<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A
                                 AMENDMENT NO. 1

        FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

[X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934
       For the fiscal year ended December 31, 1996

                                              OR

[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
       For the Transition period from              to            
                                       ------------    ----------

                         Commission file number: 0-26518


                         FITZGERALDS GAMING CORPORATION
             (Exact name of registrant as specified in its charter)

                NEVADA                                       88-0329170
   (State or other jurisdiction of                         (IRS. Employer
    incorporation or organization)                      Identification No.)

                     301 FREMONT STREET, LAS VEGAS NV 89101
               (Address of principal executive offices)(Zip Code)

                                 (702) 388-2224
              (Registrant's telephone number, including area code)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
              Cumulative Redeemable Preferred Stock, $.01 par value
                         Common Stock Purchase Warrants
                          Common Stock, $.01 par value

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 than the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES |X| NO __

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 the 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|

      As of March 15, 1997, there was no voting stock held by non-affiliates of
the Registrant. As of March 15, 1997, the number of outstanding shares of the
Registrant's Common Stock was 4,012,846.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

                        Exhibit Index Located on Page 50
<PAGE>   2

                                     PART IV

ITEM 14.       EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)     1.     Financial Statements. The following financial statements are 
               attached:

               Independent Auditors Report
               Consolidated Balance Sheets at December 31, 1996 and 1995
               Consolidated Statements of Income for years ended
                      December 31, 1996, 1995, and 1994
               Consolidated Statements of Changes in Stockholders' Equity
                      (Deficiency) for the Years ended December 31, 1996,
                      1995, and 1994
               Consolidated Statements of Cash Flows for the years ended
                      December 31, 1996, 1995, and 1994
               Notes to Consolidated Financial Statements

Explanatory Note:

This amendment is being filed to correct several typographical errors and make
certain other corrections to the financial statements filed with the Company's
Form 10-K for the year ended December 31, 1996.

                                 Page 47 of 57
<PAGE>   3

                                        SIGNATURES



        Pursuant to the requirements of Section 13 on 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, on April 1,
1997.


                                  Fitzgeralds Gaming Corporation


                                  By: /s/ FERNANDO BENSUASKI
                                     -------------------------------------
                                         Fernando Bensuaski
                                         Executive Vice President
                                         Chief Financial Officer
                                         and Secretary



                                 Page 48 of 57
<PAGE>   4

                                POWER OF ATTORNEY


        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Philip D. Griffith and Fernando
Bensuaski, and each of them, his or her own attorneys-in-fact, each with the
power of substitution, for him or her in any and all capacities, to sign any
amendments to this Report on Form 10-K and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.

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


<TABLE>
<CAPTION>
Signature                           Title                             Date
---------                           -----                             ----
<S>                                 <C>                               <C>
/s/ PHILIP D. GRIFFITH              President, Chief Executive        April 1, 1997
--------------------------------    Officer, and Director (Principal
 Philip D. Griffith                 Executive Officer)               
                                 


/s/ FERNANDO BENSUASKI              Executive Vice President, Chief   April 1, 1997
--------------------------------    Financial Officer, and Secretary   
 Fernando Bensuaski                 (Principal Financial and           
                                    Accounting Officer)                
                                


/s/ MICHAEL A. FICARO               Director                          April 1, 1997
--------------------------------
 Michael A. Ficaro


/s/ PATRICIA W. BECKER              Director                          April 1, 1997
--------------------------------
 Patricia W. Becker
</TABLE>



                                 Page 49 of 57
<PAGE>   5
FITZGERALDS GAMING CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                                         PAGE
                                                                         ----
<S>                                                                    <C>
INDEPENDENT AUDITORS' REPORT                                            F - 2

CONSOLIDATED FINANCIAL STATEMENTS:

  Balance Sheets as of December 31, 1996 and 1995                       F - 3

  Statements of Operations for the Years Ended
    December 31, 1996, 1995 and 1994                                    F - 5

  Statements of Stockholders' Equity (Deficiency) for
    the Years Ended December 31, 1996, 1995 and 1994                    F - 6

  Statements of Cash Flows for the Years Ended
    December 31, 1996, 1995 and 1994                                    F - 7

  Notes to Consolidated Financial Statements                            F - 9
</TABLE>


                                      F-1
<PAGE>   6

INDEPENDENT AUDITORS' REPORT


Fitzgeralds Gaming Corporation:

We have audited the accompanying consolidated balance sheets of Fitzgeralds
Gaming Corporation and subsidiaries (the "Company") as of December 31, 1996 and
1995, and the related consolidated statements of operations, stockholders'
equity (deficiency), and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 1996
and 1995, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.


DELOITTE & TOUCHE LLP

Las Vegas, Nevada
March 14, 1997



                                      F-2
<PAGE>   7

FITZGERALDS GAMING CORPORATION

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995



<TABLE>
<CAPTION>
ASSETS                                               1996               1995
<S>                                            <C>                <C>           
CURRENT ASSETS:
  Cash and cash equivalents                    $   13,349,497     $   19,843,824
  Restricted cash                                          --            471,569
  Accounts receivable, net of
    allowance for doubtful
    accounts of $253,942 and $343,230               2,056,841          2,669,840
  Accounts and notes receivable -
    related parties                                 2,209,188            337,121
  Inventories                                       1,545,661          1,027,848
  Prepaid expenses:
    Gaming taxes                                    1,374,319          1,483,244
    Insurance                                         326,621            146,501
    Other                                           1,367,699          1,475,984
                                               --------------     --------------
      Total current assets                         22,229,826         27,455,931
                                               --------------     --------------
PROPERTY AND
  EQUIPMENT, net                                  151,883,083        103,802,669
                                               --------------     --------------
OTHER ASSETS:
  Restricted cash - construction                    2,254,323         49,100,000
  Restricted investment                             1,000,000          1,000,000
  Long-term accounts and notes
    receivable - related parties,
    net of current portion                             10,753          1,902,396
  Advances receivable                                      --          2,500,000
  Investment in Fremont Street
    Experience                                      2,038,813          2,786,384
  Investment in 101 Main Street                     2,975,362                 --
  Debt offering costs                               7,013,894          7,357,754
  Other assets                                      1,772,520          1,308,205
                                               --------------     --------------
      Total other assets                           17,065,665         65,954,739
                                               --------------     --------------
TOTAL                                          $  191,178,574     $  197,213,339
                                               ==============     ==============
</TABLE>

                                                                     (Continued)

                                      F-3
<PAGE>   8

FITZGERALDS GAMING CORPORATION

CONSOLIDATED BALANCE SHEETS (CONTINUED)
DECEMBER 31, 1996 AND 1995




<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS'
  EQUITY (DEFICIENCY)                                                1996              1995
<S>                                                            <C>               <C>           
CURRENT LIABILITIES:
  Current portion of long-term debt                            $   25,637,728    $   10,498,434
  Current portion of notes payable - related parties                2,111,892           727,671
  Accounts payable                                                 11,518,602         5,938,650
  Accrued and other:
    Payroll and related                                             3,290,264         3,768,024
    Progressive jackpots                                              733,800           822,362
    Outstanding chips and tokens                                      843,162           914,076
    Interest                                                          459,326           761,448
    Offering costs                                                  1,048,611         2,596,799
    Other                                                           3,619,451         1,996,281
    Deferred tax liability                                                 --            63,672
                                                               --------------    --------------
      Total current liabilities                                    49,262,836        28,087,417

LONG-TERM DEBT, net of current portion                            127,856,487       137,659,479
NOTES PAYABLE - RELATED
  PARTIES, net of current portion                                      25,903         1,807,255
DEFERRED TAX LIABILITY                                                     --         1,420,495
                                                               --------------    --------------
      Total liabilities                                           177,145,226       168,974,646
                                                               --------------    --------------
MINORITY INTEREST                                                     587,837           225,097
                                                               --------------    --------------
COMMITMENTS AND CONTINGENCIES

CUMULATIVE REDEEMABLE PREFERRED STOCK,
  $.01 par value; $25 stated value; 800,000
  shares authorized, issued and outstanding;
  liquidation preference $20,000,000 stated
  value plus accrued dividends of $3,288,873
  and $92,983; recorded at liquidation preference
  value, net of unamortized offering costs
  and discount of $7,800,091 and $8,140,354                        15,488,782        11,952,629
                                                               --------------    --------------
STOCKHOLDERS' EQUITY (DEFICIENCY):
  Common stock, $.01 par value; 29,200,000 shares
    authorized; 4,012,846 and 3,956,816 shares
    issued and outstanding                                             40,128            39,568
  Additional paid-in capital                                       23,785,603        24,455,175
  Accumulated deficit                                             (25,869,002)       (8,433,776)
                                                               --------------    --------------
      Total stockholders' equity (deficiency)                      (2,043,271)       16,060,967
                                                               --------------    --------------

TOTAL                                                          $  191,178,574    $  197,213,339
                                                               ==============    ==============
</TABLE>

See notes to consolidated financial statements.



                                      F-4
<PAGE>   9
FITZGERALDS GAMING CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


<TABLE>
<CAPTION>
                                                                    1996              1995              1994
<S>                                                            <C>               <C>               <C>           
OPERATING REVENUES:
  Casino                                                       $  111,284,884    $  115,048,414    $  109,193,746
  Food and beverage                                                18,551,978        18,276,813        18,541,404
  Rooms                                                            15,875,829        13,116,906        12,517,234
  Other                                                             7,405,998         6,869,141         3,433,651
                                                               --------------    --------------    --------------
      Total                                                       153,118,689       153,311,274       143,686,035
  Less promotional allowances                                      12,588,342        11,914,178        11,851,823
                                                               --------------    --------------    --------------
      Net                                                         140,530,347       141,397,096       131,834,212
                                                               --------------    --------------    --------------
OPERATING COSTS AND EXPENSES:
  Casino                                                           58,323,360        57,158,020        55,965,803
  Food and beverage                                                13,330,471        12,496,888        12,227,653
  Rooms                                                             9,644,494         7,120,826         6,886,553
  Other operating                                                   1,543,516         1,821,157         1,758,714
  Selling, general and administrative                              44,920,756        41,021,687        38,470,954
  Depreciation and amortization                                     8,896,951         8,010,498         8,270,674
  Pre-opening expenses                                                     --                --         4,856,039
  Write down of Harolds Club assets
    to estimated realizable value                                          --                --         1,401,262
                                                               --------------    --------------    --------------
      Total                                                       136,659,548       127,629,076       129,837,652
                                                               --------------    --------------    --------------
INCOME FROM OPERATIONS                                              3,870,799        13,768,020         1,996,560

OTHER INCOME (EXPENSE):
  Interest income                                                   1,822,964           292,567           185,312
  Interest income - stockholders                                      237,524            28,218           528,987
  Other income                                                        131,221           116,483            28,225
  Interest expense                                                (20,208,230)      (14,711,618)      (10,751,158)
  Interest expense - stockholders                                     (38,899)         (315,234)         (219,484)
  Gain on sale of assets                                              250,476           459,433           501,715
  Equity in loss of unconsolidated affiliate                         (681,208)         (846,761)               --
  Minority interest in (income) loss of subsidiaries                 (362,740)         (220,051)          445,104
                                                               --------------    --------------    --------------
LOSS BEFORE TAXES                                                 (14,978,093)       (1,428,943)       (7,284,739)
INCOME TAX (PROVISION) BENEFIT                                      1,484,167        (2,825,746)        1,305,452
                                                               --------------    --------------    --------------

NET LOSS                                                          (13,493,926)       (4,254,689)   $   (5,979,287)
                                                                                                   ==============
PREFERRED STOCK DIVIDENDS                                          (3,536,152)          (98,497)
                                                               --------------    --------------
NET LOSS APPLICABLE TO COMMON
  STOCK                                                        $  (17,030,078)   $   (4,353,186)
                                                               ==============    ==============
NET LOSS PER COMMON SHARE                                      $        (4.26)   $        (1.09)
                                                               ==============    ==============
WEIGHTED AVERAGE COMMON
  SHARES OUTSTANDING                                                3,998,877         3,989,655
                                                               ==============    ==============
</TABLE>

See notes to consolidated financial statements.



                                      F-5
<PAGE>   10

FITZGERALDS GAMING CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                                                                   RETAINED            TOTAL
                                                        COMMON                  ADDITIONAL         EARNINGS        STOCKHOLDERS'
                                                         STOCK                   PAID-IN         (ACCUMULATED          EQUITY
                                                SHARES             AMOUNT        CAPITAL           DEFICIT)         (DEFICIENCY)
<S>                                         <C>              <C>              <C>               <C>               <C>            
BALANCE,
  JANUARY 1, 1994                                3,300,042   $       33,000   $   14,817,226    $     (736,786)   $   14,113,440
  Net loss                                              --               --               --        (5,979,287)       (5,979,287)
  Dividends                                             --               --               --        (1,694,306)       (1,694,306)
  Issuance of stock -
    Fitzgeralds Incorporated                        79,731              797          349,203                --           350,000
  Issuance of stock -
    Fitzgeralds South, Inc.                        553,054            5,531        4,494,469                --         4,500,000
  Issuance of stock - Fitzgeralds
    Las Vegas, Inc. and
    Fitzgeralds Mississippi, Inc.                       --               --              200                --               200
  Issuance of warrants                                  --               --          258,650                --           258,650
  Adjustment to purchase price
    of treasury stock                                   --               --         (461,678)               --          (461,678)
  Contributions from
    stockholders/partners                               --               --       (3,000,440)        3,000,440                --
                                            --------------   --------------   --------------    --------------    --------------
BALANCE,
  DECEMBER 31, 1994                              3,932,827           39,328       16,457,630        (5,409,939)       11,087,019
  Net loss                                              --               --               --        (4,254,689)       (4,254,689)
  Common stock dividends                                --               --               --        (1,018,292)       (1,018,292)
  Preferred stock dividends                             --               --               --           (98,497)          (98,497)
  Issuance of stock                                 23,989              240             (240)               --                --
  Issuance of warrants, net
    of offering costs                                   --               --       10,463,717                --        10,463,717
  Issuance of stock options                             --               --          215,042                --           215,042
  Purchase and retirement
    of treasury stock                                   --               --         (333,333)               --          (333,333)
  Contributions from
    stockholders/partners                               --               --       (2,347,641)        2,347,641                --
                                            --------------   --------------   --------------    --------------    --------------
BALANCE,
  DECEMBER 31, 1995                              3,956,816           39,568       24,455,175        (8,433,776)       16,060,967
  Net loss                                              --               --               --       (13,493,926)      (13,493,926)
  Common stock dividends                                --               --               --          (405,148)         (405,148)
  Preferred stock dividends                             --               --               --        (3,536,152)       (3,536,152)
  Issuance of stock                                 56,030              560              790                --             1,350
  Issuance of stock options                             --               --           63,666                --            63,666
  Adjustment to purchase
    price of treasury stock                             --               --         (734,028)               --          (734,028)
                                            --------------   --------------   --------------    --------------    --------------
BALANCE, 
  DECEMBER 31, 1996                              4,012,846   $       40,128   $   23,785,603    $  (25,869,002)   $   (2,043,271)
                                            ==============   ==============   ==============    ==============    ============== 
</TABLE>


See notes to consolidated financial statements.


                                      F-6
<PAGE>   11

FITZGERALDS GAMING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


<TABLE>
<CAPTION>
                                                                     1996              1995              1994
<S>                                                            <C>               <C>               <C>            
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                     $  (13,493,926)   $   (4,254,689)   $   (5,979,287)
  Adjustments to reconcile net loss to net                                 --                --
    cash provided by operating activities:                                 --                --
    Depreciation and amortization                                   8,896,951         8,010,498         8,270,674
    Amortization of note discount and offering costs                1,998,619         1,824,577           739,528
    Gain on sale of assets                                           (250,476)         (459,433)         (501,715)
    Equity in loss of unconsolidated affiliate                        681,208           846,761                --
    Minority interest in income (loss) of subsidiaries                362,740           220,051          (445,104)
    Write down of Harolds Club assets to estimated                         --                --
      realizable value                                                     --                --         1,401,262
    Deferred income taxes                                          (1,484,167)        2,825,796        (1,271,146)
    Other non-cash expense                                            201,586           215,042           406,134
    (Increase) decrease in accounts receivable, net                   369,954        (1,059,536)          769,038
    (Increase) decrease in accounts receivable -                           --                --
      related parties                                                (221,174)          218,362           167,711
    (Increase) decrease in inventories                               (177,431)         (171,798)         (166,307)
    (Increase) decrease in prepaid expenses                          (376,545)          219,080          (467,111)
    Increase in other assets                                         (464,318)          (37,897)         (663,587)
    Increase in accounts payable                                    5,579,952         1,161,211         1,279,311
    Increase (decrease) in accrued and                                     --                --
      other liabilities                                              (864,374)       (1,090,030)        4,198,922
                                                               --------------    --------------    --------------
      Net cash provided by operating activities                       758,599         8,467,995         7,738,323
                                                               --------------    --------------    --------------
CASH FLOWS FROM INVESTING ACTIVITIES:                                      --                --
  Proceeds from sale of assets                                        372,529         9,708,331           514,994
  Repayments from related parties                                      86,664           219,466         2,529,359
  Decrease in long-term deposits                                           --                --             4,345
  Purchase of treasury stock                                               --          (333,333)               --
  Acquisition of property and equipment                           (53,263,739)       (9,830,127)      (33,611,908)
  Advances to related parties                                              --                --           (91,600)
  (Increase) Decrease in restricted cash - Construction            46,845,677       (49,100,000)               --
  Increase in restricted investment                                        --                --        (1,000,000)
  Increase in advances receivable                                          --          (541,650)       (1,958,350)
  Distributions from 101 Main Street                                  594,000                --                --
  Investment in Fremont Street Experience                          (1,002,999)         (526,678)       (1,123,200)
                                                               --------------    --------------    --------------
      Net cash used in investing activities                        (6,367,868)      (50,403,991)      (34,736,360)
                                                               --------------    --------------    --------------
</TABLE>


                                                                     (Continued)


                                      F-7
<PAGE>   12

FITZGERALDS GAMING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
                                                                   1996              1995              1994
<S>                                                            <C>               <C>               <C>           
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from 1995 Offering                                              --    $  135,014,840                --
  Payment of 1995 Offering costs                                           --        (9,983,915)               --
  Proceeds from issuance of stock                                       1,350                --         4,850,000
  Proceeds from issuance of warrants                                       --                --           258,650
  Advances from related parties                                            --           868,195         1,245,957
  Proceeds from issuance of debt                                    9,643,064         7,200,963        36,000,000
  Repayment of long-term debt                                     (10,222,261)      (78,954,240)       (8,447,810)
  Payment of debt offering costs                                     (275,625)               --        (2,491,600)
  Common stock dividends                                             (405,148)       (1,018,292)         (761,999)
  Repayments to related parties                                            --        (3,113,317)               --
  (Increase) Decrease in restricted cash                              471,569          (120,415)         (351,154)
  Other                                                               (98,009)                --               150
                                                               --------------    --------------    --------------
      Net cash provided by (used in)
         financing activities                                        (885,058)       49,893,819        30,302,194
                                                               --------------    --------------    --------------
NET INCREASE (DECREASE) IN CASH AND CASH                                   --
  EQUIVALENTS                                                      (6,494,327)        7,957,823         3,304,157
                                                                                 --------------    --------------
CASH AND CASH EQUIVALENTS,                                                 --
  BEGINNING OF YEAR                                                19,843,824        11,886,001         8,581,844
                                                               --------------    --------------    --------------
CASH AND CASH EQUIVALENTS,                                                 --
  END OF YEAR                                                  $   13,349,497    $   19,843,824    $   11,886,001
                                                               ==============    ==============    ==============
</TABLE>


See notes to consolidated financial statements.




                                      F-8
<PAGE>   13

FITZGERALDS GAMING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   BUSINESS COMBINATION AND BASIS OF PRESENTATION

     Fitzgeralds Gaming Corporation (the "Company") was formed in Nevada on
     November 30, 1994 to acquire four entities controlled by two individuals
     and their affiliates which conduct gaming, hotel and other related
     operations in Reno and Las Vegas, Nevada and Tunica, Mississippi. Because
     of the integrated nature of these operations, the Company is considered to
     be engaged in one industry segment. A description of the four entities
     follows:

          FITZGERALDS SOUTH, INC. ("FSI"), a Nevada corporation formed in 1993,
          is a holding company for: (1) Fitzgeralds Las Vegas, Inc. ("FLVI"), a
          wholly owned subsidiary, which is a successor to Fitzgeralds Las Vegas
          Limited Partnership ("FLVLP"), owns and operates the Fitzgeralds
          Casino/Hotel in Las Vegas, Nevada (Fitzgeralds Las Vegas) and owns
          Fitzgeralds Fremont Experience Corporation ("FFEC"), a wholly owned
          subsidiary; (2) Fitzgeralds Mississippi, Inc. ("FMI") (formerly Polk
          Landing Entertainment Corporation), a wholly owned subsidiary, which
          is a Mississippi corporation and the owner and operator of Fitzgeralds
          Casino in Tunica County, Mississippi ("Fitzgeralds Tunica").

          FITZGERALDS RENO, INC. ("FRI") is a Nevada corporation which owns and
          operates the hotel and gaming facilities in Reno, Nevada known as
          Fitzgeralds Casino/Hotel ("Fitzgeralds Reno") and until its sale on
          May 31, 1995, Harolds Club.

          NEVADA CLUB, INC. ("NCI") is a Nevada corporation which owns and
          operates the gaming, food and beverage facilities in Reno, Nevada
          known as Nevada Club.

          FITZGERALDS INCORPORATED ("FI") is a Nevada corporation formed in 1992
          for the purpose of managing, owning and operating casinos and related
          facilities outside the State of Nevada. FI is a holding company for:
          (1) Fitzgeralds New York, Inc. ("FNYI"), formerly NYGM, Inc., an 85%
          owned subsidiary and a New York corporation which was party to a
          management agreement, and subsequently party to a settlement agreement
          with the Oneida Indian Nation of New York (the "Oneida Nation")
          regarding the management of a casino in Verona, New York; (2)
          Fitzgeralds Arizona Management, Inc. ("FAMI"), an 85% owned subsidiary
          and a Nevada corporation which is party to a Technical Services and
          Casino Consulting Agreement and a Management Agreement with the
          Yavapai-Apache Indian Nation to develop and manage a casino in Camp
          Verde, Arizona which opened in May 1995; and (3) Fitzgeralds Black
          Hawk, Inc. ("FBHI"), a wholly owned subsidiary and a Nevada
          corporation which has a management contract to operate and manage, a
          casino in Black Hawk, Colorado (Fitzgeralds Black Hawk) which opened
          in May 1995, and which, effective February 16, 1996, received
          regulatory approval to acquire a 22% interest in the equity of 101
          Main Street Limited Liability Company ("101 Main Street"), the company
          which owns Fitzgeralds Black Hawk in exchange for a $2,500,000 advance
          receivable. FBHI holds an option to acquire the remaining 78% equity
          of 101 Main Street.



                                      F-9
<PAGE>   14

     As part of a business combination, on December 31, 1994 the Company
     acquired all of the outstanding stock of FSI and 98% of the outstanding
     stock of FI through exchanges in which shares of common stock of the
     Company were issued in exchange for the common stock of FSI and FI. The
     Company acquired the remaining 2% of the outstanding stock of FI on
     December 19, 1995. On February 26, 1995, the Company acquired all of the
     outstanding stock of FRI and NCI through exchanges in which shares of
     common stock of the Company were issued in exchange for common stock of FRI
     and NCI.

     The business combination has been accounted for as a combination of
     entities under common control which is a method similar to a pooling of
     interests. Therefore, the accompanying consolidated financial statements
     reflect the assets and liabilities of the entities acquired at their
     historical cost and consolidated operations for all years presented. All
     intercompany balances and transactions have been eliminated in
     consolidation.

     All stockholders of the entities involved in the business combination
     participated in the transaction except the minority stockholders of FMI,
     FI, FNYI and FAMI. Therefore, a minority interest has been separately
     disclosed in the consolidated financial statements to reflect at historical
     cost the minority stockholders' ownership in these entities. The Company
     acquired the minority interest in FMI and FI in December 1995.

     Separate net operating revenues and net income (loss) of the consolidated
     entities, net of intercompany eliminations, for the years ended December
     31, 1996, 1995 and 1994 are as follows:


<TABLE>
<CAPTION>
                                                 1996             1995             1994
<S>                                        <C>              <C>              <C>          
Net Operating Revenues:               
  FGC                                       $         --     $         --     $         --
  FSI:                                     
    FLVI                                      43,482,777       42,652,710       43,936,644
    FMI                                       48,747,813       46,465,895       28,438,465
  FRI:                                     
    Harolds Club                                      --        1,520,244       14,042,858
    Fitzgeralds (Reno)                        37,076,390       40,212,715       38,166,565
  NCI                                          6,432,276        7,036,701        7,011,773
  FI                                           4,791,091        3,508,831          237,907
                                            ------------     ------------     ------------
Consolidated net operating revenues         $140,530,347     $141,397,096     $131,834,212
                                            ============     ============     ============
Net Income (Loss):                           
  FGC                                       $   (410,264)    $    (39,570)    $         --
  FSI:                                          
    FLVI                                      (8,219,859)      (1,721,655)        (523,224)
    FMI                                       (9,462,003)      (1,379,339)      (3,441,331)
  FRI:                                          
    Harolds Club                                      --       (1,896,510)      (5,011,095)
    Fitzgeralds (Reno)                         2,604,333         (428,503)       4,505,297
  NCI                                           (842,312)        (328,470)        (288,671)
  FI                                           2,836,179        1,539,358       (1,220,263)
                                            ------------     ------------     ------------
Consolidated net loss                       $(13,493,926)    $ (4,254,689)    $ (5,979,287)
                                            ============     ============     ============
</TABLE>



                                      F-10
<PAGE>   15

     On December 19, 1995, the Company completed a public offering of $123
     million of 13% Senior Secured Notes and $20 million of Cumulative
     Redeemable Preferred Stock (the "1995 Offering"). See Notes 7 and 8.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The accounting policies of the Company conform to generally accepted
     accounting principles. The following is a summary of the more significant
     of such policies:

     CASH AND CASH EQUIVALENTS - Cash includes cash required for gaming
     operations. The Company considers cash equivalents to include short-term
     investments with maturities of ninety days or less. At December 31, 1996
     and 1995, the Company had bank deposits in excess of federally insured
     limits of approximately $8,308,000 and $3,740,000, respectively. At
     December 31, 1996, cash and cash equivalents of $13,349,497 included
     $1,980,000 which has been designated by the Company for construction
     contingency.

     RESTRICTED CASH - at December 31, 1995 represents cash and cash equivalents
     of $471,569 held in a sinking fund related to the Company's commitment to
     purchase the land on which Nevada Club's buildings and equipment reside,
     which purchase was completed in 1996.

     INVENTORIES - consisting principally of food and beverages and operating
     supplies, are stated at the lower of first-in, first-out cost or market.

     The estimated cost of normal operating quantities (base stock) of china,
     silverware, glassware, linen, uniforms and utensils has been recorded as an
     asset and is not being depreciated. Costs of base stock replacements are
     expensed as incurred. Other assets in the accompanying consolidated balance
     sheets includes $868,168 and $786,870 of base stock inventories at December
     31, 1996 and 1995.

     PROPERTY AND EQUIPMENT - are stated at cost. Depreciation and amortization
     are computed using the straight-line method over the estimated lives of the
     assets. Costs of major improvements are capitalized; costs of normal
     repairs and maintenance are charged to expenses as incurred. Gains or
     losses on disposals are recognized.

     CAPITALIZED INTEREST - Interest costs totaling $1,814,195, $7,340 and
     $964,224 were capitalized into property and equipment for the years ended
     December 31, 1996, 1995 and 1994, respectively.

     RESTRICTED CASH - CONSTRUCTION - represents cash and cash equivalents to
     fund expansion projects at Fitzgeralds Las Vegas and Fitzgeralds Tunica
     held in collateral accounts pursuant to disbursement agreements of the 1995
     Offering.

     RESTRICTED INVESTMENT - represents U.S. Treasury Notes of $1,000,000 held
     in an escrow account for the benefit of certain land lessors related to
     Fitzgeralds Casino/Hotel in Las Vegas.

     ADVANCES RECEIVABLE - at December 31, 1995 represents funds advanced to 101
     Main Street. Such advances were converted to an investment in 101 Main
     Street on February 16, 1996 (see Note 6).



                                      F-11
<PAGE>   16

     INVESTMENT IN FREMONT STREET EXPERIENCE - The Company's investment in a
     limited liability corporation to construct certain improvements in downtown
     Las Vegas is accounted for using the equity method.

     INVESTMENT IN 101 MAIN STREET - The Company's 22% interest in a limited
     liability company which operates Fitzgeralds Black Hawk is accounted for
     using the equity method.

     DEBT OFFERING COSTS - Costs associated with the issuance of debt are
     deferred and amortized over the life of the related indebtedness using the
     effective interest method. Debt offering costs at December 31, 1996 and
     1995 are presented net of accumulated amortization of $636,190 and $16,705,
     respectively. Unamortized debt offering costs of $629,264 related to debt
     retired from the proceeds of the 1995 Offering were expensed in December
     1995.

     CASINO REVENUE - is the net win from gaming activities, which is the
     difference between gaming wins and losses.

     PROMOTIONAL ALLOWANCES - Operating revenues include the retail value of
     rooms, food and beverage provided to customers without charge;
     corresponding charges have been deducted from revenue in the accompanying
     consolidated statements of operations as promotional allowances in the
     determination of net operating revenues. The estimated costs of providing
     the complimentary services are charged to the casino department and are as
     follows:

<TABLE>
<CAPTION>
                                        1996            1995            1994
<S>                                <C>             <C>             <C>          
Hotel                              $   1,635,213   $   1,109,155   $   1,374,421
Food and beverage                      9,543,492       8,828,648       8,072,366
Other                                    102,951          91,037          64,402
                                   -------------   -------------   -------------
Total                              $  11,281,656   $  10,028,840   $   9,511,189
                                   =============   =============   =============
</TABLE>

     INDIRECT EXPENSES - Certain indirect expenses of operating departments such
     as depreciation and amortization are shown separately in the accompanying
     consolidated statements of operations and are not allocated to departmental
     operating costs and expenses.

     PRE-OPENING EXPENSES - All pre-opening expenses relating to Fitzgeralds
     Tunica were deferred and expensed upon the opening of Fitzgeralds Tunica on
     June 6, 1994. All advertising expenses were expensed as incurred.

     FEDERAL INCOME TAXES - The Company, except for FSI, FI and FMI, was not
     subject to federal income taxes prior to the business combination because
     it consisted of two S corporations and a partnership. Therefore, taxable
     income and losses of the Company were generally reportable on the income
     tax returns of the respective owners.

     Pursuant to the business combination, the S corporation elections and
     partnership status of the subsidiaries have been terminated. FLVI changed
     its tax status and adopted SFAS No. 109, Accounting for Income Taxes, on
     January 1, 1995 and FRI and NCI changed their tax status and adopted the
     provisions of this statement on February 27, 1995. FSI, FI and FMI had
     previously adopted SFAS No. 109. SFAS No. 109 requires recognition of
     deferred tax assets and liabilities for the expected future tax
     consequences of events that have been included in the financial statements
     or tax returns. Deferred



                                      F-12
<PAGE>   17

     income taxes reflect the net tax effects of (a) temporary differences
     between the carrying amounts of assets and liabilities for financial
     reporting purposes and the amounts used for income tax purposes, and (b)
     operating loss and tax credit carry forwards.

     FINANCIAL REPORTING PERIOD - The Company has adopted a "4-4-5" (weeks)
     financial reporting period which maintains a December 31 year-end. This
     method of reporting results in 13 weeks in each quarterly accounting
     period. The first and fourth accounting periods will have a fluctuating
     number of days restricted cash resulting from the maintenance of a 
     December 31 year-end, whereas the second and third periods will have the 
     same number of days each year.

     FAIR VALUE OF FINANCIAL INSTRUMENTS - The Company believes, based on
     current information, that the carrying value of the Company's cash and cash
     equivalents, accounts, notes and advances receivable, and accounts payable
     approximates fair value because of the short maturity of those instruments.
     The Company estimates the fair value of its senior secured notes payable
     approximates $86.1 million based on analysts' reports, quotes, and recent
     trades of the securities. The Company estimates the fair value of its
     preferred stock to approximate book value as no sales or exchanges have
     occurred and no market quotes for such securities exist. The Company
     estimates the fair value of all other long-term debt and notes payable -
     related parties approximates their carrying value because interest rates on
     the debt approximate market rates.

     IMPAIRMENT OF LONG-LIVED ASSETS - The Financial Accounting Standards Board
     ("FASB") issued SFAS No. 121, Accounting for the Impairment of Long-Lived
     Assets and for Long-Lived Assets to be Disposed Of in March 1995. This
     statement, which was adopted during the Company's fiscal year ended
     December 31, 1996, requires that long-lived assets and certain identifiable
     intangibles to be held and used by an entity be reviewed for impairment
     whenever events or changes in circumstances indicate that the carrying
     amount of an asset may not be recoverable. The adoption of SFAS No. 121 did
     not have a significant effect on the consolidated financial position or
     results of operations of the Company.

     STOCK BASED COMPENSATION - The FASB issued in October, 1995 SFAS No. 123,
     Accounting for Awards of Stock-Based Compensation. This statement, which
     was adopted during the Company's fiscal year ended December 31, 1996,
     establishes financial accounting and reporting standards for stock-based
     employee compensation plans and for transactions where equity securities
     are issued for goods and services. This statement defines a fair value
     based method of accounting for an employee stock option or similar equity
     instrument and encourages all entities to adopt that method of accounting
     for all of their employee stock compensation plans. However, it also allows
     an entity to continue to measure compensation cost for those plans using
     the intrinsic value based method of accounting prescribed by APB Opinion
     No. 25, Accounting for Stock Issued to Employees. Management's current
     intention is to continue to follow APB Opinion No. 25. 



                                      F-13
<PAGE>   18

     USE OF ESTIMATES - The preparation of financial statements in conformity
     with generally accepted accounting principles requires management to make
     estimates and assumptions that affect the reported amounts of assets and
     liabilities at the date of the financial statements and the reported
     amounts of revenues and expenses during the reporting period. Actual
     results could differ from those estimates.

3.   STATEMENTS OF CASH FLOWS INFORMATION

     The following supplemental disclosures are provided as part of the
     consolidated statements of cash flows for the years ended December 31,
     1996, 1995 and 1994:

     Cash paid for interest, net of amounts capitalized during the years ended
     December 31, 1996, 1995 and 1994 was $22,363,448, $10,041,419, and
     $9,731,844, respectively.

     Long-term contracts payable of $3,762,425 in 1996, $2,624,160 in 1995 and
     $12,208,782 in 1994 were incurred with the acquisition of new equipment.

     During 1996 and 1995, accumulated deficit was increased by $3,536,153 and
     $98,497 for preferred stock dividends consisting of $3,195,890 and $92,983
     accrued dividends and $340,263 and $5,514 accretion of discount on
     preferred stock.

     During 1996 advances receivable of $2,500,000 were transferred to
     investment in 101 Main Street (see Note 6).

     During 1996 additional paid in capital decreased and the note payable to a
     former stockholder increased by $636,020 (see Notes 7 and 15).

     Notes payable of $2,077,363 and $225,000 in 1995 and 1994 were incurred for
     the purchase of land.

     In 1995, accrued offering costs of $2,596,799 were incurred in connection
     with the 1995 Offering.

     During 1995, $425,000 in other assets was reclassified to property and
     equipment.

     As part of the business combination, the Company issued 23,989 shares of
     its common stock in 1995 to a minority stockholder of FI upon the
     completion of the 1995 Offering resulting in an increase in common stock
     and a decrease in additional paid-in capital of $240.

     Notes receivable from stockholders of $932,306 were distributed as
     dividends in 1994.

     During 1994, certain assets of Harolds Club with a book value totaling
     $10,301,262 were written down to their estimated realizable value of
     $8,900,000 and reclassified from property and equipment to other assets
     pursuant to an agreement to sell the assets.



                                      F-14
<PAGE>   19

4.    PROPERTY AND EQUIPMENT

     Property and equipment at December 31, 1996 and 1995 consist of the
     following:

<TABLE>
<CAPTION>
                                                                                    ESTIMATED
                                                                                      SERVICE
                                                                                         LIFE
                                                1996              1995                 (YEARS)
<S>                                        <C>               <C>                 <C>
Land used in casino operations             $   12,961,120    $   12,986,064
Buildings and improvements                    103,360,569        59,099,595            7-40
Site improvements                              14,331,622        14,139,200             20
Barge and improvements                         12,885,433        12,885,433             15
Furniture, fixtures and equipment              57,503,519        44,263,845            3-12
                                           --------------    --------------
                                              201,042,263       143,374,137
Less accumulated depreciation and               
  amortization                                (49,335,270)      (44,182,071)
                                           --------------    --------------
                                              151,706,993        99,192,066
Construction in progress                          176,090         4,610,603
                                           ==============    ==============
Total                                      $  151,883,083    $  103,802,669
                                           ==============    ==============
</TABLE>

     Substantially all property and equipment are pledged as collateral on
     long-term debt. See Note 7.

5.   INVESTMENT IN FREMONT STREET EXPERIENCE

     In July 1993, FLVI (through its predecessor, FLVLP) invested in a limited
     liability corporation owned by eight downtown Las Vegas casinos to
     construct and participate in the Fremont Street Experience. The Fremont
     Street Experience is an urban theater which includes a space frame
     containing 2.1 million lights, a sky parade light show, sidewalk and street
     improvements, a parking structure, and special events and festivals.
     Initial capital for the project was funded by its joint venture partners
     and local bond issuances. The project, which has been designed to draw both
     locals and tourists who might not otherwise visit the downtown Las Vegas
     area, opened on November 30, 1995.

     FLVI had a total initial capital commitment of $3,000,000 for the project,
     $1,876,800 contributed in 1993 and $1,123,200 contributed in 1994.
     Substantially all funds for this investment were loaned to FLVI by
     stockholders (see Note 10). The Company made additional contributions to
     capital of $1,002,999 in 1996 and $526,678 in 1995. The Company had a
     16.67% ownership interest in the joint venture and a 16.67% participation
     in losses and profits except as described below. This ownership interest
     increased to 17.65% on March 1, 1996 when one of the original investors
     relinquished its interest in the limited liability company. The Company's
     investment is recorded on the equity method. Under the equity method, the
     original investment is recorded at cost and adjusted by the Company's share
     of undistributed earnings or loss of the joint venture. The operating
     agreement for the corporation provides that, upon a two-thirds vote of the
     members, the members may be required to fund up to an aggregate of
     $5,000,000 of operating deficits of the Fremont Street Experience per year,
     of which the Company would be required to fund 17.65%, or $882,500.



                                      F-15
<PAGE>   20

     The Company anticipates that it will recover its investment in this project
     through increased business as a result of the projected increase in
     visitors to downtown Las Vegas. The Company will review its investment in
     the joint venture on a quarterly basis for impairment to determine whether
     events or circumstances indicate the carrying amount of the asset may not
     be recoverable, in which case an impairment loss will be recorded.

     Condensed financial information of the limited liability corporation as of
     December 31, 1996 and 1995 and for the years then ended is summarized
     below. The limited liability corporation had minimal operations during
     1994.

<TABLE>
<CAPTION>
                                           1996                 1995
     <S>                               <C>                  <C>         
     Current assets                    $  2,102,692         $  3,655,454
     Non current assets                  16,295,965           18,289,704
     Current liabilities                    848,586            1,655,707
     Non current liabilities              1,358,723                   --
     Net assets                          16,191,348           20,289,451
                    
     Revenues                          $  2,508,049         $    884,416
     Operating loss                     (10,069,775)          (5,080,565)
     Net loss                           (10,069,775)          (5,080,565)
     </TABLE>

6.   INVESTMENT IN 101 MAIN STREET

     On October 21, 1994, the Company, through FBHI, entered into a Membership
     Purchase Agreement, subsequently amended in March 1995, to purchase for
     $2,500,000 a 22% interest in 101 Main Street, a company formed to
     construct, develop and operate a casino in Gilpin County, Colorado. The
     first floor of the casino opened on May 23, 1995.

     FBHI had advanced the $2,500,000 purchase price at May 23, 1995 and the
     amounts advanced were converted to an unsecured promissory note bearing
     interest at a rate of 1% over the designated prime rate on that date and
     were recorded as advances receivable at December 31, 1995.

     Also on October 21, 1994, FBHI entered into a Management Agreement with 101
     Main Street to manage the casino operations for a period of 10 years, at a
     management fee equal to 8% of annualized earnings before interest, taxes,
     depreciation and amortization, subject to the approval of the Colorado
     Limited Gaming Commission.

     In March 1995, FBHI entered into an Amendment to the Management Agreement
     to provide for a fixed monthly management fee (a) until such time as FBHI
     receives the approval of the Colorado Limited Gaming Commission to acquire
     its 22% interest in 101 Main Street or (b) FBHI receives approval of the
     Colorado Limited Gaming Commission to receive a percentage management fee
     or (c) until the Membership Purchase Agreement is terminated. The approvals
     discussed above were received on February 16, 1996 and the $2,500,000
     advance was exchanged for the 22% interest. The Company's investment is
     recorded using the equity method. FBHI has an option to acquire the
     remaining 78% interest. The fixed management fee is fixed for 1 year,
     originally at $75,000 per month and since November 1, 1995, at $37,500 per
     month, and thereafter such amount as is mutually agreed in good faith. The
     management fee reverted to the 8% fee discussed above effective February
     26, 1996.


                                      F-16
<PAGE>   21

     Condensed financial information of 101 Main Street as of December 31, 1996
     and for the year then ended is summarized below:

     <TABLE>
     <S>                                               <C>         
     Current assets                                    $  2,264,357
     Non current assets                                  21,531,466
     Current liabilities                                  5,168,166
     Non current liabilities                              7,607,679
     Net assets                                          11,019,978

     Revenues                                          $ 27,944,135
     Operating income                                     7,777,331
     Net income                                           6,084,598
</TABLE>

7.   LONG-TERM DEBT

     Long-term debt at December 31, 1996 and 1995 is as follows:

<TABLE>
<CAPTION>
                                                                                         1996              1995
<S>                                                                                <C>               <C>
   Priority secured notes payable ("Priority Notes"); secured by a first
      priority lien on substantially all of the assets of the subsidiaries
      of the Company (other than FAMI, FNYI and NCI), due in semi-annual
      installments of interest at 13% on June 30 and December 31; with a
      final payment of principal and interest due on December 31, 1998 
      (net of unamortized discount of $871,535)                                    $   5,010,465     $         --

   Senior secured notes payable; secured by a first priority lien on
      substantially all of the assets of the subsidiaries of the Company
      (other than FAMI, FNYI and NCI) except for certain excluded assets,
      due in semi-annual installments of interest at 13% on June 30 and
      December 31; with a final payment of principal and interest due on
      December 31, 2002 (net of unamortized discount of $14,090,081 and
      $15,469,214). The holders of these notes have subordinated their
      collateral position to the Priority Notes. (See Notes 8 and 19)                108,909,919      107,530,786

   Note payable to an individual to acquire Fitzgeralds Casino/Hotel (Reno)
      (the "Fitzgeralds Reno Note); collateralized by deed of trust on
      Fitzgeralds Reno land and buildings and a security agreement on
      furniture, fixtures, and equipment; due in monthly installments of
      $250,000, including interest at prime plus 1% (9.25% at December 31,
      1996) not to exceed 13% nor be less than 9%; remaining unpaid
      principal balance due December 2001; $886,000 principal in arrears at
      December 31, 1996                                                               18,067,287       18,499,520
</TABLE>


                                      F-17
<PAGE>   22

<TABLE>
<CAPTION>
                                                                                                1996              1995
<S>                                                                                      <C>               <C>

        Note payable to repurchase outstanding common shares from a major
           stockholder; collateralized by deeds of trust on Fitzgeralds Reno
           land and buildings; subordinated to bank notes payable; due in
           monthly installments of $98,648, including interest at the prime rate
           plus 1% (9.25% at December 31, 1996), not to exceed 13% nor be less
           than 9%; remaining principal balance due September 16, 2001 (See 
           Note 15)                                                                           5,707,015        5,105,013

        Revolving credit and term note payable to a bank (the "Fitz Note");
           collateralized by deed of trust on Fitzgeralds Reno land and
           buildings, security agreement on furniture, fixtures and equipment,
           and a personal guarantee by certain stockholders; due in monthly
           principal installments of $50,000 plus interest at the bank's prime
           rate plus 1% (9.25% at December 31, 1996) until November 1, 1997, at
           which time all unpaid principal and interest is due                                1,233,606        1,368,605

        Note payable to a trust to acquire land used in casino operations;
           collateralized by deed of trust on the land; due in monthly
           installments of $32,681, including interest at 7.5%; remaining
           principal and interest due December 6, 2000                                        1,351,620        2,077,363

        Note payable to a bank to acquire the Nevada Club; collateralized by a
           deed of trust on land and buildings, a security agreement on
           furniture, fixtures and equipment and a personal guarantee by certain
           stockholders; due in monthly installments of $55,055, including
           interest at the bank's prime rate plus 1% (9.25% at December 31,
           1996); principal balance due December 1998                                         3,047,088        3,444,158

        Notes payable secured by gaming equipment; due in
           aggregate monthly installments of $108,708, including
           interest at 11.5%; remaining principal due August 1998                             1,969,947        2,981,602

        Contract payable secured by gaming equipment, due in
           monthly principal installments of $133,333 plus
           interest at 10.83%; remaining principal due March 1998                             2,000,000               --

        Contracts payable, collateralized by certain equipment,
           due in maximum aggregate monthly installments of
           $314,832, with varying maturity dates through 2001                                 4,702,490        4,098,723

        Obligation for construction of water/sewer lines,
           secured by an irrevocable letter of credit, due in
           monthly installments of $11,735, including imputed
           interest of 9.5%                                                                     328,034          442,674
</TABLE>



                                      F-18
<PAGE>   23

<TABLE>
<CAPTION>
                                                      1996            1995
<S>                                               <C>              <C>         
        Other                                     $   1,166,744    $  2,609,469
                                                  -------------    ------------
        Total long-term debt                        153,494,215     148,157,913
        Less current portion                        (25,637,728)    (10,498,434)
                                                  -------------   -------------
        Long-term portion                         $ 127,856,487   $ 137,659,479
                                                  =============   =============
</TABLE>

     The scheduled maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
     YEAR ENDING                                        NOTES
     DECEMBER 31,                                      PAYABLE
     <S>                                         <C>          
        1997                                         $ 25,637,728
        1998                                           11,705,800
        1999                                            2,550,532
        2000                                            1,312,985
        2001                                            3,377,251
        Thereafter                                    108,909,919
                                                     ------------
        Total                                        $153,494,215
                                                     ============
</TABLE>

     The Company has agreed to remit to a bank 30% of its excess cash flows from
     FRI on an annual basis. Such excess cash flows are generally defined as net
     income less debt service, approved capital expenditures and approved
     distributions to stockholders and related companies. Such amounts paid to
     the bank will be first applied to principal amounts owed on the Fitz Note.
     FRI did not generate excess cash flows, as defined, during 1996, 1995 or
     1994.

     The note payable to a bank to acquire the Nevada Club with a balance of
     $3,047,088 as of December 31, 1996, has covenants placing restrictions on
     Nevada Club and requiring that certain financial ratios be maintained. As
     of December 31, 1996, NCI was not in compliance with certain of these
     covenants. NCI continues to make scheduled principal and interest payments
     on the notes. The Company is actively seeking a buyer for Nevada Club, and
     upon its sale, these notes payable will be retired. The Company has
     received a waiver from the bank for one year for non-compliance with the 
     covenants.

     The Company has made interest-only payments on the Fitzgeralds Reno Note
     since March 1996 based on a verbal agreement with the holder and is
     approximately $886,000 in arrears on principal as of December 31, 1996. The
     holder of the note has not placed the note into default or demanded payment
     of either the principal in arrears or the entire principal balance.
     However, neither has the note holder waived any rights under the note
     agreement. As a result, the Company has classified the entire balance of
     the Fitzgeralds Reno Note as current as of December 31, 1996. Should the
     Fitzgeralds Reno Note be placed in default, certain cross default
     provisions of other debt, including the 1995 Notes, would be triggered, 
     resulting in acceleration of amounts due under the debt agreements, which
     the Company would not be able to pay without a refinancing of 
     substantially all long-term debt.



                                      F-19
<PAGE>   24

     As a result of improving cash flows at FRI, the Company is negotiating with
     the holder of the Fitzgeralds Reno Note to resume principal payments and
     defer principal payments in arrears to a future date. Additionally, the
     Company is seeking to refinance the mortgage-secured indebtedness at FRI,
     based on a preliminary offer from the holders of two mortgage notes to
     discount the respective notes as an inducement for early pay-off. However,
     no assurances can be given that the Company will be successful in
     completing the refinancing.

     On March 14, 1994, FSI issued $36 million of 13% senior secured notes due
     1996. In connection with the issuance of these notes, FSI has issued
     warrants to purchase 100,558 shares of its common stock. No value was
     ascribed to the warrants. The warrants are exercisable at $.01 per share,
     expire five years from the closing of the offering for these notes and are
     subject to certain anti-dilution adjustments. Warrants to purchase 54,384
     shares of common stock of FSI were also issued to the sales agent. These
     warrants are exercisable at $32.18 per share and expire five years from the
     closing of the offering. All warrants issued in connection with this note
     offering are exercisable only for common shares of FSI. These notes were
     repaid from a portion of the proceeds from the 1995 Offering (Note 8) at
     which time the Company repurchased approximately 90% of the $.01 warrants.

8.   THE 1995 OFFERING

     On December 19, 1995, the Company completed a public offering of debt,
     preferred stock and warrants (the "1995 Warrants"). The Company issued
     123,000 Note Units each consisting of $1,000 principal amount of 13% Senior
     Secured Notes due December 31, 2002 with Contingent Interest (the "1995
     Notes") and 13.59368 1995 Warrants, each to purchase one share of the
     Company's common stock at $.01 per share, and 800,000 Preferred Stock
     Units, each consisting of one share of Cumulative Redeemable Preferred
     Stock (the "Preferred Stock") and 1.25402 1995 Warrants. The 1995 Warrants
     have each been assigned a value of $4.50.

     A summary of the proceeds from the 1995 Offering is as follows:

<TABLE>
                                          1995             PREFERRED         1995
                                          NOTES              STOCK          WARRANTS             TOTAL
<S>                                   <C>               <C>               <C>               <C>
Face amount                           $  123,000,000    $   20,000,000    $           --    $  143,000,000
Less discount on notes                    (7,985,160)               --                --        (7,985,160)
Less value assigned to
  warrants                                (7,524,104)       (4,514,463)       12,038,567                --
                                      --------------    --------------    --------------    --------------
  Proceeds                               107,490,736        15,485,537        12,038,567       135,014,840
Less offering costs                       (7,374,459)       (3,631,405)       (1,574,850)      (12,580,714)
                                      --------------    --------------    --------------    --------------
  Net proceeds                        $  100,116,277    $   11,854,132    $   10,463,717    $  122,434,126
                                      =============     ==============    ==============    ==============
</TABLE>

     1995 NOTES

     The 1995 Notes bear interest at a fixed rate of 13% per annum payable on
     June 30 and December 31 of each year, commencing June 30, 1996. If neither
     a Qualified Public Offering nor a Qualified Public Company Merger (as each
     is defined) has been consummated prior to December 31, 1997, contingent
     interest will be payable on the 1995 Notes. Such contingent interest will
     be payable on each interest payment date thereafter in an aggregate amount
     equal to 25% of the Company's consolidated EBITDA (earnings before
     interest, taxes, depreciation and amortization) for the six-month periods
     ending on or about the March 31 and September 30 prior to each interest
     payment date, up to a limit of $50 million of the Company's consolidated
     EBITDA during any two consecutive semiannual periods ending on or 



                                      F-20
<PAGE>   25
     about September 30. Under certain circumstances, the Company, at its option
     may defer payment of all or a portion of any installment of contingent
     interest.

     The 1995 Notes are secured by a first priority lien on substantially all of
     the assets of the subsidiaries of the Company (other than FAMI, FNYI, and
     NCI), except certain excluded assets. See Notes 7 and 19.

     The 1995 Notes are redeemable at the option of the Company in whole (but
     not in part) at any time after the issue date at 100% of the principal
     amount thereof, increasing ratably to 102% of the principal amount thereof
     on or after December 31, 1998, and in whole or in part at any time on or
     after December 31, 1999 at 104.33% of the principal amount thereof,
     declining ratably to 100% of the principal amount thereof on or after
     December 31, 2001, plus, in each case, accrued and unpaid interest to the
     redemption date. The 1995 Notes are also redeemable as may be required by
     applicable gaming laws and regulations.

     If a Change of Control (as defined) occurs, each holder of 1995 Notes will
     have the right to require the Company to repurchase all or any part of such
     holder's 1995 Notes, at a cash price equal to 101% of the principal amount
     thereof, plus accrued and unpaid interest to the purchase date.

     The Indenture governing the 1995 Notes (the "Indenture") contains covenants
     which, among other things, restrict the Company's ability to (i) make
     certain payments to, or investments in, third parties (ii) incur additional
     indebtedness (iii) enter into transactions with affiliates and (iv) sell
     assets or subsidiary stock. At December 31, 1996, the Company was in
     compliance with these provisions.

     PREFERRED STOCK

     The Preferred Stock has a liquidation preference of $20 million dollars
     ($25 per share), plus accrued and unpaid dividends. Cash dividends on the
     Preferred Stock will be payable commencing March 31, 1996 out of funds
     legally available therefor (when and if declared by the Company's Board of
     Directors) in an amount equal to 15% of the liquidation preference.
     Dividends if not paid (whether or not declared) will be cumulative from
     December 19, 1995 and will be compounded quarterly. The Indenture restricts
     the Company's ability to pay dividends on the Preferred Stock, and the
     Company has no current intention to pay any dividends on the Preferred
     Stock. The Preferred Stock may be redeemed by the Company at any time at a
     redemption price equal to 100% of the liquidation preference plus accrued
     and unpaid dividends on the date of redemption subject to restrictions in
     the Indenture. The Company will be obligated to redeem all of the Preferred
     Stock on December 31, 2005 at a redemption price equal to 100% of the
     liquidation preference plus accrued and unpaid dividends on the date of
     redemption. In the event that the Company consummates a Qualified Public
     Offering (as defined), it will be required to offer to repurchase 35% of
     the Preferred Stock at a price equal to 100% of the liquidation preference
     on the date of repurchase.

     1995 WARRANTS

     The 1995 Warrants are exercisable for an aggregate of 2,675,237 shares of
     the Company's common stock at $.01 per share, are subject to anti-dilution
     adjustments, and expire December 19, 1998. 7.87496 of the 1995 Warrants
     included in each Note Unit and 0.69187 of the 1995 Warrants included in
     each Preferred Stock Unit became separately transferable from the Note
     Units and the Preferred Stock Units, as applicable, on June 30, 1996, and
     became exercisable on June 30, 1996. The remaining 5.71872 of the 1995
     Warrants included in each Note Unit (the "Restricted Note Warrants") and
     the remaining 0.56215 of the 1995 Warrants included in each Preferred Stock
     Unit (the "Restricted 


                                      F-21
<PAGE>   26

     Preferred Stock Warrants") will not be separately transferable from the
     1995 Notes or Preferred Stock, as applicable, with which they were issued,
     and will not be exercisable, prior to December 31, 1997.

     If, prior to December 31, 1997, any redemption or repurchase of shares of
     the Preferred Stock is effected with net proceeds from a Qualified Public
     Offering or in connection with a Qualified Public Company Merger (as each
     is defined), then the Company may redeem or cancel the Restricted Preferred
     Stock Warrants originally issued with each share of Preferred Stock
     redeemed, for no additional consideration. In addition, if the Company
     consummates a Qualified Public Offering or a Qualified Public Company
     Merger prior to December 31, 1997, it may cancel all of the Restricted Note
     Warrants originally issued with the Note Units, for no consideration.

9.   COMMITMENTS

     Future minimum rental payments under operating leases with noncancelable
     lease terms in excess of one year are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
<S>                                                             <C>
     1997                                                       $  1,485,962
     1998                                                          1,414,744
     1999                                                          1,289,830
     2000                                                          1,114,645
     2001                                                            962,282
     Thereafter                                                    6,725,114
                                                                ------------
     Total                                                      $ 12,992,577
</TABLE>                                                        ============

     Such operating lease commitments primarily relate to equipment, signs,
     warehouses and ground leases on which the Company's buildings and equipment
     reside. Rent expense for the years ended December 31, 1996, 1995 and 1994
     was $1,989,321, $2,034,061 and $1,917,666.

     On May 31, 1995, the Company sold Harolds Club and the buyer assumed the
     lease commitments for Harolds Club. The Company is contingently liable for
     the lease obligations in the event that the buyer of Harolds Club does not
     make the required lease payments. As of December 31, 1996, lease
     obligations in the aggregate amount of approximately $591,000 were unpaid
     and the remaining Harolds Club lease obligations are as follows:




                                      F-22
<PAGE>   27

<TABLE>
<CAPTION>
                  YEAR ENDING       
                  DECEMBER 31
                  <S>                                 <C>
                       1997                          $    607,454
                       1998                               571,454
                       1999                               324,996
                       2000                               324,996
                       2001                               324,996
                       Thereafter                       3,879,077
                                                     ------------
                       Total                         $  6,032,973
                                                     ============
</TABLE>

     Although the buyer agreed to provide the Company with a deed of trust on
     certain of the Harolds Club real estate sold as collateral in the event of
     default on the lease payments, such deed of trust had not been received as
     of December 31, 1996, and the Company does not anticipate receiving the
     deed of trust in light of the fact that all of the buyer's assets,
     including the Harolds Club real estate has been placed under the control of
     a bankruptcy trustee.

     The current owner of Harolds Club has not met its obligations with respect
     to the land leases and the lessors have demanded payment from the current
     lessor, FRI and from another, unrelated guarantor. On or about August 2,
     1996, each of the five land lessors filed separate actions in the Second
     Judicial District Court (Washoe County), State of Nevada, seeking payment
     from FRI and the other guarantor of an aggregate of approximately $319,280
     in unpaid lease payments plus interest, attorneys' fees and costs. On
     October 31, 1996, four of the land lessors entered into a stipulation with
     each of the named defendants pursuant to which the parties agreed to stay
     all action in the suits until April 15, 1997 in order to, among other
     things, allow the current owners an opportunity to find a buyer for the
     property and to allow FRI time to attempt to preserve the right to operate
     non-restricted gaming in the property. On March 20, 1997, the Nevada Gaming
     Commission approved the application filed by NCI to operate non-restricted
     gaming at Harolds Club for a period not to exceed one year from the date of
     approval. The Company intends to operate 21 slot machines at Harolds Club,
     on behalf of its owner, and at no significant cost to the Company, for a
     total of two hours per calendar quarter in order to preserve existing
     grandfather's rights which would allow a new purchaser to operate a
     non-restricted facility without building hotel rooms.

     The one land lessor who failed to join in the stipulation has indicated an
     intention to dismiss FRI and all other defendants except one, from its
     lawsuit. However, that dismissal has not yet occurred. On October 31, 1996,
     one of the named defendants filed a cross-claim against FRI and the other
     defendants for indemnification and has threatened to make further claims
     against FRI. FRI intends to vigorously defend this action as well as the
     other four actions should Harolds Club not be sold by April 15, 1997.

     On October 13, 1994, the Mississippi Gaming Commission formally adopted an
     infrastructure development regulation. This new regulation requires each
     casino operator to have a minimum level of infrastructure in connection
     with such operator's casino, which at a minimum consists of a 250 room
     hotel and/or certain entertainment facilities so long as the cost of those
     facilities is at least twenty-five percent (25%) of the total cost of the
     barge placed in service as a casino. Specifically excluded are parking
     garages, roads, sewage and other infrastructure items normally provided by
     governmental entities. If an operator does not have such infrastructure
     already in place, the requirements of the regulation must be approved at
     the time of the next renewal of such operator's gaming license (which was
     obtained by FMI in March 1996) or a plan showing how the operator intends
     to comply with the regulation must be presented. It is the intent of the
     Mississippi Gaming Commission that these be land-based facilities. FMI
     undertook the development of its 121-acre site to include a hotel and
     entertainment facility during December 1995. On July 23, 1996 FMI opened
     100 rooms in the hotel, and the hotel was fully opened by October 5, 1996.
     The Company believes that this expansion fully satisfies the infrastructure
     development regulation adopted by the Mississippi Gaming Commission.

10.  RELATED PARTY TRANSACTIONS

     Accounts and notes receivable - related parties consist of the following at
     December 31:

<TABLE>
<CAPTION>
                                                                                                1996              1995
<S>                                                                                         <C>                  <C>
        Unsecured notes receivable from stockholders with interest only payments
           due annually through June 30, 1997, at which time the entire
           principal amount is due and payable. The notes bear interest at 6.69%            $ 1,167,853      $ 1,167,853

        Unsecured note receivable from a former stockholder whose common shares
           in FRI and NCI were repurchased in 1992. (See Note 15). Interest only
           payments are due annually through June 30, 1997, at which time the
           principal amount is due and payable. The note bears interest at
           6.69%. Net of allowance for uncollectible portion of $510,439                        639,402          639,402

        Unsecured note receivable from a former stockholder whose common shares
           in FRI and NCI were repurchased in 1992 (see Note 15). The note bears
           interest at the prime rate plus 1% (9.25% at December 
</TABLE>


                                      F-23
<PAGE>   28
<TABLE>
<S>                                                                                         <C>                  <C>
           31, 1996), not to exceed 13% nor be less than 9%. The note is                       1996             1995
           payable in monthly installments of $19,184 including interest                   ------------      -----------
           through April 1997                                                                   216,865          303,529

        Accrued interest receivable on notes                                                     81,725          122,200
        Other advances                                                                          114,097            6,533
                                                                                           ------------      -----------
        Total                                                                                 2,219,941        2,239,517
        Less current portion                                                                 (2,209,188)        (337,121)
                                                                                           ------------      -----------
        Long-term portion                                                                  $     10,753      $ 1,902,396
                                                                                           ============      ===========
</TABLE>

     During 1994, the Company distributed $932,306 of the unsecured notes
     receivable from stockholders to those stockholders as dividends.

     Other advances represent advances made to affiliated companies. The amounts
     do not bear interest and there are no stated repayment terms. A portion of
     the amount is classified as non-current as significant repayments are not
     expected in 1997.

     Notes payable - related parties consist of the following at December 31:

<TABLE>
<CAPTION>
                                                                                                1996              1995
<S>                                                                                         <C>                  <C>
        Unsecured notes payable to stockholders; interest
           at 6.24%; payable on demand                                                      $   304,637       $  667,820

        Subordinated notes payable (including $632,221 to a former stockholder)
           issued pursuant to the buy-out of the former general partners of
           FLVLP interest which occurred on November 1, 1992. The notes are
           unsecured and bear interest at the rate of 7.22% with interest
           payments due annually on the anniversary date of the note, with all
           principal and accrued interest payable in full on November 1, 1997                 1,807,255        1,807,255

        Other                                                                                    25,903            59,851 
                                                                                            -----------       ----------- 
                                                                                              2,137,795         2,534,926 
        Less current portion                                                                 (2,111,892)         (727,671)
                                                                                            -----------       ----------- 
        Long-term portion                                                                   $    25,903       $ 1,807,255 
                                                                                            ===========       =========== 
</TABLE>

     Accrued interest payable on notes payable - related parties, included in
     accrued interest payable, was $4,191 and $44,719 at December 31, 1996 and
     1995.



                                      F-24
<PAGE>   29

11.  ONEIDA NATION AGREEMENT

     In April 1993, the Company, through FNYI, entered into a Technical
     Assistance and Management Agreement (the "Agreement") with the Oneida
     Nation to provide loans and technical services to facilitate the opening
     of, and to manage for five years a casino gaming operation in Verona, New
     York. The Agreement was submitted for approval to the National Indian
     Gaming Commission (the "Commission"). The original terms of the Agreement
     obligated FNYI to provide $12 million of financing to the Oneida Nation and
     entitled FNYI to receive repayment of such financing as well as a
     management fee ranging from 7% to 9% from the net distributable profits of
     the gaming facility.

     In July 1993, the financing obligation of the Agreement was canceled and
     replaced by a loan agreement between Phil Griffith and the Oneida Nation.
     Pursuant to this new agreement, Mr. Griffith became obligated to repay FI
     $2,500,000 advanced by FI to the Oneida Nation through June 30, 1993, and
     to advance up to an additional $5,500,000 to the Oneida Nation. FI advanced
     additional funds to Mr. Griffith and had received repayments of all
     advances at December 31, 1995.

     Prior to the final approval of the Agreement by the Commission, the Oneida
     Nation elected in early 1994 to self-manage the facility. In consideration
     of the work performed prior and subsequent to the opening of the casino,
     FNYI entered into a settlement agreement on March 30, 1995 pursuant to
     which it is entitled to receive from the Oneida Nation $6.4 million,
     payable in 48 monthly payments of $133,333, commencing retroactively as of
     August 1, 1994. The retroactive payments totaling $933,333 were received on
     March 31, 1995 and subsequent monthly payments have been made.

12.  ARIZONA AGREEMENT

     On March 1, 1994, the Company, through FAMI, entered into a Technical
     Services and Casino Consulting Agreement (the "Technical Agreement") with
     the Yavapai-Apache Nation (the "Yavapai") to provide advisory and
     consulting services in connection with the opening of a casino operation on
     the Yavapai-Apache Nation Reservation in Arizona. Under the terms of the
     Technical Agreement, as amended on October 20, 1994, FAMI will be paid
     $25,000 to $150,000 per month, direct travel and related expenses, and a
     fee of $250,000 upon the opening of the permanent casino facility and a fee
     of $700,000 payable $100,000 per month.

     On April 25, 1994, FAMI entered into a Management Agreement (the
     "Management Agreement") with the Yavapai to manage the casino operations
     for a term of five years. The Management Agreement was approved by the
     Commission on May 22, 1995 and the Casino opened on May 23, 1995. The terms
     of the Management Agreement obligate FAMI to provide, or arrange for third
     parties to provide, up to $7.3 million of financing for the construction,
     development, equipping of, and working capital for, the Casino. As of the
     opening date, FAMI had advanced $677,000 for such purposes and had arranged
     financing and equipment leases which, in the aggregate, fully satisfied
     such obligations. The advances are treated as loans bearing interest at 12%
     per annum and are repayable over 12 months or less under certain
     circumstances. FAMI is also entitled to a management fee ranging from 10%
     to 19% of the net revenues of the gaming facility (less credits ranging
     from $95,000 in the first year to $270,000 in the fifth year of
     operations). FAMI paid $300,000 to the Yavapai upon execution of the
     Management Agreement and another $100,000 upon the approval of the
     Management Agreement by the Commission.

     The Yavapai are guaranteed to receive a minimum monthly payment of $500,000
     from the operation of the casino. Should casino operations fail to produce
     net receipts sufficient to pay the guaranteed 



                                      F-25
<PAGE>   30

     minimum, FAMI and FI are obligated to provide the necessary funds. Should
     FAMI or FI be required to make the guaranteed minimum payment for three
     consecutive months, FAMI may terminate the Agreement. Through December 31,
     1996, the Company has not been required to make any payments.

     On or about February 23, 1996, FAMI initiated a claim for arbitration
     against the Yavapai relating to a dispute between the parties under the
     FAMI Technical Agreement. The dispute concerns the Company's entitlement to
     bonus payments as a result of the operations of the Cliff Castle. The
     Company contends that it is entitled to $100,000 bonus payments for the
     months of September, October, November, December 1995, and January 1996
     because the casino generated Net Revenues and/or Yavapai share of Net
     Revenues in excess of $1.0 million for each of the aforementioned months
     triggering the right to the monthly bonus. The Company has not reflected
     such bonus payments in its consolidated financial statements for 1995 or
     1996. Pursuant to an arbitration proceeding held during July 1996, it was
     determined that FAMI was not entitled to such bonus payments.

13.  PROFIT SHARING PLAN

     The Company has contributory profit-sharing plans for eligible employees.
     The Company's contribution to the plans for any year, as determined by the
     Board of Directors, is discretionary. Contributions to the plan are
     allocated among eligible participants in the proportion of their salaries
     to the total salaries of all participants. Plan contributions, excluding
     matching contributions described below, were $0, $301,585 and $256,498 for
     the years ended December 31, 1996, 1995 and 1994.

     Effective January 1, 1989, the Company amended the plans to include a
     401(k) savings plan whereby eligible employees may contribute up to 15% of
     their salary, which is matched by the Company at 25 cents per employee
     dollar contributed, up to a maximum of 6% of their salary. The Company's
     matching contributions were $390,237, $197,006 and $194,048 for the years
     ended December 31, 1996, 1995 and 1994.

     Each employee age 21 or older completing 1,000 or more hours of service
     during the twelve-month period preceding the entry dates, January 1 or 
     July 1, is eligible to participate in the plans.

     In addition, the Company contributes to multi-employer defined contribution
     pension plans under various union agreements. Contributions, based on wages
     paid to covered employees, were $322,405, $314,963 and $324,856 for the
     years ended December 31, 1996, 1995 and 1994. As of December 31, 1996, the
     Company's share of unfunded pension liabilities, if any, is unknown.

14.  CONTINGENCIES

     FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK - In the normal course of
     business, the Company is a party to financial instruments with
     off-balance-sheet risk such as guarantees, which are not reflected in the
     accompanying consolidated balance sheets.

     The Company has an irrevocable letter of credit with a bank in the amount
     of $266,000. Such letter, which expires on November 1, 1997, may be drawn
     upon by the State of Nevada Insurance Division in the event that FRI, NCI,
     or FLVI fails to pay to its employees workmen's compensation benefits under
     a self-insurance program. No amounts were drawn at December 31, 1996 and
     management does not expect any material losses to result from these
     off-balance-sheet instruments.



                                      F-26
<PAGE>   31

     LEGAL MATTERS - The Company is party to various legal actions and
     administrative proceedings and subject to various claims arising in the
     course of business. The Company believes that the disposition of these
     matters will not have a material adverse effect on the consolidated
     financial position or results of operations of the Company.

     The current bankruptcy of an adjacent casino property involves the jointly
     developed access road to Fitzgeralds Tunica. In the opinion of management
     of the Company, the Company's continued access to the property is not in
     jeopardy and the ultimate outcome of this matter will not have a material
     adverse effect on the results of operations or the financial position of
     the Company.

     See also Note 15 below for a discussion concerning a dispute over the
     valuation of Harolds Club affecting the price payable by FRI to a former
     stockholder for repurchased shares.

15.  STOCKHOLDERS' EQUITY

     STOCK REPURCHASE

     On December 21, 1990, FRI entered into an agreement to repurchase certain
     of its outstanding common shares from a major stockholder. Such agreement
     also provided for the repurchase of similar ownership interests of such
     stockholder in NCI and a third entity.

     The price paid for the ownership interests of the stockholder in all three
     companies is $7,150,636. Such purchase price was allocated (per the terms
     of the agreement) $1 to NCI, $1 to the other entity, and the remainder to
     FRI. In connection therewith, FRI (1) paid $100,000 in cash, (2) issued
     notes payable totaling $5,262,485 (see Note 5), (3) increased due to
     related parties by $1,100,000, (4) exchanged a note receivable from the
     stockholder and related accrued interest of $300,172, and (5) exchanged
     land and a building with a net book value of $387,979.

     The purchase price may be adjusted for the stockholder's prorata share
     (prior to this agreement) of (1) the net sales proceeds of certain real
     properties (or their appraised net value at March 16, 1994), (2) the net
     sales proceeds of Harolds Club and Nevada Club (or their appraised net
     value at March 16, 1994), and, (3) future net operating results of FRI and
     NCI for a period until the earlier of the sale of Harolds Club and Nevada
     Club, the full repayment of the promissory note or the elapsing of 9.5
     years from March 16, 1992. Any adjustments in purchase price will be
     effected by adjusting the amount of the promissory note. During 1992, an
     additional promissory note of $735,983 (included in $5,262,485 above) was
     signed to reflect the stockholder's prorata share of the net sales proceeds
     of a surface parking lot.

     The purchase price and notes payable to the stockholder were reduced by
     $56,061 in 1993 for an adjustment to tax liability of the stockholder for
     the repurchase of his shares.

     The appraisals discussed above were performed and resulted on March 16,
     1994 in an increase in the purchase price and the note payable to the
     stockholder in the amount of $461,678.

     The purchase price was increased by $98,007 in 1995 for an adjustment to
     the tax liability of the stockholder for repurchase of his shares.

     As a result of the court order discussed below, the purchase price was
     increased by $636,020, interest expense was increased by $137,920 and the
     note payable to the stockholder was increased by $773,940 in 1996.

     LEGAL PROCEEDINGS

     In November 1994, the stockholder filed a complaint in the Second Judicial
     District Court in Washoe County, Nevada (the "Court"), alleging that the
     stockholder is entitled to additional consideration based on certain
     valuations of Harolds Club and for damages for his failure to be released
     from certain bank guarantees. Harolds Club was sold in May 1995, which
     released the stockholder from his bank guarantees. 



                                      F-27
<PAGE>   32

     On September 13, 1996, the Court ordered an increase in the purchase price
     and the promissory note of $636,020 retroactive to March 16, 1994 which
     resulted in an additional increase in the promissory note and an increase
     in interest expense of $137,920. The court has not yet formalized its order
     into a final judgment. In response to both parties' motion for costs and
     attorney's fees, on January 15, 1997 the Court entered an order requiring
     each party to pay its own costs and attorneys fees. The parties are engaged
     in ongoing discussions to find a solution to the disputes involving the FRI
     Note and the Metzker Note. If a resolution cannot be reached, FRI intends
     to appeal the Court's judgment. If FRI does not appeal or does not prevail
     on appeal, the monthly payments due under the note will be adjusted on a
     pro-rata basis and will become payable retroactively to May 1994.


     CONTRIBUTIONS FROM STOCKHOLDERS/PARTNERS

     Pursuant to the business combination, the S corporation elections and
     partnership status of certain subsidiaries have been terminated. Therefore,
     undistributed earnings (losses) of these subsidiaries have been transferred
     to additional paid-in capital at the end of 1994 and 1995 in the
     consolidated statements of stockholders' equity.

     ISSUANCES OF STOCK

     During 1994, 79,731 shares of common stock were issued to the president of
     the Company in exchange for cash of $350,000 contributed to FI.

     During 1994, 553,054 common shares were issued in exchange for cash of
     $4,500,000 contributed to FSI.

     ISSUANCES OF WARRANTS

     The Company has outstanding common stock warrants issued in connection with
     its 1995 Offering. See Note 8.

     FSI has outstanding common stock purchase warrants issued in connection
     with its 13% Notes. See Note 7.

     During 1994, the Company sold for $133,650 in cash, warrants to purchase a
     total of 29,097 shares of common stock at $.05 per share. In addition, in
     1994 the Company received $125,000 in cash in payment for 26,942 common
     shares to be issued upon completion of the Company's 1995 offering. Such
     shares were issued during 1996.

     ACQUISITION OF FI STOCK

     As part of the business combination, the Company issued 23,989 shares of
     its common stock in 1995 to a minority stockholder of FI upon the
     completion of the 1995 Offering.

     STOCK OPTIONS

     In February 1995, the Company granted options to purchase 87,140 shares of
     common stock of the Company at $1.00 per share to certain employees of the
     Company. 50% of the options granted vested on June 30, 1995. The remaining
     50% of the options vested on June 30, 1996. The stock option plan requires
     the approval of the Nevada Gaming Control Board and Gaming Commission. No
     options had been exercised as of December 31, 1996.



                                      F-28
<PAGE>   33
     The Company has established a Stock Option Incentive Plan (the "Option
     Plan"), which permits the granting of options to officers, directors and
     key employees to purchase the Company's common stock at not less than the
     fair value at the time the options were granted. The maximum number of
     common shares available for issuance under the Option Plan is 600,000. No
     person eligible to receive options under the Option Plan may receive
     options for the purchase of more than an aggregate of 100,000 shares.  The
     Option Plan provides for the grant of options to purchase common stock
     either that are intended to qualify as "incentive stock options" within the
     meaning of Section 422 of the Internal Revenue Code of 1986, as amended, or
     that are not intended to so qualify ("Non-qualified options"). All
     officers, directors, and key employees are eligible to receive options
     under the Option Plan, except that only employees are eligible to receive
     incentive stock options.

     In December 1995, the Company granted options under the Option Plan to
     purchase 75,000 shares to each of two officers and 50,000 shares to each of
     two additional officers. In addition, approximately 193,000 options were
     granted under the Option Plan to Company employees concurrently with the
     closing of the 1995 Offering. In connection with the election of two
     non-employee directors concurrently with the 1995 Offering, the Company
     granted options to purchase 5,000 shares to each of such non-employee
     directors. During 1996, 6,000 options were granted under the Option Plan
     and 82,510 options were forfeited. These options are exercisable at $4.50
     per share, with the options vesting ratably over three years. With the
     exception of 50,000 options which expired in 1996, all options will expire
     on December 31, 1999.

     The Option Plan is administered by the Board of Directors or, in its
     discretion, by a committee of the Board of Directors appointed for that
     purpose (the "Committee"), which, subject to the terms of the Option Plan,
     has the authority in its sole discretion to determine: (a) the individuals
     to whom options shall be granted; (b) the time or times at which options
     may be exercised; (c) the number of shares subject to each option, the
     option price and the duration of each option granted; and (d) all of the
     other terms an conditions of options granted under the Option Plan.

     The exercise price of options granted under the Option Plan must be at
     least equal to the fair market value of the shares on the date of grant
     (110% of fair market value in the case of participants who own shares
     possessing more than 10% of the combined voting power of the Company) and
     may not have a term in excess of 10 years from the date of grant (five
     years in the case of participants who are more than 10% stockholders). No
     optionee may receive in any year incentive stock options, whether under the
     Option Plan or any other plan of the Company or any of its subsidiaries, to
     purchase common stock if the aggregate fair market value (determined at the
     time the incentive stock option is granted) of the stock for which the
     incentive stock options are exercisable for the first time by such optionee
     during any calendar year exceeds $100,000.

     Options granted under the Option Plan are not transferable other than by
     will or the laws of descent and distribution. Unless otherwise determined
     by the Board of Directors or the Committee in connection with the grant of
     any non-qualified stock options, all stock options granted under the Option
     Plan will expire 90 days after the date of the optionee's termination of
     employment or other relationship with the Company for any reason other than
     death or permanent disability and one year after the optionee's termination
     of employment or other relationship by reason of death or permanent
     disability (but not, in either case, later than the scheduled expiration
     date). The termination of employment or other relationship of an optionee
     will not accelerate or otherwise affect the number of shares with respect
     to which a stock option may be exercised, which are limited to that number
     of shares which could have been purchased pursuant to the option had the
     option been exercised by the optionee on the date of such termination of
     employment or other relationship. In the case of death, options are
     permitted to be exercised by the person or persons to whom the rights under
     the options pass by will or by the laws of descent or distribution. No
     option is exercisable if such exercise would create a right of recovery for
     "short swing" profits under Section 16(b) of the Securities Exchange Act of
     1934, as amended (the "Exchange Act"), unless such restriction is expressly
     waived by the holder of the options.

     If the number of outstanding shares of common stock is increased or
     decreased, or if such shares are exchanged for a different number or kind
     of shares through reorganization, merger, recapitalization,
     reclassification, stock dividend, stock split, combination of shares or
     other similar transaction, the aggregate number of shares available for
     issuance under the Option Plan, the number of shares subject to outstanding
     options, the per share exercise price of outstanding options and the
     aggregate number of shares with respect to which options may be granted to
     a single participant will be appropriately adjusted by the Board of
     Directors or the Committee. No grant of options is permitted to be made
     under the Option Plan more than 10 years after its date of adoption. The
     Board of Directors has the authority to terminate or to amend the Option
     Plan, subject to the approval of the Company's stockholders under certain
     circumstances, provided that such action does not impair the rights of any
     holder of outstanding options without the consent of such holder.

     A summary of the status of the Company's stock option plans as of December
     31, 1996 and 1995 and changes during the years ending on those dates is
     presented below:

<TABLE>
<CAPTION>
                                               1996                    1995
                                        -------------------     -------------------
                                                   Weighted-               Weighted-
                                                   Average                 Average
                                                   Exercise                Exercise
                                        Shares      Price       Shares      Price
                            
     <S>                                <C>        <C>          <C>        <C>
     Outstanding at beginning of year   526,561     $ 4.01         -        $ -

     Granted                              6,000     $ 4.50      540,140     $ 3.94

     Exercised                             -        $ -            -        $ -

     Forfeited                          (82,510)    $ 4.22      (13,579)    $ 1.00

     Outstanding at end of year         450,051     $ 3.98      526,561     $ 4.01

     Options exercisable at year-end    192,593     $ 3.28       36,781     $ 1.00
</TABLE>

     As of December 31, 1996, the 450,051 options outstanding under the plans
     have exercise prices of either $1.00 and $4.50 and a weighted-average
     remaining contractual life of 2.80 years.

     The Company applies APB Opinion No. 25 and related interpretations in
     accounting for its plans. The compensation cost that has been charged
     against income for its plans was $63,666 and $215,042 for 1996 and 1995,
     respectively. Had compensation cost for the Company's two stock-based
     compensation plans been determined based on the fair value at the grant
     dates for awards under those plans consistent with the method of SFAS No.
     123, the Company's pro forma net loss and loss per common share would have
     been the amounts indicated below:

<TABLE>
     <S>                            <C>             <C>             <C>
     Net loss                       As reported     $(13,493,926)   $(4,254,689)
                                    Proforma        $(13,599,207)   $(4,243,296)

     Loss per common share          As reported     $      (4.26)   $     (1.09)
                                    Proforma        $      (4.29)   $     (1.09)
</TABLE>

     The fair value of each option grant for the pro forma disclosure was
     estimated on the date of grant using the minimum value method with the
     following weighted-average assumptions used for grants in 1996 and 1995;
     risk-free interest rates of 5.91 percent and 5.45 percent, respectively,
     with expected lives of three years and four years, respectively. The
     weighted-average fair value of options granted during 1996 and 1995 were
     $0.71 and $1.32, respectively.
   
     REVERSE STOCK SPLIT

     In August 1995, the Company authorized an increase in the number of
     authorized shares of capital stock to 30,000,000 shares and a 1 for
     4.6396341 reverse stock split. Subsequent to approval by the Nevada Gaming
     Control Board and Gaming Commission the increase in the number of
     authorized shares and the reverse stock split were effected on September
     20, 1995, and 29,200,000 shares of common stock and 800,000 shares of
     preferred stock were authorized. The consolidated financial statements have
     been retroactively adjusted to reflect common stock transactions of the
     Company in terms of the capital structure of Fitzgeralds Gaming
     Corporation, the parent company, and to give retroactive effect to the
     reverse stock split.

     TREASURY STOCK PURCHASE AND RETIREMENT

     Prior to the business combination, FMI purchased and retired certain of its
     shares held by a minority stockholder in exchange for a note payable in the
     amount of $333,333. The note was repaid with a portion of the proceeds from
     the 1995 Offering.

16.  MINORITY INTEREST

     Minority interest represents FNYI's and FAMI's minority stockholders' 15%
     share of the common equity and net income (loss) of FNYI and FAMI,
     respectively, and FMI's minority stockholders' 20% share of the common
     equity and net loss of FMI.

     The minority stockholders of FMI purchased their 20% interest for
     $2,000,000 consisting of $25,000 cash and non-recourse promissory notes
     payable to FMI of $1,975,000 which were partially secured by a deed of
     trust on certain real estate.

     In May 1995, the Company entered into an agreement with the 20% minority
     stockholders of FMI, pursuant to which the Company acquired such minority
     interests effective with the closing of the 1995 Offering. Upon execution
     of the agreement, the minority interest was placed in escrow and the
     Company reimbursed a minority stockholder of FMI for $75,000 of expenses
     incurred in connection with the organization of FMI. At the closing of the
     1995 Offering, the promissory notes from the minority stockholders of FMI
     were returned to such stockholders. Following approval of the proposed
     transfer of the minority interests by the Mississippi Gaming Authorities, a
     deed of trust held as partial security for such notes was released.
     Additionally, the Company paid the minority stockholders $100,000 upon the
     closing of the 1995 Offering.



                                      F-29
<PAGE>   34

     At the time the minority interest in FMI was acquired, the minority
     interest had a debit book balance of $425,000. That amount plus the
     $100,000 purchase price was allocated to property and equipment of FMI
     under the purchase method of accounting.

17.  HAROLDS CLUB

     On November 29, 1994, the Company entered into a Purchase and Sale
     Agreement to sell certain assets of Harolds Club, primarily land, buildings
     and improvements, and casino name, with a book value of approximately
     $10,301,000. The Company retained the remaining assets of Harolds Club,
     consisting primarily of cash and gaming and other machinery and equipment,
     to be used at other properties, and will remain responsible for all
     liabilities of Harolds Club through the closing date of the sale and is
     contingently liable for lease obligations in the event that the buyer of
     Harolds Club does not make the required lease payments (see Note 9). At
     December 31, 1994, the Company recorded an allowance against the book value
     of the assets held for sale of $1,401,262 to write such assets down to
     estimated realizable value as evidenced by the sales price of the agreement
     described above. On March 31, 1995, the Company ceased operating Harolds
     Club pending completion of the Purchase and Sale Agreement. Deposits
     totaling $1,150,000 had been placed in the escrow account through April 20,
     1995 to extend the closing date of the sale to May 31, 1995.

     On May 31, 1995 the sale of Harolds Club was completed and the Company
     received the $8,900,000 sales proceeds. Debt of the Company totaling
     approximately $8,237,000 was paid out of the proceeds.

18.  INCOME TAXES

     The Company accounts for income taxes in accordance with Statement of
     Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
     Taxes," which requires recognition of deferred tax assets and liabilities
     for the expected future tax consequences of events that have been reflected
     in the financial statements or tax returns. Deferred income taxes reflect
     the net effect of (a) temporary differences between the carrying amounts of
     assets and liabilities for financial reporting purposes and the amounts
     used for income tax purposes, and (b) operating loss and tax credit
     carryforwards.

     The income tax (provision) benefit recognized in the consolidated financial
     statements consists of the following:

<TABLE>
<CAPTION>
                                       1996           1995            1994
<S>                                 <C>            <C>             <C>         
Current provision                   $         --   $         --    $    (36,177)
Deferred (provision) benefit           1,484,167     (2,825,746)      1,341,629
                                    ------------   ------------    ------------
Total                               $  1,484,167   $ (2,825,746)   $  1,305,452
                                    ============   ============    ============
</TABLE>



                                      F-30
<PAGE>   35

     A reconciliation of the income tax (provision) benefit with amounts
     determined by applying the statutory U.S. Federal income tax rate to
     consolidated income (loss) before taxes is as follows:

<TABLE>
<CAPTION>
                                                    1996           1995           1994
<S>                                             <C>            <C>            <C>        
Tax benefit at U.S. statutory rate              $ 5,242,297    $   502,060    $ 2,628,147
Entities which had elected S corporation
  status or were partnerships                            --       (501,497)      (444,086)
Deferred liabilities recorded upon the change
  to a taxable status by entities which had
  elected S Corporation status or were
  partnerships                                           --     (3,002,235)            --
(Increase) decrease in valuation allowance       (3,567,514)       303,922       (869,337)
Other                                              (190,617)      (127,996)        (9,272)
                                                -----------    -----------    -----------
                                                $ 1,484,167    $(2,825,746)   $ 1,305,452
                                                ===========    ===========    ===========
</TABLE>

     The tax items comprising the Company's net deferred tax liability as of
     December 31, 1996 are as follows:

<TABLE>
<CAPTION>
                                               CURRENT        NON-CURRENT        TOTAL
<S>                                           <C>            <C>             <C>         
Deferred tax assets:
  Start-up costs                              $        --    $  1,409,066    $  1,409,066
  Accrued and other liabilities                   844,448              --         844,448
  Bad debt reserve                                267,534              --         267,534
  FICA credits not utilized                            --         212,795         212,795
  NOL carryforward                                     --      12,806,098      12,806,098
  Other                                                --          93,567          93,567
                                              -----------    ------------    ------------
                                                1,111,982      14,521,526      15,633,508
                                              -----------    ------------    ------------
Deferred tax liabilities:                        
  Differences from flow through entity                 --         149,320         149,320
  Difference between book and
    tax basis of property                              --       8,498,185       8,498,185
  Prepaid expenses                                865,598              --         865,598
                                              -----------    ------------    ------------
                                                  865,598       8,647,505       9,513,103
                                              -----------    ------------    ------------
                                                  246,384       5,874,021       6,120,405
  Less:  valuation allowance                     (246,384)     (5,874,021)     (6,120,405)
                                              -----------    ------------    ------------
  Net deferred tax liability                  $        --    $         --    $         --
                                              ===========    ============    ============
</TABLE>



                                      F-31
<PAGE>   36

     The tax items comprising the Company's net deferred tax liability as of
     December 31, 1995 are as follows:

<TABLE>
<CAPTION>
                                        CURRENT      NON-CURRENT       TOTAL
<S>                                   <C>            <C>            <C>
Deferred tax assets:
  Start-up costs                      $        --    $ 1,975,183    $ 1,975,183
  Accrued and other liabilities           675,225             --        675,225
  Bad debt reserve                        301,891             --        301,891
  NOL carryforward                             --      3,765,535      3,765,535
                                      -----------    -----------    -----------
                                          977,116      5,740,718      6,717,834
                                      -----------    -----------    -----------
Deferred tax liabilities:
  Difference between book and
    tax basis of property                      --      6,379,980      6,379,980
  Prepaid expenses                        921,080             --        921,080
  Other                                        --         84,184         84,184
                                      -----------    -----------    -----------
                                          921,080      6,464,164      7,385,244
                                      -----------    -----------    -----------
                                           56,036       (723,446)      (667,410)
  Less:  valuation allowance             (119,708)      (697,049)      (816,757)
                                      -----------    -----------    -----------
  Net deferred tax liability          $   (63,672)   $(1,420,495)   $(1,484,167)
                                      ===========    ===========    ===========
</TABLE>

     As of December 31, 1996, the Company had consolidated net operating loss
     carryforwards of approximately $27 million which are available to offset
     future taxable income through 2011. Of these carryforwards, $3.7 million
     are available only to offset future taxable income of FMI. The availability
     of the loss carryforwards may be further limited in the event of a
     significant change in ownership of the entities.

     CHANGE IN TAX STATUS - The provision for income taxes for the year ended
     December 31, 1995 has been increased by $3,002,235 as a result of recording
     deferred tax liabilities upon the change to a taxable status by certain
     subsidiaries of the Company in connection with the business combination.

19.  GUARANTEE OF 1995 NOTES AND PRIORITY NOTES

     The Company's obligations under the 1995 Notes and the Priority Notes are
     fully and unconditionally guaranteed, jointly and severally, by all
     subsidiaries of the Company on the issue date (other than FAMI, FNYI, and
     NCI). This guarantee is secured by a first priority lien on substantially
     all assets of the guarantor subsidiaries (other than FRI) other than
     certain excluded assets, as defined. Such excluded assets include, among
     other things, (a) the leased portions of Fitzgeralds Las Vegas, unless
     certain consents are obtained; (b) the assets of FRI, including Fitzgeralds
     Reno; (c) stock of unrestricted subsidiaries (as defined); (d) cash and
     cash equivalents, other than those required to be deposited in certain
     restricted accounts, revenues from hotel room rentals; (e) existing
     equipment subject to financing and any newly acquired or leased assets
     financed with certain permitted or non-recourse indebtedness; (f) the
     agreement evidencing the receivable from the Oneida Nation; (g) the
     management and consulting agreements with respect to the Cliff Castle
     Casino; (h) gaming licenses; and (I) the license agreement with Holiday
     Inn. Pursuant to the Indenture governing the 1995 Notes, the excluded
     assets (other than those in clause (e)) may not be subjected to liens in
     favor of third parties.



                                      F-32
<PAGE>   37

     Condensed consolidating financial statement information for Fitzgeralds
     Gaming Corporation, the Guarantor Subsidiaries, the Excluded Assets, the
     Non-Guarantor Subsidiaries and Eliminating Entries (which consist
     principally of the elimination of intercompany loan and investment
     accounts) follows.


                                      F-33
<PAGE>   38
<TABLE>
<CAPTION>
FITZGERALDS GAMING CORPORATION

CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
DECEMBER 31, 1996
----------------------------------------------------------------------------------------------------------------------------------
                                       FITZGERALDS                                       NON
                                         GAMING         GUARANTOR       EXCLUDED      GUARANTOR      ELIMINATING      CONSOLIDATED
ASSETS                                 CORPORATION     SUBSIDIARIES      ASSETS      SUBSIDIARIES      ENTRIES           TOTAL
<S>                                    <C>             <C>             <C>            <C>           <C>               <C>         
CURRENT ASSETS:
  Cash and cash equivalents            $       -       $       -       $12,920,340    $  429,157    $        -        $ 13,349,497
  Accounts and notes receivable, net         38,198       1,359,755      2,470,821       397,255             -           4,266,029 
  Inventories                                  -          1,048,859        461,360        35,442             -           1,545,661
  Prepaid and other current assets          171,810       1,892,658        784,121       220,100             -           3,068,639
                                       ------------    ------------    -----------    ----------    -------------     ------------  
      Total current assets                  210,008       4,301,222     16,636,642     1,081,954             -          22,229,826
                                       ------------    ------------    -----------    ----------    -------------     ------------  
PROPERTY AND EQUIPMENT, net                  81,178     118,459,014     30,947,784     4,299,254       (1,904,147)(c)  151,883,083
                                       ------------    ------------    -----------    ----------    -------------     ------------  
OTHER ASSETS:
  Long-term accounts and notes
    receivable, net of current portion  128,588,039       7,643,800      4,151,057     2,082,720     (142,454,863)(a)       10,753
  Other assets                           (1,924,100)      9,331,830        261,910       568,924        8,816,348 (b)   17,054,912
                                       ------------    ------------    -----------    ----------    -------------     ------------  
      Total other assets                126,663,939      16,975,630      4,412,967     2,651,644     (133,638,515)      17,065,665
                                       ------------    ------------    -----------    ----------    -------------     ------------  
TOTAL                                  $126,955,125    $130,735,866    $51,997,393    $8,032,852    $(135,542,662)    $191,178,574
                                       ============    ============    ===========    ==========    =============     ============
LIABILITIES AND STOCKHOLDERS'EQUITY

CURRENT LIABILITIES:
  Current portion of long-term debt    $    120,415    $  5,659,167    $21,551,187    $  418,851    $        -        $ 27,749,620
  Accounts payable, accrued and other     3,145,683      14,673,045      4,782,085       704,309       (1,791,806)(d)   21,513,216
                                       ------------    ------------    -----------    ----------    -------------     ------------  
      Total current liabilities           3,266,098      20,332,212     26,333,272     1,123,060       (1,791,806)      49,262,836
                                       ------------    ------------    -----------    ----------    -------------     ------------  
LONG TERM DEBT, net of current portion  114,922,596     136,461,703     11,831,285     7,121,669     (142,454,863)(a)  127,882,390  
                                       ------------    ------------    -----------    ----------    -------------     ------------  
      Total liabilities                 118,188,693     156,793,915     38,164,557     8,244,729     (144,346,669)     177,145,226
                                       ------------    ------------    -----------    ----------    -------------     ------------  
MINORITY INTEREST                              -               -              -          587,837             -             587,837  

CUMULATIVE REDEEMABLE PREFERRED STOCK    15,488,782            -              -             -                -          15,488,782 
STOCKHOLDERS' EQUITY (DEFICIENCY)        (6,722,351)    (17,058,049)    13,832,836      (799,714)       8,704,007 (e)   (2,043,271)
                                       ------------    ------------    -----------    ----------    -------------     ------------  
TOTAL                                  $126,955,125    $139,735,866    $51,997,393    $8,032,852    $(135,542,662)    $191,178,574
                                       ============    ============    ===========    ==========    =============     ============
</TABLE>

(a)  To eliminate intercompany accounts and notes receivable and payable.
(b)  To eliminate investment in subsidiaries.
(c)  To eliminate intercompany gain on sale of assets.
(d)  To eliminate intercompany deferred interest income.
(e)  To eliminate investment in subsidiaries, intercompany gain on sale of
     assets and intercompany deferred interest income.


                                      F-34
<PAGE>   39

FITZGERALDS GAMING CORPORATION

CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
DECEMBER 31, 1995

<TABLE>
<CAPTION>
                                           FITZGERALDS
                                             GAMING         GUARANTOR          EXCLUDED
ASSETS                                     CORPORATION     SUBSIDIARIES         ASSETS
<S>                                      <C>              <C>              <C>           
CURRENT ASSETS:
  Cash and cash equivalents              $           --   $           --   $   18,091,562
  Accounts and notes receivable, net                 --        1,155,811          979,189
  Inventories                                        --          763,602          235,753
  Prepaid and other current assets               22,000        1,847,530        1,563,681
                                         --------------   --------------   --------------
      Total current assets                       22,000        3,766,943       20,870,185
                                         --------------   --------------   --------------
PROPERTY AND EQUIPMENT, net                          --       69,094,819       32,122,248
                                         --------------   --------------   --------------
OTHER ASSETS:
  Long-term accounts and notes
    receivable, net of current portion      116,347,578        2,561,905        5,409,274
  Other assets                               12,624,423       58,138,519          271,752
                                         --------------   --------------   --------------
      Total other assets                    128,972,001       60,700,424        5,681,026
                                         --------------   --------------   --------------
TOTAL                                    $  128,994,001   $  133,562,186   $   58,673,459
                                         ==============   ==============   ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current portion of long-term debt      $           --   $    3,906,200   $    6,741,356
  Accounts payable, accrued and other         3,147,028        8,782,265        4,267,093
                                         --------------   --------------   --------------
      Total current liabilities               3,147,028       12,688,465       11,008,449
                                         --------------   --------------   --------------
LONG TERM DEBT, net of current portion      107,530,786      120,563,157       28,320,439

DEFERRED TAX LIABILITY                               --               --        3,094,835
                                         --------------   --------------   --------------
      Total liabilities                     110,677,814      133,251,622       42,423,723
                                         --------------   --------------   --------------
MINORITY INTEREST                                    --               --               -- 

CUMULATIVE REDEEMABLE PREFERRED STOCK        11,952,629               --               -- 
STOCKHOLDERS' EQUITY                          6,363,558          310,564       16,249,736
                                         --------------   --------------   --------------
TOTAL                                    $  128,994,001   $  133,562,186   $   58,673,459
                                         ==============   ==============   ==============
</TABLE>

<TABLE>
<CAPTION>
                                              NON
                                           GUARANTOR        ELIMINATING          CONSOLIDATED
                                          SUBSIDIARIES        ENTRIES               TOTAL    
<S>                                      <C>              <C>                  <C>
CURRENT ASSETS:
  Cash and cash equivalents              $    1,752,262               --       $   19,843,824
  Accounts and notes receivable, net            871,961               --            3,006,961
  Inventories                                    28,493               --            1,027,848
  Prepaid and other current assets              264,050         (119,963)(d)        3,577,298
                                         --------------   --------------       --------------
      Total current assets                    2,916,766         (119,963)          27,455,931
                                         --------------   --------------       --------------
PROPERTY AND EQUIPMENT, net                   4,489,749       (1,904,147)(c)      103,802,669
                                         --------------   --------------       --------------
OTHER ASSETS:
  Long-term accounts and notes
    receivable, net of current portion          706,393     (123,122,754)(a)        1,902,396
  Other assets                                  451,415       (7,433,766)(b)       64,052,343
                                         --------------   --------------       --------------
      Total other assets                      1,157,808     (130,556,520)          65,954,739
                                         --------------   --------------       --------------
TOTAL                                    $    8,564,323   $ (132,580,630)      $  197,213,339
                                         ==============   ==============       ==============
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current portion of long-term debt      $      578,549   $           --       $   11,226,105
  Accounts payable, accrued and other           784,889         (119,963)(d)       16,861,312
                                         --------------   --------------       --------------
      Total current liabilities               1,363,438         (119,963)          28,087,417
                                         --------------   --------------       --------------
LONG TERM DEBT, net of current portion        6,175,106     (123,122,754)(a)      139,466,734
DEFERRED TAX LIABILITY                               --       (1,674,340)(d)        1,420,495
                                         --------------   --------------       --------------
      Total liabilities                       7,538,544     (124,917,057)         168,974,646
                                         --------------   --------------       --------------
MINORITY INTEREST                               225,097               --              225,097

CUMULATIVE REDEEMABLE PREFERRED STOCK                --               --           11,952,629
STOCKHOLDERS' EQUITY                            800,682       (7,663,573)(b)       16,060,967
                                         --------------   --------------       --------------
TOTAL                                    $    8,564,323   $ (132,580,630)      $  197,213,339
                                         ==============   ==============       ==============
</TABLE>

(a)  To eliminate intercompany accounts and notes receivable and payable.
(b)  To eliminate investment in subsidiaries and reclassify deferred tax assets.
(c)  To eliminate intercompany gain on sale of assets.
(d)  To reclassify deferred tax assets and liabilities.



                                      F-35

<PAGE>   40
FITZGERALDS GAMING CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                 FITZGERALDS                                        NON
                                    GAMING       GUARANTOR       EXCLUDED        GUARANTOR      ELIMINATING     CONSOLIDATED
                                 CORPORATION    SUBSIDIARIES      ASSETS        SUBSIDIARIES      ENTRIES          TOTAL
<S>                             <C>             <C>             <C>             <C>            <C>              <C>
OPERATING REVENUES:
  Casino                        $      -          73,380,708    $20,380,175     $  5,524,001   $      -         $111,284,884
  Food and beverage                    -          12,051,750      4,991,981        1,508,247          -           18,551,978
  Rooms                                -          10,849,429      5,026,400             -             -           15,875,829
  Other                                -           2,764,789        983,476        6,258,163       (601,430)(d)    7,405,998
                                ------------    ------------    -----------     ------------   ------------     ------------
      Total                            -         101,047,676     41,382,032       11,290,811       (601,430)     153,118,689
  Less promotional allowances          -           8,202,222      3,749,037          637,083          -           12,588,342
                                ------------    ------------    -----------     ------------   ------------     ------------
      Net                              -          92,845,454     37,632,995       10,653,328       (601,430)     140,530,347
                                ------------    ------------    -----------     ------------   ------------     ------------

OPERATING COSTS AND
  EXPENSES:
  Casino                               -          39,994,989     14,502,541        3,910,240        (84,410)(d)   58,323,360
  Food and beverage                    -           8,828,750      2,425,602        1,076,119          -           13,330,471
  Rooms                                -           7,792,686      1,851,808             -             -            9,644,494
  Other operating                         16       1,337,345        216,155             -             -            1,543,516
  Selling, general and
    administrative                 4,965,042      30,287,509     13,041,387        2,103,578     (5,476,760)(g)   44,920,756
  Depreciation and amortization       13,071       6,373,534      2,277,840          282,506          -            8,896,951
                                ------------    ------------    -----------     ------------   ------------     ------------
      Total                        4,978,129      94,604,813     35,315,333        7,322,443     (5,561,170)     136,650,548
                                ------------    ------------    -----------     ------------   ------------     ------------

INCOME (LOSS) FROM
  OPERATIONS                      (4,978,129)     (1,759,359)     2,317,662        3,330,885      4,959,740        3,870,799

OTHER INCOME (EXPENSE):
  Interest and other income       20,814,691       1,764,649        451,453          110,923    (20,950,007)(h)    2,191,700
  Interest expense               (18,033,588)    (16,178,645)    (3,232,511)        (584,458)    17,782,073 (e)  (20,247,129)
  Gain on sale of assets               -             127,370         92,857           30,249          -              250,476
  Interest in income (loss)
    of subsidiaries              (13,083,662)      3,345,460          -                 -         9,738,202 (f)         -
  Equity in loss of
    unconsolidated affiliate           -            (681,208)         -                 -             -             (681,208)
  Minority interest in income
    of subsidiaries                    -               -              -             (362,740)         -             (362,740)
                                ------------    ------------    -----------     ------------   ------------     ------------
INCOME (LOSS) BEFORE TAXES       (15,280,688)    (13,381,733)      (370,539)       2,524,859     11,530,008      (14,978,093)

INCOME TAX (PROVISION)
  BENEFIT                             (5,044)     (1,463,950)     2,974,872          (21,711)         -            1,484,167
                                ------------    ------------    -----------     ------------   ------------     ------------

NET INCOME (LOSS)               $(15,285,732)   $(14,845,683)   $ 2,604,333     $  2,503,148   $ 11,530,008     $(13,493,926)
                                ============    ============    ===========     ============   ============     ============
</TABLE>

(d)  To eliminate intercompany rental income and expense.
(e)  To eliminate intercompany interest expense.
(f)  To eliminate interest in loss of subsidiaries.
(g)  To eliminate intercompany rental expense and intercompany management
     fee expense.
(h)  To eliminate intercompany interest income, intercompany management fee
     income and intercompany deferred interest income.






<PAGE>   41
FITZGERALDS GAMING CORPORATION

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
DECEMBER 31, 1995

<TABLE>
<CAPTION>
                                              FITZGERALDS
                                                GAMING            GUARANTOR          EXCLUDED
                                              CORPORATION       SUBSIDIARIES          ASSETS
<S>                                          <C>               <C>               <C>
OPERATING REVENUES:
  Casino                                     $         --      $   75,308,493    $   32,232,241
  Food and beverage                                    --          10,957,875         5,512,901
  Rooms                                                --           6,989,510         6,127,396
  Other                                                --           3,020,701           785,946
                                             --------------    --------------    --------------
      Total                                            --          96,276,579        44,658,484
  Less promotional allowances                          --           6,723,700         4,376,155
                                             --------------    --------------    --------------
      Net                                              --          89,552,879        40,282,329
                                             --------------    --------------    --------------
OPERATING COSTS AND EXPENSES:
  Casino                                               --          36,655,063        15,333,814
  Food and beverage                                    --           7,454,233         3,805,535
  Rooms                                                --           5,276,164         1,844,662
  Other operating                                      --           1,439,955           371,579
  Selling, general and administrative                94,872        25,435,797        11,918,155
  Depreciation and amortization                        --           5,385,063         2,011,942
                                             --------------    --------------    --------------
      Total                                          94,872        81,646,275        35,285,687
                                             --------------    --------------    --------------

INCOME (LOSS) FROM OPERATIONS                       (94,872)        7,906,604         4,996,642
OTHER INCOME (EXPENSE):       
  Interest and other income                         576,366           319,795           482,840
  Interest expense                                 (545,338)      (11,804,488)       (2,607,465)
  Gain on sale of assets                               --           1,978,769           219,380
  Interest in income (loss) of subsidiaries      (2,782,270)        1,323,332              -- 
  Equity in loss of unconsolidated
    affiliate                                          --            (846,761)             -- 
  Minority interest in income 
    of subsidiaries                                    --                --                -- 
                                             --------------    --------------    --------------
INCOME (LOSS) BEFORE TAXES                       (2,846,114)       (1,122,749)        3,091,397

INCOME TAX (PROVISION) BENEFIT                       24,274         1,465,260        (3,519,900)
                                             --------------    --------------    --------------
NET INCOME (LOSS)                            $   (2,821,840)   $      342,511    $     (428,503)
                                             ==============    ==============    ==============
</TABLE>

<TABLE>
<CAPTION>
                                                   NON 
                                                GUARANTOR        ELIMINATING          CONSOLIDATED 
                                               SUBSIDIARIES        ENTRIES               TOTAL     
OPERATING REVENUES:
<S>                                          <C>               <C>                  <C>
  Casino                                     $    7,507,680    $         --         $  115,048,414
  Food and beverage                               1,806,037              --             18,276,813
  Rooms                                                --                --             13,116,906
  Other                                           3,158,608           (96,114)(d)        6,869,141
                                             --------------    --------------       --------------
      Total                                      12,472,325           (96,114)         153,311,274
  Less promotional allowances                       814,323              --             11,914,178
                                             --------------    --------------       --------------
      Net                                        11,658,002           (96,114)         141,397,096
                                             --------------    --------------       --------------
OPERATING COSTS AND EXPENSES:        
  Casino                                          5,227,830           (58,687)(d)       57,158,020
  Food and beverage                               1,237,120              --             12,496,888
  Rooms                                                --                --              7,120,826
  Other operating                                     9,623              --              1,821,157
  Selling, general and administrative             3,610,290           (37,427)(d)       41,021,687
  Depreciation and amortization                     613,493              --              8,010,498
                                             --------------    --------------       --------------
      Total                                      10,698,356           (96,114)         127,629,076
                                             --------------    --------------       --------------

INCOME (LOSS) FROM OPERATIONS                       959,646              --             13,768,020
OTHER INCOME (EXPENSE):
  Interest and other income                         106,677        (1,048,410)(e)          437,268
  Interest expense                               (1,117,971)        1,048,410 (e)      (15,026,852)
  Gain on sale of assets                            165,431        (1,904,147)(e)          459,433
  Interest in income (loss) of subsidiaries            --           1,458,938 (f)             --
  Equity in loss of unconsolidated
    affiliate                                          --                --               (846,761)
  Minority interest in income 
    of subsidiaries                                (220,051)             --               (220,051)
                                             --------------    --------------       --------------

INCOME (LOSS) BEFORE TAXES                         (106,268)         (445,209)          (1,428,943)

INCOME TAX (PROVISION) BENEFIT                     (795,380)             --             (2,825,746)
                                             --------------    --------------       --------------
NET INCOME (LOSS)                            $     (901,648)   $     (445,209)      $   (4,254,689)
                                             ==============    ==============       ==============
</TABLE>

(c)  To eliminate intercompany gain on sale of assets.
(d)  To eliminate intercompany rental income and expense.
(e)  To eliminate intercompany interest income and expense.
(f)  To eliminate interest in (income) loss of subsidiaries.



                                      F-37

<PAGE>   42


FITZGERALDS GAMING CORPORATION

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
DECEMBER 31, 1994

<TABLE>
<CAPTION>
                                         FITZGERALDS                                  NON
                                           GAMING        GUARANTOR     EXCLUDED     GUARANTOR     ELIMINATING    CONSOLIDATED
                                         CORPORATION   SUBSIDIARIES     ASSETS     SUBSIDIARIES     ENTRIES          TOTAL
<S>                                      <C>           <C>           <C>           <C>           <C>            <C>          
OPERATING REVENUES:
  Casino                                 $         --  $ 59,729,258  $ 30,485,188  $ 18,979,300  $        --    $ 109,193,746
  Food and beverage                                --     9,770,389     5,187,694     3,583,321           --       18,541,404
  Rooms                                            --     6,342,993     6,174,241            --           --       12,517,234
  Other                                            --     2,276,744       594,268       582,659      (20,020)(d)    3,433,651
                                         ------------- ------------- ------------- ------------- ------------   --------------
      Total                                        --    78,119,384    42,441,391    23,145,280      (20,020)     143,686,035
  Less promotional allowances                      --     5,731,368     4,254,806     1,865,649           --       11,851,823
                                         ------------- ------------- ------------- ------------- ------------   --------------
      Net                                          --    72,388,016    38,186,585    21,279,631      (20,020)     131,834,212
                                         ------------- ------------- ------------- ------------- ------------   --------------
OPERATING COSTS AND
  EXPENSES:
  Casino                                           --    29,812,250    14,190,884    11,982,689      (20,020)(d)   55,965,803
  Food and beverage                                --     6,898,261     3,332,310     1,997,082           --       12,227,653
  Rooms                                            --     5,147,597     1,738,956            --           --        6,886,553
  Other operating                                  --     1,437,396       278,799        42,519           --        1,758,714
  Selling, general and administrative              --    19,222,071    10,300,283     8,948,600           --       38,470,954
  Depreciation and amortization                    --     4,875,312     1,999,584     1,395,778           --        8,270,674
  Pre-opening expenses                             --     4,856,039            --            --           --        4,856,039
  Write down of Harolds Club assets                              --            --            --           --               --
    to estimated realizable value                  --            --            --     1,401,262           --        1,401,262
                                         ------------- ------------- ------------- ------------- ------------   --------------
      Total                                        --    72,248,926    31,840,816    25,767,930      (20,020)     129,837,652
                                         ------------- ------------- ------------- ------------- ------------   --------------
INCOME (LOSS) FROM
  OPERATIONS                                       --       139,090     6,345,769    (4,488,299)          --        1,996,560

OTHER INCOME (EXPENSE):
  Interest and other income                        --       308,679       378,603       326,339     (271,097)(e)      742,524
  Interest expense                                 --    (7,438,742)   (2,257,104)   (1,545,893)     271,097 (e)  (10,970,642)
  Gain on sale of assets                           --        62,400        38,029       401,286           --          501,715
  Interest in loss of subsidiaries         (5,979,287)           --            --            --    5,979,287 (f)           --
  Minority interest in (income) loss                             --            --            --           --               --
    of subsidiaries                                --       450,000            --        (4,896)          --          445,104
                                         ------------- ------------- ------------- ------------- ------------   --------------
INCOME (LOSS) BEFORE TAXES                 (5,979,287)   (6,478,573)    4,505,297    (5,311,463)   5,979,287       (7,284,739)
                                                                 --            --            --           --               --
INCOME TAX BENEFIT                                 --     1,305,452            --            --           --        1,305,452
                                         ------------- ------------- ------------- ------------- ------------   --------------
NET INCOME (LOSS)                        $ (5,979,287) $ (5,173,121)  $ 4,505,297  $ (5,311,463) $ 5,979,287     $ (5,979,287)
                                         ============= ============= ============= ============= ============   ==============
</TABLE>


(d)  To eliminate intercompany rental income and expense.
(e)  To eliminate intercompany interest income and expense.
(f)  To eliminate interest in loss of subsidiaries.



                                      F-38
<PAGE>   43

FITZGERALDS GAMING CORPORATION

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
DECEMBER 31, 1996

<TABLE>
<CAPTION>
                                         FITZGERALDS                                     NON
                                            GAMING       GUARANTOR        EXCLUDED     GUARANTOR    ELIMINATING     CONSOLIDATED
                                         CORPORATION   SUBSIDIARIES        ASSETS    SUBSIDIARIES     ENTRIES           TOTAL
<S>                                     <C>            <C>              <C>          <C>           <C>              <C>         
  NET CASH PROVIDED BY (USED
    IN) OPERATING ACTIVITIES            $(11,572,491)  $  6,265,026     $ 2,739,732  $ 3,326,332   $      -         $    758,599 
                                        ------------   ------------     -----------  -----------   -------------    ------------ 
CASH FLOWS FROM INVESTING
  ACTIVITIES:                            
    Proceeds from sale of assets                -           143,941         190,857       37,731          -              372,529
    Repayments from related parties             -              -             86,664         -             -               86,664
    Acquisition of property and          
     equipment                               (94,249)   (52,266,449)       (898,548)      (4,493)         -          (53,263,739)
    Advances to related parties                 -              -               -            -             -               -
    Decrease in restricted cash                 -        46,845,677            -            -             -           46,845,677
    Distributions from 101 Main Street          -           594,000            -            -             -              594,000
    Dividends received                          -         3,698,396            -            -       (3,698,396)(a)          -
    Investment in Fremont                
      Street Experience                         -        (1,002,999)           -            -             -           (1,002,999)
                                        ------------   ------------     -----------  -----------   -----------      ------------
  Net cash provided by (used in)
    investing activities                     (94,249)    (1,987,434)       (621,027)      33,238    (3,698,396)       (6,367,868)
                                        ------------   ------------     -----------  -----------   -----------      ------------ 
CASH FLOWS FROM FINANCING                
  ACTIVITIES:                            
    Proceeds from issuance of  
      common stock                             1,350           -               -            -             -                1,350
    Payment of debt issue costs             (275,625)          -               -            -             -             (275,625)
    Proceeds from issuance of debt         5,654,211      3,988,853            -            -             -            9,643,064
    Repayment of long-term debt             (523,332)    (5,743,515)     (3,376,283)    (579,131)         -          (10,222,261)
    Dividends                                   -              -               -      (4,103,544)   (3,698,396)(a)      (405,148)
    Decrease in restricted cash                 -              -            471,569         -             -              471,569
    Other                                       -              -            (98,007)        -             -              (98,007)
                                        ------------   ------------     -----------  -----------   -----------      ------------
  Net cash provided by (used in)
    financing activities                   4,856,604     (1,754,662)     (3,002,721)  (4,682,675)    3,698,396          (885,058)
                                        ------------   ------------     -----------  -----------   -----------       -----------
NET INCREASE (DECREASE) IN 
  CASH AND CASH EQUIVALENTS               (6,810,136)     2,522,930        (884,016)  (1,323,105)         -           (6,494,327)
RECLASSIFICATION TO
  EXCLUDED ASSETS                         (2,887,273)(b) (8,764,179)(b)  11,651,452(b)      -             -                 -
CASH AND CASH EQUIVALENTS,
  BEGINNING OF YEAR                        9,697,409      6,241,249       2,152,904    1,752,262          -           19,843,824
                                        ------------   ------------     -----------  -----------   ------------     ------------
CASH AND CASH EQUIVALENTS,
  END OF YEAR                           $       -      $       -        $12,920,340  $   429,157   $      -         $ 13,349,497
                                        ============   ============     ===========  ===========   ==============   ============
</TABLE>

(a)  To eliminate intercompany dividends.
(b)  To reclassify net increase (decrease) in cash to excluded assets.



                                      F-39
<PAGE>   44

FITZGERALDS GAMING CORPORATION

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
DECEMBER 31, 1995

<TABLE>
<CAPTION>
                                         FITZGERALDS                                   NON
                                            GAMING       GUARANTOR     EXCLUDED     GUARANTOR    ELIMINATING   CONSOLIDATED
                                         CORPORATION   SUBSIDIARIES     ASSETS    SUBSIDIARIES     ENTRIES         TOTAL
<S>                                     <C>            <C>           <C>          <C>            <C>           <C>
  NET CASH PROVIDED BY (USED
    IN) OPERATING ACTIVITIES            $    (708,178) $  6,616,790  $ 3,586,770  $ (1,027,387)            --  $  8,467,995
                                        -------------- ------------- ------------ ------------- -------------- -------------
CASH FLOWS FROM INVESTING
  ACTIVITIES:
    Proceeds from sale of assets        $          --       364,839      269,891     9,073,601             --     9,708,331
    Repayments from related parties                --        25,137           --       219,466        (25,137)      219,466
    Purchase of treasury stock                     --      (333,333)          --            --             --      (333,333)
    Acquisition of property and
     equipment                                     --    (6,957,830)  (2,782,834)      (89,463)            --    (9,830,127)
    Advances to related parties          (114,874,329)           --           --            --    114,874,329            --
    Increase in restricted cash                    --   (49,100,000)          --            --             --   (49,100,000)
    Increase in advances receivable                --      (541,650)          --            --             --      (541,650)
    Dividends received                             --       777,750           --            --       (777,750)           --
    Investment in Fremont 
      Street Experience                            --      (526,678)          --            --             --      (526,678)
                                        -------------- ------------- ------------ ------------- -------------- -------------
  Net cash provided by (used in)
    investing activities                 (114,874,329)  (56,291,765)  (2,512,943)    9,203,604    114,071,442   (50,403,991)
                                        -------------- ------------- ------------ ------------- -------------- -------------
CASH FLOWS FROM FINANCING
  ACTIVITIES:
    Proceeds from 1995 Offering           135,014,840            --           --            --             --   135,014,840
    Payment of 1995 Offering costs         (9,983,915)           --           --            --             --    (9,983,915)
    Advances from related parties                  --   114,874,329      868,195            --   (114,874,329)      868,195
    Proceeds from issuance of debt                 --     4,675,367    2,525,596            --             --     7,200,963
    Repayment of long-term debt                    --   (67,506,379)  (2,578,226)   (8,869,635)            --   (78,954,240)
    Dividends                                      --            --     (914,792)     (881,250)       777,750    (1,018,292)
    Repayments to related parties                  --    (2,700,000)    (225,562)     (212,892)        25,137    (3,113,317)
    Increase in restricted cash                    --            --     (120,415)           --             --      (120,415)
                                        -------------- ------------- ------------ ------------- -------------- -------------
  Net cash provided by (used in)
    financing activities                  125,030,925    49,343,317     (445,204)   (9,963,777)  (114,071,442)   49,893,819
                                        -------------- ------------- ------------ ------------- -------------- -------------

NET INCREASE (DECREASE) IN
  CASH AND CASH EQUIVALENTS                 9,448,418      (331,658)     628,623    (1,787,560)            --     7,957,823
RECLASSIFICATION TO
  EXCLUDED ASSETS                          (9,697,409)   (6,241,249)  15,938,658            --             --            --
CASH AND CASH EQUIVALENTS,
  BEGINNING OF YEAR                           248,991     6,572,907    1,524,281     3,539,822             --    11,886,001
                                        -------------- ------------- ------------ ------------- -------------- -------------
CASH AND CASH EQUIVALENTS,
  END OF YEAR                           $         --             --  $18,091,562  $  1,752,262  $          --   $19,843,824
                                        ============== ============= ============ ============= ============== =============
</TABLE>


(a)  To eliminate intercompany accounts and notes receivable and payable.
(b)  To eliminate intercompany dividends.
(c)  To reclassify net increase (decrease) in cash to excluded assets.




                                      F-40
<PAGE>   45

FITZGERALDS GAMING CORPORATION

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
DECEMBER 31, 1994

<TABLE>
<CAPTION>
                                             FITZGERALDS                                     NON
                                                GAMING       GUARANTOR      EXCLUDED      GUARANTOR     ELIMINATING   CONSOLIDATED
                                             CORPORATION    SUBSIDIARIES     ASSETS      SUBSIDIARIES     ENTRIES         TOTAL
<S>                                         <C>            <C>            <C>           <C>             <C>           <C>         
  NET CASH PROVIDED BY (USED IN)
    OPERATING ACTIVITIES                    $          --  $   2,386,200  $  7,031,390  $  (1,679,267)  $         --  $  7,738,323
                                            -------------- -------------- ------------- -------------- -------------- -------------
CASH FLOWS FROM INVESTING
  ACTIVITIES:
    Proceeds from sale of assets                       --         62,400        38,456        414,138             --       514,994
    Repayments from related parties                    --             --       109,085      2,420,274             --     2,529,359
    Decrease in long-term deposit                      --             --            --          4,345             --         4,345
    Acquisition of property and equipment              --    (33,126,974)     (380,451)      (104,483)            --   (33,611,908)
    Advances to related parties                        --             --       (91,600)            --             --       (91,600)
    Increase in restricted investment                  --     (1,000,000)           --             --             --    (1,000,000)
    Increase in advances receivable                    --     (1,958,350)           --             --             --    (1,958,350)
    Investment in Fremont Street Experience            --     (1,123,200)           --             --             --    (1,123,200)
                                            -------------- -------------- ------------- -------------- -------------- -------------
  Net cash provided by (used in) investing
    activities                                         --    (37,146,124)     (324,510)     2,734,274             --   (34,736,360)
                                            -------------- -------------- ------------- -------------- -------------- -------------
CASH FLOWS FROM FINANCING
  ACTIVITIES:
    Proceeds from issuance of stock                    --      4,850,000            --             --             --     4,850,000
    Proceeds from issuance of warrants            258,650             --            --             --             --       258,650
    Advances from (to) related parties             (9,659)     3,800,421    (4,186,257)     1,641,452             --     1,245,957
    Proceeds from issuance of debt                     --     36,000,000            --             --             --    36,000,000
    Repayment of long-term debt                        --     (3,225,577)   (1,974,914)    (3,247,319)            --    (8,447,810)
    Payment of debt offering costs                     --     (2,491,600)           --             --             --    (2,491,600)
    Dividends                                          --             --      (761,999)            --             --      (761,999)
    Increase in restricted cash                        --             --      (351,154)            --             --      (351,154)
    Other                                              --             --            --            150             --           150
                                            -------------- -------------- ------------- -------------- -------------- -------------
  Net cash provided by (used in)
    financing activities                          248,991     38,933,244    (7,274,324)    (1,605,717)            --    30,302,194
                                            -------------- -------------- ------------- -------------- -------------- -------------
NET INCREASE (DECREASE) IN CASH                   248,991      4,173,320      (567,444)      (550,710)            --     3,304,157

RECLASSIFICATION TO EXCLUDED
  ASSETS                                         (248,991)    (4,173,320)    4,422,311             --             --            --

CASH, BEGINNING OF YEAR                                --             --     4,491,312      4,090,532             --     8,581,844
                                            -------------- -------------- ------------- -------------- -------------- -------------
CASH, END OF YEAR                           $          --  $          --  $  8,346,179  $   3,539,822  $          --  $ 11,886,001
                                            ============== ============== ============= ============== ============== =============
</TABLE>

(a)  To reclassify net increase (decrease) in cash to excluded assets.


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                                      F-41