chief Executive Officer and Chairman
John Holt Smith             57            Secretary and Director
Bonnie Houldsworth          44            Treasurer and Chief Financial Officer
---------------

Officers and Directors

Pursuant to the Bylaws,  each Director  shall serve until the annual  meeting of
the stockholders,  or until his or her successor is elected and qualified. It is
the intent of the  Company to support the  election  of a majority of  "outside"
directors at such meeting. The Company's basic philosophy mandates the inclusion
of  directors  who  will be  representative  of  management,  employees  and the
minority shareholders of the Company. Directors may only be removed for "cause".
The term of office of each  officer  of the  Company is at the  pleasure  of the
Company's Board.



<PAGE>


             BUSINESS EXPERIENCE OF DIRECTORS AND EXECUTIVE OFFICERS

Dominic Orsatti, Chairman of the Board, Chief Executive Officer and Founder, was
formerly  President  of  Orsatti  Productions,   Inc.,  a  leading  producer  of
educational  films.  Among Orsatti  Productions  credits were an NBC  Children's
Television Special,  "All About Me", a musical television  special,  "Get Down",
hosted by Milton  Berle,  more than 100  educational  films and two  educational
children's  record  albums.  Mr.  Orsatti is the recipient of more than 18 major
industry  awards,  including  four gold and three silver medal awards by the New
York  International  Film  Festival  and two Golden Babe  awards  awarded at the
Chicagoland Film Festival.  Mr. Orsatti  co-wrote and was executive  producer of
the first place Telly  award-winning  "Coming To Ametrica" in 1993. He is also a
member of the Writer's Guild of America.

John Holt Smith,  Corporate Secretary and Director, is a senior partner of Smith
&  Associates  and was  formerly  a partner  in the Fort  Worth,  Texas  firm of
McDonald, Sanders, Ginsburg, Phillips, Maddox & Newkirk. As a partner, he served
as Vice  President of the United  States  Trust  Company of New York and in that
capacity opened the Beverly Hills,  California office of the company.  Mr. Smith
subsequently  returned to the practice of law to ultimately  head the securities
department of the Los Angeles firm of Bushkin,  Gaims,  Gaines & Jonas.  In that
capacity,   Mr.  Smith  represented  clients  including  Johnny  Carson,  Kareem
Abdul-Jabbar, Diane Keaton, Joan Rivers, Bill Cosby, David Letterman, Neil Simon
and many NBC  personalities.  Mr.  Smith is  currently  engaged  in the  private
practice of law  representing  broker-dealers,  individuals and entities raising
capital as well as preparing private placements and subsequent public offerings.
Mr. Smith is a two-time  graduate of Vanderbilt  University  (B.A.  1963,  LL.B.
1966) and a member of the State Bars in Texas and California.

Bonnie  Houldsworth,  Treasurer and Chief Executive Officer,  started her public
accounting  career at Laventhol & Horwath.  Ms.  Houldsworth has been a founding
principal in a Las Vegas public accounting firm since 1987, Houldsworth, Russo &
Company,  which is a full service  accounting  firm in which she  specializes in
accounting and auditing for highly regulated industries such as banks,  mortgage
companies and gaming companies.  Ms. Houldsworth  obtained a Bachelor of Science
in Accounting in June 1984 from the University of Nevada,  Las Vegas, and became
a licensed Certified Public Accountant in Nevada and California.

Item 11. Executive Compensation
-------------------------------

The table below sets forth the payroll and  consulting  compensation  for fiscal
1998 for the executive officers and directors of the Company.

Name of Individual          Capacities in Which Served              Compensation
--------------------------------------------------------------------------------
Dominic Orsatti             Chairman and Chief Executive Officer        $-0-
John Holt Smith             Secretary and Director                      $-0-
Bonnie Houldsworth          Treasurer and Chief Financial Officer       $-0-

Item 12. Security Ownership of Certain Beneficial Owners and Management
-----------------------------------------------------------------------

As of December 31, 1998,  there were 2,973,080  Common Shares  outstanding.  The
following tabulates holdings of Common Shares of the Company by each person who,
subject to the above,  are holders of record or are known by  Management  to own
beneficially  more than 5.0% of the  Common  Shares  and,  in  addition,  by all
directors and officers of the Company individually and as a group.

<PAGE>
<TABLE>
<CAPTION>

                                               Table 1 - Common Stock
                                               ----------------------
Name and Address                                 Number of Shares of                  Percentage
of Beneficial Owner                             Common Stock Owned(1)                of Ownership
-------------------------------------------------------------------------------------------------

<S>                                                   <C>                          <C>
Dominic Orsatti(2)                                     800,000                      26.90 Percent
2550 E. Desert Inn Road #338
Las Vegas, Nevada  89121

Nevada Entertainment Partners, Ltd.(2)                 800,000                      26.90 Percent
2550 E. Desert Inn Road #338
Las Vegas, Nevada  89121

John Holt Smith                                          8,000                      .0027 Percent
1925 Century Park East #1600
Los Angeles, California  90067

All Directors and Officers as a Group (3)              808,000                    27.1772 Percent

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

(1)  Pursuant  to Rule  13d-3  under the  Securities  Exchange  Act of 1934,  as
     amended,  beneficial  ownership  of a security  consists  of sole or shared
     voting power (including the power to vote or direct the voting) and/or sole
     or shared  investment  power  (including the power to dispose or direct the
     disposition)  with  respect  to a  security  whether  through  a  contract,
     arrangement,  understanding,  relationship or otherwise.  Unless  otherwise
     indicated,  each person  indicated above has sole power to vote, or dispose
     or direct the  disposition  of all shares  beneficially  owned,  subject to
     applicable community property laws.
(2)  Includes Nevada  Entertainment  Partners,  Ltd., and Dominic  Orsatti,  the
     managing  general partner  thereof,  who together  constitute a "group," as
     that term is defined in Section 13D of the Securities Exchange Act of 1934,
     as amended.
(3)  Three individuals.

The following  tabulates  holding of Series "C" Preferred  Shares of the Company
owned beneficially by all directors and officers of the Company individually and
as a group.

                                Table 2 - Series "C" Preferred Shares
                                -------------------------------------

                                                     Number of Series "C"        Percent of
Name and Address                                     Preferred Shares(1)             Class
-------------------------------------------------------------------------------------------

Dominic Orsatti(2)                                         12,000                    36.58%
2550 East Desert Inn Road, Suite 338
Las Vegas, Nevada  89121

Nevada Entertainment Partners Ltd.(2)                      12,000                    36.58%
2550 East Desert Inn Road, Suite 338
Las Vegas, Nevada  89121

John Holt Smith                                             8,000                    24.39%
1925 Century Park East #1600
Los Angeles, California  90067

All Directors & Officers
as a group (3)                                             20,000                    60.97%
__________

<PAGE>

(1)  Pursuant  to Rule  13d-3  under the  Securities  Exchange  Act of 1934,  as
     amended,  beneficial  ownership  of a security  consists  of sole or shared
     voting power (including the power to vote or direct the voting) and/or sole
     or shared  investment  power  (including the power to dispose or direct the
     disposition)  with  respect  to a  security  whether  through  a  contract,
     arrangement,  understanding,  relationship or otherwise.  Unless  otherwise
     indicated,  each person  indicated above has sole power to vote, or dispose
     or direct the  disposition  of all shares  beneficially  owned,  subject to
     applicable community property laws.
(2)  Includes  Nevada  Entertainment  Partners,  Ltd. and Dominic  Orsatti,  the
     managing general partner hereof, who together constitute a "group," as that
     term is defined in Section 13D of the  Securities  Exchange Act of 1934, as
     amended.
(3)  Three individuals.

                              Table 3 - Series "D" Preferred Shares
                              -------------------------------------
                                                    Number of Series "D"         Percent of
Name and Address                                    Preferred Shares(1)             Class
-------------------------------------------------------------------------------------------

Dominic Orsatti(2)                                       98,000                      100%
2755 East Desert Inn Road, Suite 200
Las Vegas, Nevada  89121

Nevada Entertainment Partners Ltd.(2)                    98,000                      100%
2755 East Desert Inn Road, Suite 200
Las Vegas, Nevada  89121

All Directors & Officers
as a group (3)                                           98,000                      100%
</TABLE>


(1)  Pursuant  to Rule  13d-3  under the  Securities  Exchange  Act of 1934,  as
     amended,  beneficial  ownership  of a security  consists  of sole or shared
     voting power (including the power to vote or direct the voting) and/or sole
     or shared  investment  power  (including the power to dispose or direct the
     disposition)  with  respect  to a  security  whether  through  a  contract,
     arrangement,  understanding,  relationship or otherwise.  Unless  otherwise
     indicated,  each person  indicated above has sole power to vote, or dispose
     or direct the  disposition  of all shares  beneficially  owned,  subject to
     applicable community property laws.
(2)  Includes  Nevada  Entertainment  Partners,  Ltd. and Dominic  Orsatti,  the
     managing general partner hereof, who together constitute a "group," as that
     term is defined in Section 13D of the  Securities  Exchange Act of 1934, as
     amended.
(3)  Three individuals.

                                     PART IV

Item 14. Exhibits, Financial Statements, and Reports on Form 8-K
----------------------------------------------------------------

(a)      Financial Statements
         ---------------------

                                                                   Reference
                                                                   ---------
         Report of independent public accountants                     F-1
         Balance sheets                                               F-2
         Statements of operations                                     F-4
         Statements of stockholders' equity                           F-5
         Statements of cash flows                                     F-6
         Notes to financial statements                                F-7

(b)      Reports on form 8-K
         -------------------
         None

(c)      Exhibits
         --------
         None


<PAGE>


                          INDEPENDENT AUDITOR'S REPORT


Board of Directors and Shareholders
Olympic Entertainment Group, Inc.

We have audited the balance  sheet of Olympic  Entertainment  Group,  Inc. as of
December  31,  1998,  and the  related  statements  of  operations,  changes  in
stockholders'  equity,  and cash  flows for each of the two years in the  period
ended December 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,  the financial  statements referred to above, present fairly, in
all material respects,  the financial position of Olympic  Entertainment  Group,
Inc. as of December 31, 1998, and the related statements of operations,  changes
in stockholders'  equity, and cash flows for each of the two years in the period
ended  December 31, 1998,  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 10 to the
financial statements, the Company has suffered recurring losses from operations,
has made significant  commitments and relies upon one major customer which raise
substantial   doubts  about  its  ability  to  continue  as  a  going   concern.
Management's plans in regard to these matters are also described in Note 10. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.




                                   James E. Scheifley & Associates, P.C.
                                        Certified Public Accountants

Denver, Colorado
May 21, 1999


                                      F-1
<PAGE>
                        Olympic Entertainment Group, Inc.
                                  Balance Sheet
                             As of December 31, 1998

Assets
                                                                           1998
Current Assets:
Cash and cash equivalents                                               $     31
                                                                        --------
Total current assets                                                          31

Other Assets:
  Film library                                                           101,323
  Deposits and other assets                                                 --
                                                                        --------
                                                                         101,323
                                                                        --------
Total assets                                                            $101,354
                                                                        ========





The accompanying notes are an integral part of the financial statements.

                                      F-2

<PAGE>

                        Olympic Entertainment Group, Inc.
                                  Balance Sheet
                             As of December 31, 1998
                                   (Continued)

Liabilities and Stockholders' Equity
                                                                        1998
Current Liabilities:
Notes payable                                                       $   135,000
Current portion of long-term debt                                        36,787
Accounts payable - trade                                                607,429
Accrued expenses                                                        455,485
Default judgement                                                          --
                                                                    -----------
Total current liabilities                                             1,234,701

Long-term debt                                                             --

Commitments and contingencies

Redeemable preferred stock:
 Preferred stock, 10% cumulative convertible
  $.01 par value, 650,000 shares authorized,
  101,500 and 106,500 sshares issued
  and outstanding in 1996 and 1995
  liquidating preference $1 per share                                   203,000

Stockholders' equity:
 Preferred stock, $.01 par value,
  5,000,000 total shares authorized:
 Preferred stock, convertible, 40,000 shares
  authorized, 32,800 shares issued and
  outstanding, $10 per share liquidating
  preference (Series C)                                                  65,600
 Preferred stock, convertible, 98,000 shares
  authorized, issued and outstanding, $3 per
  share liquidating preference (Series D)                               196,000
Common stock, $.01 par value, 20,000,000
 shares authorized, 3,002,785 shares
 issued and outstanding                                                  30,028
Paid in capital                                                       3,394,314
Common stock subscriptions                                               48,750
Accumulated deficit                                                  (5,071,039)
                                                                    -----------
                                                                     (1,336,347)
                                                                    -----------
Total liabilities and
  stockholders' equity                                              $   101,354
                                                                    ===========


The accompanying notes are an integral part of the financial statements.

                                      F-3


<PAGE>

                        Olympic Entertainment Group, Inc.
                            Statements of Operations
                 For the Years Ended December 31, 1998 and 1997


                                                       1998            1997

Revenue                                            $     2,800      $ 1,736,491

Costs and expenses:
 General and administrative                          1,622,384        2,184,137
                                                   -----------      -----------
                                                     1,622,384        2,184,137

Income (loss) from operations                       (1,619,584)        (447,646)

Other income and (expense):
 Interest expense                                      (35,185)         (28,680)
 Loss from disposal of assets                         (134,740)
 Other income                                            9,619             --
                                                   -----------      -----------
                                                      (160,306)         (28,680)

Net income before income taxes                      (1,779,890)        (476,326)
Provision for income taxes                                --               --
                                                   -----------      -----------
Net income (loss)                                  $(1,779,890)     $  (476,326)
                                                   ===========      ===========


Per share information:
Basic and diluted (loss) per share
 Net income (loss) per share                       $     (0.60)     $     (0.18)
                                                   ===========      ===========
 Weighted average shares outstanding                 2,973,080        2,626,390
                                                   ===========      ===========






The accompanying notes are an integral part of the financial statements.

                                      F-4



<PAGE>

<TABLE>
<CAPTION>

                                                    Olympic Entertainment Group, Inc.
                                                   Statement of Stockholders' Equity
                                              For the Years Ended December 31, 1998 and 1997



                                                                                Additional    Common
                                 Common                 Preferred                Paid-In       Stock      Accumulated
                                 Shares       Amount      Shares     Amount      Capital    Subscribed      Deficit        Total
                                 ------       ------      ------     ------      -------    ----------      -------        -----

<S>                             <C>          <C>          <C>       <C>        <C>           <C>          <C>           <C>
Balance December 31, 1996       2,938,681    $ 29,387     130,800   $261,600   $ 3,305,838   $    --      $(2,814,823)  $   782,002

Cancellation of shares
 at par value                    (114,129)     (1,141)       --         --           1,141        --             --            --

Common stock subscribed
 for services                        --          --          --         --            --        45,000           --            --

Net (loss) for the year              --          --          --         --            --          --         (476,326)     (476,326)
                              -----------    --------    --------   --------   -----------   ---------    -----------   -----------
Balance December 31, 1997       2,824,552      28,246     130,800    261,600     3,306,979      45,000     (3,291,149)      305,676

Shares issued for services        178,233       1,782        --         --          87,335        --             --          89,117

Common stock subscribed
 for services                        --          --          --         --            --          --             --          3,750

Net (loss) for the year              --          --          --         --            --          --       (1,779,890)   (1,779,890)
                              -----------    --------    --------   --------   -----------   ---------    -----------   -----------
Balance December 31, 1998       3,002,785    $ 30,028     130,800   $261,600   $ 3,394,314   $  48,750    $(5,071,039)  $(1,385,098)
                              ===========    ========    ========   ========   ===========   =========    ===========   ===========


The accompanying notes are an integral part of the financial statements.




                                                                 F-5

</TABLE>



<PAGE>
<TABLE>
<CAPTION>

                                 Olympic Entertainment Group, Inc.
                                      Statements of Cash Flows
                           For the Years Ended December 31, 1998 and 1997

                                                                 1998                      1997
<S>                                                           <C>                      <C>
Operating activities:
Net income (loss)                                            $(1,779,890)              $  (476,326)
Adjustments to reconcile net income
  (loss) to net cash:
Depreciation                                                       8,921                    20,197
Amortization of film costs                                       641,358                   128,355
Common stock issued for services                                  89,117                      --
Stock subscriptions issued for services                            3,750                    45,000
Film masters rights charged off                                   74,876                    74,876
Loss on disposition of assets                                    134,740                      --
(Increase) decrease in accounts receivable                        73,039                   304,465
(Increase) decrease in prepaid expenses                             --                      12,145
(Increase) in other assets                                        13,775                       248
Increase (decrease) in accrued expenses                          354,190                    34,725
Increase (decrease) in deferred revenue                             --                        --
Increase (decrease) in accounts payable                          372,651                    95,230
Increase in accounts payable - related party                        --                     (76,956)
                                                             -----------               -----------
Total adjustments                                              1,766,417                   638,285
                                                             -----------               -----------
Net cash provided by (used in) operating activities              (13,473)                  161,959

Cash flows from investing activities:
(Increrase) in film library                                         --                    (275,287)
Purchase of property and equipment                                  --                     (61,887)
                                                             -----------               -----------
Net cash provided by (used in)
 investing activities                                               --                    (337,174)

Cash flows from financing activities:
Advances to stockholder                                             --                     (87,200)
Proceeds from notes payable                                         --                     125,000
Repayment of notes payable                                        (2,000)                     --
Repayment of long-term debt                                         --                     (22,164)
                                                             -----------               -----------
Net cash provided by (used in)
 financing activities                                             (2,000)                   15,636

Net increase in cash and cash equivalents                        (15,473)                 (159,579)
Beginning cash                                                    15,504                   175,083
                                                             -----------               -----------
Ending cash                                                  $        31               $    15,504
                                                             ===========               ===========
Supplemental cash flow information:
Cash paid for:  Interest                                     $      --                 $      --
                Income taxes                                 $      --                 $      --





The accompanying notes are an integral part of the financial statements.

                                                         F-6
</TABLE>

<PAGE>



                        Olympic Entertainment Group, Inc.
                          Notes to Financial Statements
                                December 31, 1998

Note 1. ORGANIZATION

The Company was incorporated on May 21, 1987, in the State of Nevada,  and is in
the business of acquiring,  licensing and distributing  non-violent educational,
informational  and special  interest  television  programming for children.  The
Company does business as the  "Children's  Cable  Network"  ("CCNII"),  which is
comprised of individuals or entities, known as Broadcast affiliates, who license
the Company's programs to air in the various cable markets throughout the United
States.  The Company commenced the sale of broadcast licenses to such affiliates
during 1995. The ceased its principal business activity during the first quarter
of 1998.

     SIGNIFICANT ACCOUNTING POLICIES

Estimates:
The preparation of the Company's  financial  statements  requires  management to
make estimates and assumptions that effect the amounts reported in the financial
statements  and  accompanying  notes.  Actual  results  could  differ from these
estimates.

Fixed assets:
Property and equipment are carried at cost.  Depreciation  is computed using the
straight-line  method over the estimated useful lives of the assets. When assets
are  retired or  otherwise  disposed  of, the cost and the  related  accumulated
depreciation  are removed from the accounts,  and any resulting  gain or loss is
recognized in operations for the period.  The cost of repairs and maintenance is
charged to operations as incurred and  significant  renewals or betterments  are
capitalized.

The Company  depreciates its office equipment utilizing the straight line method
over a period of five  years.  The Company  has  recorded  $4,337 and $20,197 of
depreciation   expense  for  the  years  ended   December  31,  1998  and  1997,
respectively.   During  the  second  quarter  of  1998,  the  Company  abandoned
substantially  all of its office and computer  equipment in connection  with the
cessation of its  operations.  Additionally,  the Company  abandoned  its rights
under a long term operating lease for its corporate  offices  including  certain
leasehold improvements.  The Company recognized a loss of $134,740 in connection
with the abandonment of these assets.

                                      F-7


<PAGE>

Film library:
The Company amortizes the costs of its film library over the estimated  economic
life of the film using the film forecast method in accordance with SFAS #53. The
amortization  periods  begin at the time the films are  available for showing by
the Company's  Broadcast  Affiliates.  When the Company  concludes that any such
costs will not benefit  future  periods said costs are charged to operations for
the period.

During the year ended December 31, 1997 the Company made an adjustment to reduce
the  carrying  value of its film  library of  $74,876.  Amortization  charged to
operations  during 1997 aggregated  $128,355 (See Note 6). During the year ended
December 31, 1998,  the Company  ceased its principal  business  activities.  In
connection  therewith the Company reduced the carrying value of its film library
to its  estimated net  realizable  value of $100,000 and charged an aggregate of
$717,557 to costs and expenses.

Revenue recognition:
The Company  recognizes  revenue from network license  agreements not related to
specific  programming over the term of the agreements.  Revenue from the sale of
licenses for television  program rights is recorded in accordance with SFAS #53,
which provides for recognition of revenue at the beginning of the license period
when specified conditions have been met.

Cash and cash equivalents
Cash  and  cash  equivalents  consist  of cash  and  other  highly  liquid  debt
instruments with a maturity of less than three months.

Advertising
Advertising expenses are charged to expense upon first showing.  Amounts charged
to expense  were 7,839 and  $39,937 for the years  ended  December  31, 1998 and
1997, respectively

Fair value of financial instruments
The  Company's  short-term  financial  instruments  consist  of  cash  and  cash
equivalents,  accounts and loans receivable,  and accounts payable and accruals.
The carrying  amounts of these  financial  instruments  approximates  fair value
because of their short-term  maturities.  Financial instruments that potentially
subject the Company to a  concentration  of credit risk consist  principally  of
cash and  accounts  receivable,  trade.  During  the year  the  Company  did not
maintain cash deposits at financial institutions in excess of the $100,000 limit
covered by the Federal Deposit  Insurance  Corporation.  The Company has several
major  customers,  (see  Note 9) the loss of which has had a  material  negative
impact upon the Company.

                                      F-8
<PAGE>


Stock-based Compensation
The Company  adopted  Statement  of Financial  Accounting  Standard No. 123 (FAS
123), Accounting for Stock-Based Compensation beginning with the Company's first
quarter of 1996.  Upon  adoption of FAS 123,  the Company  continued  to measure
compensation expense for its stock-based  employee  compensation plans using the
intrinsic value method  prescribed by APB No. 25, Accounting for Stock Issued to
Employees, and has provided in Note 2 pro forma disclosures of the effect on net
income and earnings per share as if the fair  value-based  method  prescribed by
FAS 123 had been applied in measuring compensation expense.

Earnings (loss) per share:
In February 1997, the Financial  Accounting Standards Board ("FASB") issued SFAS
No. 128,  "Earnings  Per Share."  SFAS No. 128  supersedes  and  simplifies  the
existing  computational  guidelines  under  Accounting  Principles Board ("APB")
Opinion No. 15, "Earnings Per Share."

The statement is effective for financial  statements  issued for periods  ending
after  December 15,  1997.  Among other  changes,  SFAS No. 128  eliminates  the
presentation  of primary  earnings per share and replaces it with basic earnings
per  share  for  which  common  stock  equivalents  are  not  considered  in the
computation.  It also revises the computation of diluted earnings per share. The
Company  has  adopted  SFAS No.  128 and  there  is no  material  impact  to the
Company's earnings per share, financial condition, or results of operations. The
Company's  earnings per share have been restated for all periods presented to be
consistent with SFAS No. 128.

The  earnings  per share is computed by dividing  the net income  (loss) for the
period by the  weighted  average  number of common  shares  outstanding  for the
period.  Common stock  equivalents  are excluded from the  computation  if their
effect would be anti-dilutive.

Recent Pronouncements
SFAS No. 130, "Reporting  Comprehensive Income",  establishes guidelines for all
items that are to be  recognized  under  accounting  standards as  components of
comprehensive income to be reported in the financial  statements.  The statement
is  effective   for  all  periods   beginning   after   December  15,  1997  and
reclassification  of financial  statements of financial  statements  for earlier
periods will be required for comparative  purposes. To date, the Company has not
engaged in transactions which would result in any significant difference between
its reported net loss and comprehensive net loss as defined in the statement.


                                       F-9
<PAGE>



In March 1998, the American  Institute of Certified  Public  Accountants  issued
Statement  of  Position  98-1,  Accounting  for the Costs of  Computer  Software
Developed  or  Obtained  for  Internal  Use  ("SOP  98-1").  SOP  98-1  provides
authoritative guidance on when internal-use software costs should be capitalized
and when these costs should be expensed as incurred.

Effective  January 1, 1998, the Company adopted SOP 98-1.  Costs  capitalized by
the Company  during the year ended  December 31, 1998 in  accordance  with these
guidelines were not significant.

Effective December 31, 1998, the Company adopted SFAS No. 131, Disclosures about
Segments  of an  Enterprise  and  Related  Information  ("SFAS  131").  SFAS 131
superseded  SFAS  No.  14,  Financial  Reporting  for  Segments  of  a  Business
Enterprise.  SFAS 131  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.  SFAS 131 also  establishes
standards for related disclosures about products and services, geographic areas,
and  major  customers.  The  adoption  of SFAS  131 did not  affect  results  of
operations  or  financial  position.  To date,  the Company has  operated in one
business segment only.

Effective December 31, 1998, the Company adopted the provisions of SFAS No. 132,
Employers' Disclosures about Pensions and Other Post-retirement  Benefits ("SFAS
132").  SFAS  132  supersedes  the  disclosure  requirements  in  SFAS  No.  87,
Employers' Accounting for Pensions,  and SFAS No. 106, Employers' Accounting for
Post-retirement  Benefits Other Than Pensions. The overall objective of SFAS 132
is  to  improve  and   standardize   disclosures   about   pensions   and  other
post-retirement   benefits   and  to  make   the   required   information   more
understandable. The adoption of SFAS 132 did not affect results of operations or
financial  position.  The  Company  is in its  development  stage  and  has  not
initiated  benefit  plans to date  which  would  require  disclosure  under  the
statement.

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"), which
is required to be adopted in years  beginning after June 15, 1999. SFAS 133 will
require the Company to recognize  all  derivatives  on the balance sheet at fair
value.  Derivatives  that are not hedges must be adjusted to fair value  through
income.  If the  derivative  is a hedge,  depending  on the nature of the hedge,
changes in the fair  value of  derivatives  will  either be offset  against  the
change in fair value of hedged assets,  liabilities, or firm commitments through
earnings or  recognized in other  comprehensive  income until the hedged item is
recognized in earnings. The ineffective portion of a derivative's change in fair
value will be  immediately  recognized  in  earnings.  The  Company  has not yet
determined  what the effect of SFAS 133 will be on  earnings  and the  financial
position of the Company,  however it believes that it has not to date engaged in
significant transactions encompassed by the statement.

                                      F-10
<PAGE>




Note 2. STOCKHOLDERS' EQUITY

During the periods covered by these financial  statements and prior thereto, the
Company issued  securities in reliance upon an exemption from  registration with
the Securities and Exchange  commission.  Although the Company believes that the
sales  did not  involve  a  public  offering  and  that it did  comply  with the
exemptions from registration,  it could be liable for recession of said sales if
such  exemption  was found not to apply.  The Company has not received a request
for  rescission  of shares  nor does it  believe  that it is  probable  that its
shareholders would pursue rescission nor prevail if such action were undertaken.

During  May 1996,  in  connection  with a lawsuit  settlement  (see Note 8), the
Company  issued  common  stock  purchase  warrants  for  329,500  shares  to  an
individual.  The warrants are  exercisable  for a period of eighteen months from
the date of issue at a price of $2.00 per share.  The Company  has not  recorded
any expense  related to the warrants as the estimated fair value of the warrants
is less  than the  exercise  price  at the  grant  date.  The  warrants  expired
unexercised during 1998.

During the year ended  December 31, 1997,  the Company  reacquired  and canceled
certain of its shares  issued for  services  which had not been  completed.  The
shares were retired at their par value.

During the year ended  December  31,  1998,  the Company  issued an aggregate of
178,233  shares  of its  common  stock to  certain  employees  and a vendor  for
services provided to the Company. The shares were valued at $.50 per share which
represents  the  market  value of the stock at the  dates at which the  services
provided to the Company were substantially complete.

During July 1996,  the Company  adopted the 1996 Employee  Stock Option Plan for
the benefit of certain  employees,  officers,  directors  and  consultants.  The
Company  also  filed a  Registration  Statement  on Form S-8 to  register  these
shares. The number of common shares reserved under the plan is 800,000. The plan
provides that the option price on the grant date shall not be less than the fair
market value on such date.  During July 1996 the Company issued 360,000  options
exercisable  at $1.40 per  share  under the plan  which  expire  after ten years
unless exercised.  During December 1996, the Company granted  additional options
under the plan for 370,000 shares exercisable at $.60 for a ten year period.

                                      F-11
<PAGE>

Following is a summary of the transactions in the plan:

                                                    Range of        Weighted
                                      Shares        Exercise        Average
                                                     Prices          Price
                                     -------      ------------      --------

Balance December 31, 1996            730,000      &.60 - $1.40      $    .99
Granted                                 --
Canceled                                --
Exercised                               --
                                     -------
Balance December 31, 1997            730,000      $.60 - $1.40      $    .99

Granted                                 --
Canceled                             335,000      $.60 - $1.40      $    .92
Exercised                               --
                                     --------
Balance December 31, 1998            395,000      $.60 - $1.40      $   1.08

Options available at
 December 31, 1998                   405,000

As of the  date  of the  financial  statements  none  of the  options  had  been
exercised.


Note 3. 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  classification of 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.

The  Company  currently  has  net  operating  loss   carryforwards   aggregating
approximately $2,950,000 which expire beginning in 2003.

The principal  difference between the Company's book operating losses and income
tax operating losses results from the issuance of and  subscriptions  for common
stock and  preferred  stock  during 1994 and 1996 for  services.  The effects of
these differences are expected to be permanent in nature,  therefore no deferred
tax asset had been recorded related thereto.

The Company did not provide  Federal  income taxes for the years ended  December
31, 1998 and 1997 due to an operating losses incurred.



                                      F-12
<PAGE>


The Company is unable to predict  future  taxable income that would enable it to
utilize  the  deferred  tax  asset  arising  from  the  future  value of the net
operating loss and therefore the deferred tax asset of approximately  $1,000,000
related   thereto  is  fully  reserved.   The  reserve   balance   increased  by
approximately $430,000 as a result of the loss generated in the current year.


Note 4. RELATED PARTY TRANSACTIONS

The Company  made $87,200 of cash  advances to its  president  during 1997.  The
advances  were  repaid  during  1998 and as of  December  31,  1998  $82,731  of
repayments  had been  made in cash or by  payment  of  Company  expenses  by the
officer.  The amount due to the officer at December 31, 1998 consists of the net
loan  balance  of $4,159  offset by an  accrual  of  salary  due to the  officer
pursuant to an employment contract of $260,000.

The Company  received legal services of $18,165 and $108,062 for the years ended
December 31, 1998 and 1997,  respectively provided by a firm associated with one
of its  directors  and  had a  year  end  balance  due  such  firm  of  $42,296.
Additionally,  the Company  purchased  program rights and production  costs from
another  related  entity of $113,625  during the year ended  December  31, 1997.
During the year ended  December 31, 1997, the Company  purchased  program rights
from an officer/stockholder in the amount of $18,000.


Note 5. NOTES PAYABLE AND LONG TERM DEBT

Long-term  debt  consists of an  obligation  arising  from the  settlement  of a
lawsuit (see Note 8). Monthly payments of $2,000 per month,  including  interest
imputed at 8% per annum are due for a forty month period beginning June 1, 1996.
Principal payments due in the years ended December 31, 1998 and 1999 are $22,164
and $16,623,  respectively. The loan is in default and all amounts due under the
loan at December 31, 1998 ($36,787) have been classified as a current liability.

Notes  payable  consists of a short term loan of $10,000 made in March 1993 from
an  individual  pursuant  to a debenture  bearing  interest at 10% per annum and
originally  due on March 30, 1994.  The holder of the debenture has the right to
convert the debenture  into common stock of the Company at the rate of one share
of common stock for each one dollar due on the  debenture.  During March,  1994,
the holder of the  debenture  agreed to extend the due date on the  debenture to
March 30, 1995.

                                      F-13
<PAGE>





The note has not been  extended  and is  considered  to be due on  demand by the
holder.

Also included in notes payable are a series of four notes  aggregating  $125,000
which were  issued by the Company in  December  1997,  The notes were due during
September 1998 with interest at 10% per annum payable  quarterly.  The notes are
secured  by an  aggregate  of  250,000  shares  of the  Company's  common  stock
controlled by an officer of the Company. The fair value of the pledged shares is
equivalent  to the face amount of the notes at the issue date of the notes.  The
notes are considered to be due on demand.

Note 6. FILM LIBRARY

At December 31, 1998, the Company's film library consisted of the following:
   License costs                        $ 912,935
   Mastering costs                         43,235
                                        ---------
                                          956,170
   Less accumulated amortization         (856,170)
                                        ---------
                                        $ 100,000

During 1997 the Company incurred $275,287 of costs in connection with the rights
to air certain  programming,  including film mastering costs, through the medium
of cable  television.  The  amortization  of such  costs  during  the year ended
December 31, 1987 amounted to $128,355.

During  1997,  the  Company  charged  off to expense  the value of film  masters
delivered to network affiliates that have not renewed their license agreements.

During  1998,  in  connection  with the  cessation  of the  Company's  principal
business operations, the Company made a reduction of the carrying amounts of the
film rights and masters of $717,557,  which  reduced the carrying  amounts to an
estimated net realizable  value of $100,000.  The Company believes that it could
realize  a  minimum  of this  amount  from the sale of or other  use of the film
library.


                                      F-14
<PAGE>




Note 7. COMMITIENTS AND CONTINGENCIES

During August,  1997,  the Company  entered into a lease for office space in Las
Vegas,  Nevada for a sixty  month  period  ending  August 31,  2002 at a monthly
rental of $4,445,  increasing  by  approximately  3.5% per year  throughout  the
lease.  Rent expense was $160,883 and $143,158 for the years ended  December 31,
1998 and 1997,  respectively.  In connection with the cessation of its principal
business  activity in 1988,  the Company  abandoned  its rights  pursuant to the
lease.  The landlord has commenced legal action to recover unpaid rent and build
out costs aggregating  $229,765.  The Company has accrued the full amount of the
claim in trade accounts payable.


Note 8. LITIGATION

Capital Funding & Financial Group, Inc. et al. v. Olympic  Entertainment  Group,
Inc., et al. Colorado state court, Case No. 96-CV-001980.

The claim by the plaintiff is for the refund of $120,000 in licensing  fees paid
to the  Company in 1996 and for other  damages.  The Company had filed a counter
claim and based on the opinion of its Colorado attorney as of April 26, 1998 had
not made any accrual  pursuant to the case for the year ended December 31, 1997.
As a result of the Company's cessation of its principal business operations, the
Company was forced to abandon its counterclaim  effort  California.  A trial was
held in  Colorado  in  November  1998 and the  plaintiff  was  awarded a default
judgement of $1,000,000, including punitive damages of $520,000. A motion to set
aside the  default  judgement  has been made by the  Company  and  stayed by the
Court. The Company's Colorado attorney believes that the motion to set aside the
judgement  will be approved as the plaintiff has been subject to numerous  cease
and desist orders for  violation of state  securities  regulations  which may be
directly  related to the case.  The  Company  has not  accrued any amount of the
default judgement in the foregoing financial statements.

Lee Van Dyke et al. v. Olympic  Entertainment Group, Inc., et al. Superior Court
of Los Angeles County, Case No. BC189116.

The  plaintiffs  seek class action  status and allege  violations  of California
securities laws, breach of contract and violation of the California Business and
Professions  Code. The suit has not been certified by the Court for class action
status.


                                      F-15


<PAGE>




The Company is also named as an adverse party in a cross-complaint  filed in the
same  case  filed by  Pacific  Health  Management,  Inc.  d/b/a  Carousel  Media
Marketing  (Carousel).  The  cause of  action  relates  to the  sale of  limited
partnership investment units to investors by Carousel.

Carousel had been the Company's  major customer  during the years ended December
31, 1996 and 1997. The Company maintains that it did not materially  participate
in the sale of the securities.  The Company cannot predict the possible  outcome
of the case nor  estimate  the  range of  potential  damages  that  might  arise
therefrom.


Note 9. INFORMATION ABOUT MAJOR CUSTOMERS

The  Company,  whose  customers  arrange for  programming  to air on local cable
systems in their respective  licensed  territories  under leased access rules of
the  Federal  Communications  Commission,  made  sales in excess of 10% of total
revenues  for the years  ended  December  31,  1998 and 1997 to  Carousel  Media
Marketing in the amount of $2,800 and $1,735,000  which  constituted 100% of the
Company's  sales in those years.  No amounts were due from  Carousel at December
31, 1998 or 1997.


Note 10. BASIS OF PRESENTATION

The  accompanying  financial  statements have been prepared on a "going concern"
basis  which  contemplates  the  realization  of assets and the  liquidation  of
liabilities in the ordinary course of business.

The Company has incurred  operating  losses during the years ended  December 31,
1998 and 1997 aggregating $1,779,890 and $476,326,  respectively and the Company
has a working capital  deficit of $1,234,670 at December 31, 1998.  There can be
no assurance that  profitable  operations  will be attained due to the Company's
cessation of its principal business operation.

Profitable  operations are dependent  upon,  among other factors,  the Company's
ability  to obtain  equity or debt  financing,  the  ability  of  management  to
restructure  its  liabilities  either by repayment at less than face value or by
conversion  to equity  and the  Company's  ability  to locate  and merge  with a
profitable business operation. Management is exploring plans for a merger of the
Company with another  operating  entity and is  attempting  to  restructure  its
liabilities.




                                      F-16
<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized this 29th day of May, 1999:

Olympic Entertainment Group, Inc.


By:  /s/ Dominic Orsatti                                  Date:  05/29/99
     ---------------------------------                           ---------------
         Dominic Orsatti, Chairman and
         Chief Executive Officer

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

NAME & POSITION                                             DATE


/s/ Dominic Orsatti                                      May 29, 1999
--------------------------------------
Dominic Orsatti,
Chairman & Chief Executive Officer


/s/ John Holt Smith                                      May 29, 1999
-------------------------------------
John Holt Smith
Corporate Secretary & Director


/s/ Bonnie Houldsworth                                   May 29, 1999
-------------------------------------
Bonnie Houldsworth
Treasurer and Chief Financial Officer