SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

For the Fiscal Year Ended June 30, 1996        Commission file number   0-18377
                                                                        --------

                             NONA MORELLI'S II, INC.
             (Exact name of registrant as specified in its charter)

                                    Colorado
         --------------------------------------------------------------
         (State of other jurisdiction of incorporation or organization)

                                   84-1126818
                      ------------------------------------
                      (I.R.S. Employer Identification No.)

                2 Park Plaza, Suite 470, Irvine, California 92614
                --------------------------------------------------
                (Address of Principal Executive Offices) Zip Code)

       Registrant's telephone number, including area code: (714) 833-5381
                                  ------------
           Securities registered pursuant to Section 12(b) of the Act:
                                      None

           Securities registered pursuant to Section 12(g) of the Act:
                          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  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                                Yes         No  X

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation  S-K, is not contained  herein and will not be contained,
to the best of  Registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB.

                                                                               o

         The  Registrant's  revenues  for  its  most  recent  fiscal  year  were
$12,658,491.

         The aggregate  market value of the voting stock held by  non-affiliates
computed by reference  to the price at which the stock was sold,  or the average
bid and asked  prices of such stock,  as of October  15, 1996 was  approximately
$6,329,500.

                                      Class
                          Common Stock , $.01 par value

                        Outstanding at October 15, 1996
                               45,048,500 shares

                      Documents Incorporated by Reference:
                                      None

                                           Total Number of Pages Including Cover

                                                         [NM\10-KSB:63096KSB]-45

<PAGE>



                                TABLE OF CONTENTS



                                                                         Page



                                     PART I

Item 1.   Description of Business .........................................1

Item 2.   Description of Property .........................................13

Item 3.   Legal Proceedings ...............................................14

Item 4.   Submission of Matters to a Vote of Security-Holders .............18

                                     PART II

Item 5.   Market for Common Equity and Related Stockholder Matters ........19

Item 6.   Management's Discussion and Analysis of Financial Condition
           and Results of Operations ......................................20

Item 7.   Financial Statements ............................................26

Item 8.   Changes in and Disagreements With Accountants on Accounting
           and Financial Disclosure .......................................26

                                    PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
           Compliance with Section 16(a) of the Exchange Act ..............27

Item 10.  Executive Compensation ..........................................32

Item 11.  Security Ownership of Certain Beneficial Owners and Management ..37

Item 12.  Certain Relationships and Related Transactions ..................38

                                     PART IV

Item 13.  Exhibits and Reports on Form 8-K ................................40

                                                         [NM\10-KSB:63096KSB]-45

<PAGE>



                                     PART I



ITEM 1.           DESCRIPTION OF BUSINESS.

(a)      Business Development

         Nona  Morelli's  II,  Inc.  (the  "Company"  or the  "Registrant")  was
incorporated  in Colorado on  February  6, 1989 and became  public in 1990.  The
Registrant was originally  organized to succeed the business of the Nona Morelli
Limited  Partnership  which  operated a  restaurant  from 1986  through 1989 and
manufactured and marketed  fresh-pack pasta and pasta sauces.  Prior to December
1992,  the business of the  Registrant  consisted  solely of the  manufacturing,
marketing and sale of Italian food products, primarily pasta and sauces.

         During its fiscal year ended June 30, 1993 ("fiscal 1993"), as a result
of a number of  acquisitions  and  investments  in the areas of food,  legalized
gaming and real estate,  the Registrant evolved from a pasta manufacturer into a
food  manufacturing,   distributing  and  investment  company.   Following  some
extensive  corporate  re-engineering  in fiscal 1993 and the first six months of
its  fiscal  year  ended June 30,  1994  ("fiscal  1994"),  the  Registrant  was
restructured  to  operate  as  a  holding  company.  Since  July  1,  1993,  the
Registrant's food, legalized gaming and real estate acquisition, development and
production activities have been owned and operated by wholly-owned  subsidiaries
or subsidiaries  where the Registrant  owned and exercised  voting control.  The
restructuring  was  undertaken to allow the  Registrant to redefine its business
segments,  concentrate  its financial and human resources in each of its present
areas of  operation,  and  focus  performance  incentives  based  upon  separate
segment, or industry-specific businesses.

         The Registrant believes that maintaining an entrepreneurial  atmosphere
is essential to continuing its growth and  development.  In order to create this
environment,  in fiscal 1993 the  Registrant  adopted the strategy to ultimately
result in its separate subsidiaries becoming publicly-held companies,  which the
Registrant  believes will permit the  establishment  of more focused  management
objectives and  performance  incentives,  and allow each subsidiary to raise new
equity  capital,  as  needed,   while  minimizing  the  Registrant's   financial
commitment to support the  subsidiaries'  growth.  Since the beginning of fiscal
1994, the Registrant's  operating philosophy is to supervise its subsidiaries by
providing  financial  support,   centralized   strategic   planning,   corporate
development,  administrative,  and other  services  that would not  otherwise be
available  to  independent  companies  of similar  size.  As of the close of the
fiscal  year  ended June 30,  1996  ("fiscal  1996"),  the  Registrant  had four
subsidiaries, one of which is publicly traded.

         The  Registrant's   historical   domestic  gaming  related  assets  and
operations  have been  conducted  by its  subsidiary,  NuOasis  Gaming,  Inc., a
Delaware  corporation  ("NuOasis  Gaming"),   formerly  E.N.  Phillips  Company,
("ENP"),  which is a  publicly-held  company  whose shares are traded on the OTC
Bulletin Board.  The Registrant has voting control of NuOasis Gaming and has the
right to  acquire  a  majority  interest  in  NuOasis  Gaming  by  virtue of its
ownership of common and  preferred  stock,  and warrants and options to purchase
additional  common stock.  During the year ended June 30, 1996,  the  Registrant
entered into an option agreement to sell the Registrant's  controlling  interest
in NuOasis Gaming (see Item 6, Management's Discussion and Analysis).

         The Registrant's international gaming activities which, at the close of
fiscal  1996,  are  still in the  development  stage and  include  its Asian and
Tunisian  activities,  are  conducted by its  wholly-owned  subsidiary,  NuOasis
International, Inc. ("NuOasis International"),  a Bahamas corporation, successor
to NuOasis International Inc., a California Corporation (formerly  International
Casino Management,  Inc.), and by Cleopatra Palace Limited, an Irish corporation
("Cleopatra") in which the Registrant owns a 28% equity interest.

                                                         [NM\10-KSB:63096KSB]-45

                                        1

<PAGE>



         The  Registrant's   domestic  food  operations  are  conducted  by  its
wholly-owned  subsidiary,  Fantastic  Foods  International,  Inc.,  a California
corporation  ("Fantastic  Foods")  doing  business as the Pasta  Fresca  Company
("Pasta Fresca").

         The Registrant's domestic real estate operations, which at the close of
fiscal  1996 are  still in the  development  stage,  are  conducted  by  NuOasis
Properties,  Inc.,  a  Colorado  corporation  ("NuOasis  Properties"),  formerly
Morelli Capital, Inc. ("MCI"), a wholly-owned subsidiary.

         As used herein,  the term "Company" or the "Registrant"  refers to Nona
Morelli's II, Inc., and its  subsidiaries:  NuOasis Gaming and its  wholly-owned
subsidiaries;  NuOasis Properties;  NuOasis International;  and Fantastic Foods.
The  wholly-owned  subsidiaries  of NuOasis  Gaming are:  Casino  Management  of
America,  Inc., a Utah corporation ("CMA");  NuOasis Laughlin,  Inc., a Colorado
corporation  ("NuOasis  Laughlin");  and  NuOasis  Las Vegas,  Inc.,  a Colorado
corporation  ("NuOasis  Las Vegas").  The  Registrant  currently  maintains  its
executive offices in Irvine, California.

         The following chart illustrates the relationship between the Registrant
and the various subsidiaries:

                            ------------------------
                            |NONA MORELLI'S II INC |
                            |                      |
                            ------------------------
                                       |
       ----------------------------------------------------------------
       |                     |                    |                   |
----------------   --------------------   -----------------   ----------------
|   NuOasis    |   |     NuOasis      |   |   Fantastic   |   |    NuOasis    |
| Gaming Inc.  |   |  International   |   |     Foods     |   |  Properties   |
|   (Voting    |   |       Inc.       |   | International |   |     Inc.      |
|    Control)  |   |      (100%)      |   |   Inc. (100%) |   |     (100%)    |
----------------   --------------------   -----------------   -----------------

(b)      Description of Business

         The Registrant's business interests are comprised of food manufacturing
and distribution, legalized gaming, and real estate acquisition and development.
The  activities  in the past have  been  financed  by  working  capital,  equity
financing or through joint ventures between one of the Registrant's subsidiaries
and unrelated parties.

         (1)      Food Manufacturing and Distribution

                  The  Registrant  is a  manufacturer  and marketer of fresh and
         frozen packed pasta and Italian sauces. The Registrant utilizes its own
         recipes and those  acquired in the  purchase of the assets and business
         of Italfin,  Inc.  ("Italfin")  and The Pasta Fresca Co. ("Pasta Fresca
         Company") in fiscal 1993. The Registrant's  pasta products are fresh or
         frozen,  not dried, to maintain 60% of the  nutritional  value, to cook
         quickly  and to retain  aroma and  taste.  Its pasta is high in complex
         carbohydrates  making it a high energy food. The Registrant's  pasta is
         manufactured  under the brand names "Nona Morelli" and "Pasta  Fresca,"
         and contains all natural  ingredients  without any  preservatives.  The
         "Nona  Morelli" and "Pasta  Fresca" brand name pasta  products are sold
         primarily  to  the  retail  trade  in  supermarkets,  club  stores  and
         independent   grocers  in  California  and  other  states  and,  to  an
         increasingly greater extent, through contract packaging  ("co-packing")
         for  other  national/regional   organizations,   which  distribute  the
         Registrant's  products  under their  private  labels.  Fresh and frozen
         pasta is also sold in bulk for the food  service  industry,  hotels and
         restaurants.  The  Registrant  has  lines  of no  cholesterol  and  low
         cholesterol  pasta and  packages  and markets  pasta with  accompanying
         sauces.  The  Registrant  is also a producer  and marketer of a private
         label and "Nona Morelli" and "Pasta Fresca" brand sauces.

                                                         [NM\10-KSB:63096KSB]-45

                                        2

<PAGE>



                  During the year ended June 30, 1996, the Registrant  continued
         to pursue a program that  focused on  increasing  operations  on both a
         national and international  level. The Registrant  continues its direct
         manufacturing  and  marketing  activities  for the "Nona  Morelli"  and
         "Pasta Fresca" brand names on a regional basis through  various brokers
         in the Southeast and Southwest. In co-packing,  the Registrant packages
         its pasta and sauce  products  for other  companies  which  market  the
         products under their own labels and brand names. Co-packing represented
         approximately  24% and 55% of food sales  revenue for each of the years
         ended June 30, 1996 and 1995, respectively.

                  Since   September   1993,  the   Registrant's   food  products
         operations  have been conducted by Fantastic  Foods. In fiscal 1994 the
         Registrant's historical food manufacturing and distribution activities,
         which include pasta and sauce products,  were transferred from Colorado
         to California and are now operated in two (2) manufacturing  facilities
         based in Irwindale and Arcadia,  California. The USDA certified Arcadia
         facility   produces  the  Registrant's  meat  and  other  filled  pasta
         products, and speciality items for hotels and restaurants.

         Products

                  The  Registrant's  primary food products  include a variety of
         pastas and sauces.  The  Registrant's  pasta sales accounted for ninety
         five  percent of food sales  revenues for both the years ended June 30,
         1996 and 1995.  The  Registrant's  pasta line  consists of 35 different
         pasta  products   separately   packaged  under  the   Registrant's  and
         private-label names.

                  The Registrant also  manufactures  and markets eight different
         sauce products separately packaged in five sizes under the Registrant's
         brand name and private-label.

                  Fresh  pasta  is  manufactured  from  high  quality  durum  or
         semolina flour, and whole eggs or egg whites,  in a process which takes
         it from dough mix  through  various  machines  which  shape and cut the
         pasta to the required shape,  thickness,  and size. The product is then
         pasteurized  and  packaged in a way in which oxygen is flushed from the
         package and replaced with an inert gas to inhibit spoilage and increase
         shelf life. The fresh pasta industry has flourished  with the advent of
         effective,   cost-efficient,   packaging  equipment.  Spinach,  cheese,
         tomatoes,  and  other  ingredients  may be added to the mix to create a
         variety  of  gourmet  pasta   products.   Cholesterol   free  pasta  is
         manufactured from semolina flour, egg whites, and water.

                  The major markets for fresh pasta are chain-supermarkets, club
         stores,  food  service,  independent  groceries,   delicatessens,   and
         military  commissaries.  Fresh  pasta,  sold  in  retail  supermarkets,
         generally may be found in the "deli" section,  refrigerated grocery, or
         possibly the nutrition section.  According to a compilation of the U.S.
         Commerce Department and the National Pasta Association, annual sales of
         pasta in the United States for 1990 were estimated at approximately 4.6
         billion  pounds or a mean  annual per capita  consumption  rate of 18.4
         pounds,  up from 13 pounds per person in 1980.  Domestic sales of fresh
         pasta were not separately categorized by the publication.  The National
         Pasta Association estimated that the mean annual per capita consumption
         of pasta will be 30.6 pounds by the year 2000.

                  While  consumption  of pasta  generally has been occurring for
         hundreds  of years in Europe  and the United  States,  over-the-counter
         sale of  off-premises  manufactured  and  packaged  fresh pasta is made
         possible by  pasteurization  and oxygen flushing.  Domestic fresh pasta
         sales began to accelerate  in 1985.  Sales of low  cholesterol,  and no
         cholesterol,  fresh pasta began to capture a small market share in 1988
         as U.S. consumers with health concerns, or dietary requirements, became
         more  aware of pasta  products  with these  features.  These same fresh
         pasta  products  can also be quick  frozen for longer shelf life in the
         retail  markets.  Management  expects  the  demand for fresh and frozen
         pasta will continue to increase during the coming years.

                                                         [NM\10-KSB:63096KSB]-45

                                        3

<PAGE>



         Marketing

                  There  are  approximately  40,000  major  supermarkets  in the
         United  States and between  4,000 and 6,000 in market  areas  presently
         served by the Registrant's products. The Registrant cannot estimate its
         market share of fresh pasta sales.

                  The  Registrant  is  currently  packaging  pasta  products and
         sauces  separately  and  in  combination  for  three  marketers.  Under
         co-packing  agreements,  the Registrant  contracts with distributors to
         market  its  pasta   products  who  are   typically   responsible   for
         transporting,  warehousing,  advertising,  distributing,  promoting and
         brokering  Fantastic Foods produced pastas and sauces. The Registrant's
         expenses related to managing  co-packing  accounts have been relatively
         nominal. Thus, the primary costs are limited to production,  packaging,
         and returns, which are subject to more accurate budgeting and control.

                  Sales of the  Registrant's  products are made  through  direct
         marketing by food brokers and  Registrant's  personnel  with a focus on
         supermarket  chains and other  retailers.  Typically,  the Registrant's
         products are  delivered  to  distribution  centers of such  supermarket
         chains for subse quent re-delivery through the supermarket subsystem as
         demand  dictates.  The  Registrant  also markets its  products  through
         distributors  under short term "spot sale"  arrangements  terminable on
         short notice.  Food brokers utilized by the Registrant  usually receive
         commissions  based  on  net  sales,  while  distributors  purchase  the
         Registrant's  products for their own account.  The  Registrant  has not
         granted exclusive area  distribution  rights with respect to any of its
         products.

         Production

                  The Registrant  purchases  durum and semolina flour from mills
         in California  and Minnesota in truck load  quantities.  The Registrant
         purchases  whole eggs and egg white  mixtures from local egg producers.
         The   Registrant   has  not   experienced   any  shortages  or  limited
         availability  for  ingredients  for its products;  however,  prices for
         flour and eggs fluctuate based on weather, market variations, and other
         factors beyond the Registrant's  control.  The California and Minnesota
         mills  currently  supply 90% of flour  purchases  for the  Registrant's
         products.  Spices, cheese and various other raw materials are purchased
         locally in Southern California.

                  The  Registrant  mixes flour and eggs  (whole or whites  only)
         into  a  moist  dough  mix  which  is  then   processed  into  specific
         thicknesses  in sheets.  The sheets are then placed in  machines  which
         form different  pasta products,  i.e.,  spaghetti,  ravioli,  linguine,
         tortellini  and  fettuccine.  Spinach,  tomato  paste,  and other  herb
         ingredients  are added to the basic  pasta mix at  different  stages to
         create  flavored  products.  The  Registrant  cuts,  pasteurizes,   and
         packages  through an oxygen  flushing  process  for its fresh or frozen
         pasta.

         Packaging

                  In its  fresh  or  frozen  pasta  manufacturing  process,  the
         Registrant uses a series of equipment,  including  dough mixers,  pasta
         sheeters,  tortellini and ravioli machines,  cutters,  and pasteurizing
         and  packaging  equipment.  Sauces,  which  are  marketed  in  separate
         containers  and  combination  packages,  are precooked in large batches
         pursuant to proprietary  recipes. The Registrant packages its sauces in
         7 oz., 8 oz., 15 oz., 21 oz.,  and bulk  containers  for sale,  usually
         with clear-wrap to reveal its freshness. Colorful logos are included on
         the package,  along with identifying and ingredient  labels meeting all
         USDA and Government standards along with cooking instructions.  Low fat
         and no cholesterol  notations are clearly indicated on the Registrant's
         products  with those  features.  Since the  Registrant's  products  are
         usually maintained for retail sale in "deli" areas of supermarkets, the
         Registrant    seeks    distinctive    packaging   for   its   products,
         notwithstanding the slightly higher costs.

                                                         [NM\10-KSB:63096KSB]-45

                                        4

<PAGE>



         Current Sales Activity

                  The Registrant's strategy is to continue to develop the market
         for its  Nona  Morelli  and  Pasta  Fresca  brand  name  products  on a
         nationwide  and  regional  basis,  as  well  as  to  pursue  additional
         co-packing  agreements and relationships.  The Registrant's brand sales
         represented 40% and 35% of food sales revenues for the years ended June
         30,  1996 and  1995,  respectively.  The  Registrant  expects  that its
         co-packing agreements with other customers will continue to represent a
         significant  portion of its food business as the Registrant enters into
         additional co-packing agreements, and that direct sales of its products
         to stores will increase as a percentage of total sales.

         (2)      Domestic Gaming Activities

                  Until April 1995, Ba-Mak Gaming  International Inc. ("BGI"), a
         wholly-owned  subsidiary  of NuOasis  Gaming was active and involved in
         charitable  gaming in Louisiana.  BGI operated five  charitable  gaming
         establishments  in New Orleans at which 140 video bingo  machines  were
         operating.  BGI recognized as gaming revenues the gross funds deposited
         in video bingo machines.  BGI realized a gross profit, or "net win", as
         represented  by the difference  between gross funds  deposited into the
         machines and payments to customers.  BGI realized net operating profits
         by  way  of the  percentage  of  the  net  win  after  payments  to the
         charitable organizations, the location owner and the State of Louisiana
         for gaming taxes. However, from inception through October 1994, BGI was
         unable to generate any operating profits.  Additionally, the Registrant
         has suffered from negative cash flows since assuming  control of BGI in
         April 1994. On October 28, 1994, BGI filed for protection under Chapter
         11 of the U.S.  Bankruptcy  Code in the Eastern  District of Louisiana.
         While under the protection of Chapter 11, BGI continued to operate as a
         charitable bingo route operator in Louisiana as Debtor-in-Possession.

                  On April 20, 1995, upon motion from the United States Trustee,
         an order  converting  the case to Chapter 7 was  issued.  The Chapter 7
         trustee  took  possession  of BGI's  assets  and is in the  process  of
         liquidating such assets for the benefit of BGI's bankruptcy  estate. As
         such,  all gaming  operations at BGI ceased and,  accordingly,  BGI was
         accounted for as a disposition  of investment  during fiscal 1995 which
         resulted in (a) the  write-off of  $1,056,978  and  $1,415,050 of total
         assets and liabilities, respectively, and (b) a net loss on disposal of
         investment in the amount of approximately  $140,949.  As of the date of
         this Report,  the Trustee's  administration of the bankruptcy estate is
         ongoing.

                  NuOasis  Gaming  currently  has no  gaming  or  other  ongoing
         business,  and  is  presently  evaluating  business  opportunities  for
         possible acquisition within the gaming industry. In particular, NuOasis
         Gaming  is  currently   evaluating  the  potential   acquisition  of  a
         development  stage  California  company  formed  in 1992 to  facilitate
         public  participation in group play in the California State Lottery and
         the lotteries of other states, through the sale of a prepaid debit card
         called the HIT- LOTTO  value card (see Item 6,  Managements  Discussion
         and Analysis - National Pools Corporation).

         (3)      International Gaming Activities

                  In September  1993, as part of the  Registrant's  new business
         plan, it formed NuOasis  International through which it hoped to extend
         its proposed gaming operations internationally. The Registrant believes
         that international  leisure and entertainment  opportunities offer much
         greater  potential,  and have far less  competition  than domestic U.S.
         gaming  because  of the  "emerging  market"  status of many of the host
         countries.  The  Registrant's  goal is to  capitalize  on the  expected
         growth  in  tourism  trade  and the  surge  of  entertainment  spending
         worldwide, and to take advantage of certain investment opportunities in
         emerging markets which appear to be the greatest  beneficiaries of this
         expected growth.  As a result of the  Registrant's  research into these
         expected emerging leisure and entertainment markets during fiscal 1996,
         it has been  soliciting and evaluating  prospects in certain markets in
         North  Africa,  Asia,  the  Caribbean  and the South  Pacific  where it
         intends to focus the majority of its resources.

                                                         [NM\10-KSB:63096KSB]-45

                                        5

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         North Africa

                  In October 1993, the Registrant acquired a 70% equity interest
         in Cleopatra. In December 1995, the Registrant transferred a 42% equity
         interest in Cleopatra along with other corporate  assets,  to acquire a
         gaming interest in Macau (the "Gaming  Interest") (as discussed below).
         In  December   1995,  the  remaining  28%  interest  in  Cleopatra  was
         transferred  to  the  Registrant's  wholly-owned  subsidiary,   NuOasis
         International.

                  Cleopatra  is the lessee of a 200,000  square  foot casino and
         Las Vegas-style  showroom facility (the "Cap Gammarth Casino") pursuant
         to a Casino Lease  Agreement and Operating  Management  Contract  dated
         October 8, 1993,  with  Societe  Touristique  Tunisie-Golfe  ("Tunisie-
         Golfe").  The Cap Gammarth Casino is presently under  construction.  In
         conjunction  with  such  casino,   Tunisie-Golfe  is  also  building  a
         five-star  hotel, a health and sports  center,  a beach club, a 54-unit
         shopping mall and 250 apartments,  all located within walking  distance
         to the Cap Gammarth Casino.  The location of the Cap Gammarth Casino is
         approximately 10 miles northwest of Tunis, the capital of Tunisia.

                  In October  1994,  Cleopatra  entered into an  agreement  with
         Societe  Loisirs Club Hammamet  ("Club  Hammamet") to lease and operate
         the sixty thousand (60,000) square foot casino and French-style cabaret
         in Hammamet,  Tunisia (the "Hammamet  Casino").  The Hammamet Casino is
         presently under construction on a build-to-suit  basis for Cleopatra as
         part of a new five-star hotel and villa resort (the "Hammamet  Hotel").
         Club Hammamet is a subsidiary of Occidental Hotels which, in turn, is a
         subsidiary of General Mediterranean  Holdings,  Ltd. The Hammamet Hotel
         is  one  of  forty-five   (45)  hotels   planned  or  currently   under
         construction    in   south    Hammamet    as   part   of   a   Tunisian
         government-sponsored   expansion  of  the  Hammamet   resort  area.  If
         completed,  these  additional  hotels will  provide up to  thirty-eight
         thousand  (38,000)  additional beds for the Hammamet area. The Hammamet
         Hotel  facilities were completed and opened in September 1996. Both the
         Hammamet  Casino  and Hotel  facilities  are  situated  within  walking
         distance of three  operating  hotels,  two of which were also  recently
         completed, with approximately eighteen hundred (1,800) beds.

                  Subsequent to the close of fiscal 1996, NuOasis  International
         executed  letters of intent and is  negotiating  definitive  agreements
         related to its international gaming and hospitalities  activities.  The
         transactions  represented by these agreements  involve (a) the purchase
         of a controlling  interest in the  corporate  entity which owns the Cap
         Gammarth  Casino real property and  improvements  (b) the purchase of a
         50%  interest  in the entity  which is  currently  the lessor of the Le
         Palace Hotel and surrounding  commercial center and residential complex
         (the "Cap Gammarth  Resort"),  (c) the formation of a new joint venture
         with a publicly-held  European hotel and food service company,  (d) the
         purchase  of the Cap  Gammarth  Resort  including  the real  estate and
         improvements,  and (e) the purchase of additional  equity in Cleopatra.
         The  Registrant  has an agreement in principle  with the European hotel
         operation  pursuant to which the parties plan to form a joint  venture.
         In exchange for a 50% interest in the new joint  venture,  the European
         hotel  operator  will  provide the new joint  venture  with up to $13.5
         million in working capital and NuOasis International will contribute or
         cause to be  transferred  its interest in the  entities  which hold the
         rights to manage the Le Palace  Hotel,  the Cap  Gammarth  Casino,  the
         Hammamet Casino and the Monastir Casino.

                  Closings have not occurred on any of the proposed transactions
         and there is no guarantee that all or any of the proposed  transactions
         will be consummated.  Additionally,  failing to consummate the proposed
         new  joint  venture  with  the  European   hotel   operator,   the  new
         acquisitions  contemplated  by  NuOasis  International,  along with the
         continued  development and completion of the Cap Gammath Casino and the
         Hammamet  Casino,  may  require  aggregate  financing  in excess of $20
         million to complete,  to which  neither the  Registrant  nor any of its
         subsidiaries currently have access.

                                                         [NM\10-KSB:63096KSB]-45

                                        6

<PAGE>



                  At the close of fiscal 1996, the Registrant  held a 28% equity
         interest in Cleopatra,  Mr. Ng Man Sun ("Mr.  Ng"),  doing  business as
         Dragon Sight  International  Amusement (Macau) Company  ("Dragon") held
         42% of the equity interest in Cleopatra, and the remaining 30% is owned
         by one  unrelated  party and two  related  parties:  10% by Fred Graves
         Luke, Fred G.Luke's father,  and a member of the Registrant's  Advisory
         Board,  a  Director  of  Cleopatra,  and an  Officer  and  Director  of
         Fantastic Foods International, Inc.; 10% by Gabriel Tabarani, President
         and Director of Cleopatra;  and 10%  subscribed  but not paid for by an
         individual unrelated to the Registrant. Neither Cap Gammarth Casino nor
         Hammamet Casino are operating as of the date of this Report.

         Asia

                  On May 25, 1995, the Registrant  purchased from Dragon,  a 40%
         net profits  interest in the gaming  operations  conducted by Dragon at
         two hotels in Macau  (the  "Gaming  Interest").  The two  casinos,  the
         Diamond  Casino  (Holiday  Inn),  Macau,  and the Harbor Island Diamond
         Casino (Hyatt  Regency),  Macau are operated by Dragon and have been in
         operation since March 1991 and February 1994, respectively.

                  The two  casinos  exist  pursuant to a  sub-license  to Dragon
         under a master gaming permit  granted by the  government of Portugal to
         Sociedade  DeTurismo  Diversocs De Macau  ("STDM").  STDM is owned,  in
         part, by Mr. Stanley Ho. Dragon acquired its rights and interest in the
         two casinos pursuant to an "arrangement" with STDM,  pursuant to which,
         Dragon equips and manages the casinos for which it is allowed to retain
         a  percentage  of the "net  win"  equal to 12.5% of Macau and Hong Kong
         resident  customers  and 37.5% of  "foreign  passport"  customers.  The
         balance of the "net win" in both  categories  is paid to STDM.  The 40%
         net profits interest that Dragon sold and transferred to the Registrant
         is based on  Dragon's  portion  of the "net win." STDM is the lessee of
         the leasehold  interest in which each casino is situated and the annual
         leasehold  costs  are  paid by STDM out of its  share of net  winnings.
         Dragon's costs are limited to the marketing, promotion and operation of
         the  casinos.  The total  floor area of the  casinos  is  approximately
         10,000 square feet. Gaming activities  consist primarily of card games;
         there are no slot machines in the two casinos.

                  The arrangement  between Dragon and STDM is oral:  there is no
         written  contract  and,  therefore,  Dragon  essentially  conducts  its
         business at the will of STDM.  Mr. Ng, the sole  proprietor  of Dragon,
         reportedly  has a good working  relationship  with STDM.  Historically,
         STDM has not terminated any arrangement with any of its  sub-licensees.
         STDM reportedly has no plans to open additional  casinos in Macau prior
         to the year 2001, when STDM's license expires.

                  On August 5, 1996, NuOasis International, holder of the Gaming
         Interest,  entered  into an  agreement  with Mr. Ng to sell the  Gaming
         Interest for twenty  million  (20,000,000)  shares of the  Registrant's
         common stock issued by the  Registrant in the original  purchase of the
         Gaming  Interest.  On or about  September 30, 1996,  the subject shares
         were  tendered  by Mr. Ng to a third  party  escrow  agent  pending the
         closing  of  the  purchase  of  replacement  properties  which  NuOasis
         International  is currently  negotiating to purchase ("the  Replacement
         Property").

                  At June 30, 1996,  the  Registrant  recognized a write down of
         the book value of the Gaming  Interest to bring the value of the shares
         held in escrow for the  purchase  of the  Replacement  Property  to the
         basis of the stock originally  issued to Mr. Ng, which was $.50 a share
         or $10  million  in  aggregate.  Since  the  intended  purchase  of the
         Replacement  Property will be effective  later in fiscal 1997, the book
         value of the escrowed  shares has been presented in a position  similar
         to treasury stock as of June 30, 1996.

                                                         [NM\10-KSB:63096KSB]-45

                                        7

<PAGE>



                  The Registrant  earned  $2,111,228  and  $11,407,317 as gaming
         revenue  generated from the Gaming  Interest for the 5-week period from
         inception  on May 25,  1995 to June  30,1995 and fiscal year ended June
         30, 1996,  respectively.  Due to the sale of the Gaming Interest, these
         revenues are not expected to recur in future years.

         (4)      Real Estate Activities

                  Effective  December 31, 1995,  the  Registrant  acquired  from
         Silver  Faith  Development  Limited  ("SFDL"),   an  affiliate  of  the
         Registrant and Mr. Ng, an interest in three  buildings  currently under
         construction   located  in  a  large  master  planned   commercial  and
         residential  real  estate  development  located  in  Beijing,   Peoples
         Republic of China  ("PRC")  known as The Peony Garden  project  ("Peony
         Garden").  The  purchase  price of the  Registrant's  interest in Peony
         Garden was $21 million for which the Registrant issued an 8% Promissory
         Note in the principal  amount of $21 million (the "Peony Garden Note").
         The Peony Garden Note was non recourse and fully  collateralized by the
         interest acquired,  with the outstanding  principal balance convertible
         into the shares of the Registrant's  common stock. In January 1996, the
         Registrant  made a prepayment  of principal on the Peony Garden Note in
         the amount of $9.6 million.

                  In April 1996,  the  Registrant  requested a title  opinion on
         Peony Garden in  conjunction  with NuOasis  International's  efforts to
         receive financing on the property. Upon receipt of the title opinion in
         October 1996, the Registrant  learned that under PRC law, real property
         cannot  be  transferred  until  completion  of the  project.  Since the
         project was not  completed at June 30, 1996,  and the Peony Garden Note
         was non recourse other than against the Registrant's  interest in Peony
         Garden,  the Registrant has presented its investment in Peony Garden as
         a beneficial ownership interest in the real estate development.

                  On August 8, 1996,  the  Registrant  entered into an agreement
         with  The  Hartcourt   Companies,   Inc.   ("Hartcourt")  to  sell  the
         Registrant's   entire   interest  in  Peony  Garden  for  $22  million,
         consisting  of $10 million of Hartcourt  common stock and a $12 million
         Convertible  Promissory Note secured by the Peony Garden interest being
         sold (the  "Hartcourt  Note").  The sale closed on October 8, 1996 and,
         according  to  unaudited  information  received  from  Hartcourt,   the
         Registrant's  investment  in the Hartcourt  stock  represents an equity
         interest of approximately 43%.  Concurrent with the closing of the sale
         of the  Registrant's  interest in Peony Garden,  the Hartcourt Note was
         assigned  to SFDL in  exchange  for the Peony  Garden  Note (the  "Note
         Swap").  No profit was  recognized on the Note Swap or the  transaction
         since the difference between the sales price and the Registrant's basis
         in Peony Garden represents  approximately the amount of interest on the
         Note that would otherwise have been capitalized during the construction
         of the Peony Garden project. At June 30, 1996, the beneficial ownership
         interest  in Peony  Garden was valued at the lower of the  Registrant's
         equity in Hartcourt on or about the closing date or its net  investment
         in the Peony Garden interest.  The Registrant's ultimate realization of
         value from the  investment in Hartcourt is dependent upon many factors,
         such as changes  in the  equity  value in  Hartcourt,  which  itself is
         dependent upon  uncertainties  surrounding  Peony Garden,  and upon the
         Registrant's ability to dispose of its investment at its current basis.
         The Registrant  intends to exchange the Hartcourt equity investment for
         other equity investments.

                                                         [NM\10-KSB:63096KSB]-45

                                        8

<PAGE>



(c)      Raw Materials

         The Registrant's  domestic food manufacturing and distribution  segment
requires raw materials which are readily  available such as flour,  tomatoes and
domestically-grown  spices.  The Registrant has not  experienced  any difficulty
obtaining any raw  materials  for its domestic  food  operations in the past and
does not anticipate any supply problems in the future.

         The  Registrant's   international   gaming  and  proposed  real  estate
acquisition and development  activities are not  manufacturing-based  businesses
and therefore do not rely on raw materials.

(d)      Patents, Trademarks and Licenses

         Although  the  Registrant's  formulas  and  recipes  are not subject to
patent  protection,   the  Registrant   considers  these  proprietary  and  uses
confidentiality agreements as appropriate in an attempt to protect such formulas
and recipes. The Registrant has received a trademark for "Nona Morelli" from the
United  States  Patent  and  Trademark  Office,  which  it  uses  on some of its
products.

         The  Registrant's  proposed  international  gaming  activities  do  not
require  patents or trademarks,  and the  Registrant  does not intend to rely on
patents or trademarks. The operations of the proposed gaming casinos will depend
on and  be  subject  to  gaming  licenses  and  permits  from  their  respective
jurisdictions.  With respect to the proposed  gaming  operations of Cleopatra in
North  Africa,  the  respective  gaming  licenses  are to be issued  jointly  to
Cleopatra and the owner/operators of the hotel complexes,  of which the proposed
casinos are a part. With respect to the  Registrant's  Gaming Interest in Macau,
which was sold  subsequent to the close of fiscal 1996,  neither  Dragon nor the
Registrant  relied on patents  or  trademarks.  However,  Dragon  operated  as a
sub-licensee  under a master gaming permit granted by the government of Portugal
to STDM.

(e)      Seasonality

         None of the  Registrant's  industry  segment  activities is seasonal in
nature.

(f)      Customer Dependence

         For the year  ended  June 30,  1996,  the  Registrant  had three  major
customers,  all  distributors,  each of which accounted for more than 10% of the
Registrant's  sales with  respect  to its food  manufacturing  and  distribution
segment. The Registrant's Tunisian gaming segment remains under development, and
its domestic gaming is nonoperational since BGI's liquidation in April 1995. The
Registrant's Macau Gaming Interest was dependent on gaming by the general public
in Macau.

(g)      Backlog of Orders

         The Registrant's  food  manufacturing and distribution  subsidiary,  at
June 30,  1996,  had a backlog  for orders of $31,733 as  compared to $22,651 at
June 30, 1995. This reflects production on an as-ordered basis.

         The Registrant's domestic gaming,  international gaming and real estate
subsidiaries  were not  subject to the type of business  activities  which would
give rise to "orders."

(h)      Government Contracts

         None of the Registrant's industry segment activities were involved with
material government contracts in fiscal 1996 or 1995.

                                                         [NM\10-KSB:63096KSB]-45

                                        9

<PAGE>



(i)      Competition

         (1)      Food Manufacturing and Distribution

                  Although  the  Registrant  has no market data  compiled on the
         fresh pasta industry, management believes that Contadina, a division of
         Carnation  Foods, is the fresh pasta industry leader  accounting for in
         excess of 50%,  nationally,  of fresh pasta sales.  However, in certain
         states in which the Registrant operates,  management believes Contadina
         controls  less than 50% of this  market in the  aggregate.  Other major
         retail competitors are Davis Lay under the trade name Mallard's,  Pasta
         Pasta,  Trios,  Pasta  Perfecta,  DiGiorno,  Romance and Monterey Pasta
         Company.

                  Competitive  factors in the industry  include  product quality
         and  taste,  freshness,   healthfulness,  brand  name  awareness  among
         consumers,  advertising and promotion, supermarket shelf space, product
         shelf life,  package  design,  price and  reputation  among  consumers.
         Competition  is severe in each  area,  and  industry  leaders,  such as
         Contadina, are extremely strong in most competitive areas.

                  Management  believes  the  Registrant  may be in a position to
         establish  a  niche  in  the  food  manufacturing   industry  with  its
         co-packing  agreements which are becoming a significant  portion of its
         business.  The Registrant  expects  Contadina to continue to be a major
         force due to its vast resources, name recognition, and good reputation.
         Although management believes the Registrant can compete on the basis of
         quality,  price,  and  reliability  of delivery,  the marketing of food
         products is subject to changeable  consumer tastes and habits and thus,
         there is no assurance the Registrant can maintain or improve its market
         position.

         (2)      Domestic Gaming Activities

                  The Registrant,  through  NuOasis Gaming,  competes with other
         gaming  companies  for  opportunities  to acquire legal gaming sites in
         emerging  gaming  jurisdictions,  and  opportunities  to manage  gaming
         facilities. NuOasis expects many competitors to enter new jurisdictions
         that  authorize  gaming,  some of whom may  have  more  personnel,  and
         greater  financial  and  other  resources  than  NuOasis  Gaming or the
         Registrant.   Further   expansion  of   legalized   gaming  could  also
         significantly  and adversely  affect the proposed gaming  activities of
         NuOasis  Gaming.  In  particular,  the expansion of casino gaming in or
         near any geographic  area that NuOasis Gaming  attracts,  or expects to
         attract a significant number of customers, would have a material effect
         on their business.

         (3)      International Gaming Activities

                  The Registrant, directly and through NuOasis International and
         Cleopatra,  competes with other gaming  companies for  opportunities to
         manage  casino  gaming  activities  in  emerging  international  gaming
         jurisdictions.  The  Registrant  expects many  competitors to enter new
         international  jurisdictions  that authorize  gaming,  some of whom may
         have more  personnel  and greater  financial and other  resources  than
         NuOasis  International  and  Cleopatra,  or  the  Registrant.   Further
         expansion of international  legalized  gaming could also  significantly
         and  adversely  affect  the  proposed  gaming   activities  of  NuOasis
         International  and the  Registrant.  In  particular,  the  expansion of
         casino  gaming in or near any  geographic  area  where the  Registrant,
         NuOasis  International,  Cleopatra or any future  international  gaming
         subsidiary  of the  Registrant  is  active,  or in  pursuit of a gaming
         license or rights to manage casino gaming  activities,  may diminish or
         otherwise  detract  from  the  activities  of  the  Registrant  or  its
         subsidiaries.

                                                         [NM\10-KSB:63096KSB]-45

                                       10

<PAGE>



         (4)      Real Estate Activities

                  The  Registrant  has no operating  activities  with respect to
         real estate investments,  acquisitions and development.  As of the date
         of this Report,  NuOasis  Properties  does not hold any  domestic  real
         estate assets; therefore,  competition is insignificant.  International
         real  estate  related  investments  to  date  consist  of a  beneficial
         ownership  interest in Peony Garden,  which was sold  subsequent to the
         close of fiscal 1996 and, therefore, competition as it relates to Peony
         Garden is not applicable.

(j)      Research and Development

                  As  part  of  the  Registrant's  domestic  food  manufacturing
process,  the Registrant enhances existing products and develops new products on
a continuous basis. The Registrant did not have any direct costs associated with
customer-sponsored research and development activities.

(k)      Government Regulation

         (1)      Food Manufacturing and Distribution

                  The  Registrant is regulated by the Los Angeles  County Health
         Department  and the United  States  Food and Drug  Administration.  The
         Registrant   is  subject  to  various   regulations   with  respect  to
         cleanliness,  maintenance of food production equipment, storage cooling
         and cooking temperatures,  food handling and storage, and is subject to
         on-site  inspections.  The  finding of a failure to comply  with one or
         more  regulatory  requirements  could result in a variety of sanctions,
         including  fines and the withdrawal of the  Registrant's  products from
         store shelves.

         (2)      Domestic Gaming Activities

                  At the present time, neither the Registrant nor NuOasis Gaming
         has  any  domestic  gaming  activities.   However,  NuOasis  Gaming  is
         currently  evaluating  proposals  from third  parties  to  reenter  the
         domestic  gaming  market.  With  respect to the  Registrant's  domestic
         gaming  activities,  casino  gaming  in the  United  States  is  highly
         regulated.  Owners and  operators  of casinos  must be  licensed by the
         various state gaming  commissions and must provide  detailed  financial
         and other  reports.  Additionally,  some of the states  which have just
         recently legalized gaming, have experienced unexpected internal changes
         and modification of the rules and regulations,  all of which has served
         to delay and impede gaming  applications  filed by  prospective  gaming
         operators.  Changes  in laws and  regulations  may  limit or  otherwise
         materially  affect  types of gaming that may be  conducted in these new
         jurisdictions.  Any such  changes  might have an adverse  effect on the
         activities  and proposed  activities of NuOasis  Gaming.  To the extent
         that the Registrant or NuOasis Gaming utilizes  certain of their assets
         to make  investments  in or  otherwise  re-enter  the  domestic  gaming
         industry,  one or all companies may be required to submit  applications
         for gaming licenses,  as most jurisdictions  require any holder of more
         than ten percent (10%) of the common stock of the  operating  entity to
         be suitable.

         (3)      International Gaming Activities

                  Tunisia

                  Under  Tunisian law,  casino gaming is closely  supervised and
         monitored  through the use of on-site  government  representatives  and
         strict  published  operating  procedures.  The process  through which a
         company  obtains a license  to  conduct  casino  gaming in  Tunisia  is
         similar to that of many of the  various  states in the U.S.  which have
         recently  adopted  legalized  gaming  statutes,   involving  background
         checks,   personal  interviews  and  the  discretionary  right  of  the
         government  body  overseeing  gaming  activities  to deny or withdraw a
         license to any applicant.

                                                         [NM\10-KSB:63096KSB]-45

                                       11

<PAGE>



                  The  Tunisian   government  has  approved  Cleopatra  and  its
         management  for casino gaming  licenses at the Cap Gammarth  Casino and
         Hammamet Casino.

                  Macau

                  The Gaming  Interest in Macau is operated by Dragon,  who is a
         sub-licensee  under a 40- year master gaming permit  granted in 1961 by
         the government of Portugal to STDM.  Pursuant to this  arrangement with
         STDM, Dragon owns interests in seven casinos, two of which it operates.
         The  arrangement  between STDM and Dragon is an oral  agreement and the
         master  gaming  permit  granted to STDM will expire in the year 2001 if
         not  renewed  or  terminated  in 1999  upon the  return of Macau to the
         Peoples Republic of China. Since the Gaming Interest was sold in August
         1996,  the  Registrant is no longer  affected by Portuguese  government
         regulations.

         (4)      Real Estate Activities

                  Since Peony Garden was sold in October  1996,  the  Registrant
         believes that PRC government regulations will have little if any direct
         effect on the Registrant in future fiscal years.

(l)      Compliance With Environmental Laws

         Compliance  with federal,  state and local  provisions  regulating  the
discharge  of  materials  into the  environment  or  otherwise  relating  to the
protection  of  the   environment   has  no  material   effect  on  the  capital
expenditures, earnings and competitive position and operators of the Registrant.

(m)      Employees

         (1)      Corporate Officers and Significant Subsidiaries Officers

                  Corporate  officers of Nona and significant  subsidiaries  who
         rendered   services  during  fiscal  1996  pursuant  to  employment  or
         consulting agreements are as follows:

          Name                          Office
          ----------------------------  ---------------------------------------
          
          Fred G. Luke (Employee)       Chief Executive Officer (Nona);
                                         and President (NuOasis Gaming)
          Steven H. Dong (Consultant)   Chief Financial Officer
                                         (Nona & NuOasis Gaming)
          John D. Desbrow (Consultant)  Corporate Secretary
                                         (Nona & NuOasis Gaming)
          Jon L. Lawver (Consultant)    President (Fantastic Foods)
          Albert Rapuano (Consultant)   President (NuOasis International)

         (2)      Food Manufacturing and Distribution

                  Fantastic  Foods,  the  food  manufacturing  and  distribution
         subsidiary,  currently  has  10  employees  engaged  in  administrative
         activities,  27 employees engaged in production and 2 employees engaged
         in sales.  The number of production  employees  varies  depending  upon
         demand for  product and the  Registrant's  production  procedures.  The
         range for the two years  ending June 30, 1996 was a low of 15 employees
         and a high of 35 employees.  Production employees are generally paid an
         average  of  $7.93  per  hour and the  Registrant  has not  experienced
         difficulty  in obtaining  sufficient  labor.  None of  Fantastic  Foods
         employees  are covered by a  collective  bargaining  agreement,  and it
         believes it has very good employee relations.

                                                         [NM\10-KSB:63096KSB]-45

                                       12

<PAGE>



         (3)      Domestic Gaming Activities

                  The Registrant's  subsidiary,  NuOasis Gaming and BGI (through
         April 20, 1995,  the date BGI was converted into Chapter 7 liquidation)
         employed 4 full-time employees and 10 part-time employees during fiscal
         1995. All employees were located in Louisiana.  Since BGI's  bankruptcy
         case was  converted to a Chapter 7  proceeding,  NuOasis  Gaming ceased
         employing personnel at BGI.

         (4)      International Gaming Activities

                  Tunisia

                  The  Registrant's  international  gaming  subsidiary,  NuOasis
         International,  has no employees;  Cleopatra had 2 employees as of June
         30, 1996, as its proposed  activities are still under development until
         the opening of its proposed casinos in North Africa.

                  Macau

                  The Gaming Interest acquired by the Registrant  consisted of a
         40% net profits  interest in two Macau casinos;  the Registrant did not
         acquire  any  rights to manage or  otherwise  participate  in the daily
         operations  of such casinos and,  accordingly,  the  Registrant  has no
         employees  engaged  in the  operations  of the two Macau  casinos.  The
         Gaming Interest was sold in August 1996.

         (5)      Real Estate Activities

                  The  Registrant's  real  estate  acquisition  and  development
         subsidiary,  NuOasis Properties, has no employees, as there are no real
         estate operations as of June 30, 1996.

ITEM 2.           DESCRIPTION OF PROPERTY.

(a)      Food Manufacturing and Distribution Facilities and Corporate
         Headquarters

         The Registrant owns a 26,000 square foot plant in Pueblo, Colorado. The
Registrant's  Pueblo,  Colorado  facility was purchased in 1990 and includes 3.2
acres of land.  The  building was formerly  used by a beverage  distributor  and
contains  11,000  square  feet of  refrigerated  space and 5,000  square feet of
office space.

         In fiscal  1993,  the  Registrant  relocated  its  pasta  manufacturing
activities  to  Southern  California  as part of the Pasta  Fresca  Company  and
Italfin  acquisitions.  The Registrant currently leases its Pueblo facilities to
an ethnic food manufacturer  under a month-to-month  lease agreement calling for
the lessee to pay $4,000 per month in advance  and satisfy  certain  maintenance
and other operating costs associated with the building. The Lessee has an option
to buy the building at an amount of $660,000.

         Fantastic  Foods leases  approximately  7,000 and 10,000 square feet of
food manufacturing space in Arcadia and Irwindale, California,  respectively. It
also owns two trucks for  transportation of its products,  various equipment for
the manufacture of pasta and sauces,  five large  refrigeration  units, and four
large freezers for certain raw materials and finished products.  Fantastic Foods
completed a  remodeling  of its  Irwindale  plant in late 1995,  increasing  its
production and storage capacity.

         The  Registrant  currently  subleases its  principal  offices at 2 Park
Plaza, Suite 470, Irvine, California,  92614, from an affiliate, NuVen Advisors,
Inc. ("NuVen Advisors," formerly New World Capital),  on a month-to-month  basis
as part of  an  Advisory  and  Management  Agreement  with  NuVen Advisors.  The
Registrant   believes   that   these  facilities  and  its  southern  California
manufacturing facilities are suitable and adequate for its needs.

                                                         [NM\10-KSB:63096KSB]-45

                                       13

<PAGE>




(b)      Domestic Gaming Facilities

         Prior to April 1995, the Registrant,  through BGI, provided video bingo
gaming devices to five (5) charitable bingo halls in southern Louisiana.  During
this time, BGI leased approximately 1,000 square feet of industrial/office space
in the New Orleans area from where it supervised the related  gaming  activities
and where it maintained the gaming devices. All of BGI's property,  however, was
subject to its Chapter 7 bankruptcy proceedings and, as a result, BGI maintained
no  facilities  at June 30, 1996  (discussed  in Item 6). At June 30, 1996,  the
Registrant did not own any domestic  gaming real property  interests or personal
property, nor was its domestic gaming entity subject to lease obligations.

(c)      International Gaming Facilities

         Tunisia

         At June 30,  1996,  Cleopatra  was a lessee  under two casino lease and
management  operating  contracts related to the proposed Cap Gammarth Casino and
Hammamet Casino under  construction  in Tunisia.  As of the date of this Report,
Cleopatra's   activities  are  still  in  the  development  stage  and,  because
construction of the proposed casinos has not yet been completed,  the Registrant
did not own any real or personal property nor was it subject to any leasehold or
other contingent obligations with respect to its investment in Cleopatra,  other
than  being  the  guarantor  on the Cap  Gammarth  Casino  lease  and  operating
agreement.

         Macau

         The  Registrant  acquired the Gaming  Interest,  representing a 40% net
profits  interest  in two Macau  casinos;  the  Registrant  did not  acquire the
operations of the casinos or any fixed assets,  and  accordingly  the Registrant
does not have any  facilities  or fixed assets  recorded with respect to the two
Macau casinos.
The Gaming Interest was sold in August 1996.

(d)      Real Estate Activities

         The Registrant  held no real estate  operations at June 30, 1996, or as
of the date of this Report.

ITEM 3.           LEGAL PROCEEDINGS.

         The Registrant  knows of no material pending legal  proceedings,  other
than ordinary routine litigation  incidental to the Registrant's business except
as follows:

(a)       Casino   Management   of  America,   Inc.  vs.  Mark  Bachik,   Bachik
          Enterprises,  Inc.  and Bruce West;  District  Court,  Dallas  County,
          Texas; Case No. 94-4479

          In April 1993, FTF Management  Company,  Inc., a Colorado  corporation
owned by Frank J. Morelli, II and Frank J. Morelli,  III ("FTF") entered into an
agreement  with Bachik  Enterprises,  Inc., a Texas  corporation  ("Bachik")  to
purchase a 50% interest in the Star Casino, a gaming facility located in Cripple
Creek, Colorado. At the time of the Agreement,  Mr. Morelli, II and Mr. Morelli,
III were current and former officers and directors of the Registrant.  Under the
agreement,  FTF and  Bachik  orally  agreed to form a joint  venture  to own and
operate the Star Casino with each party acquiring a 50% interest in the venture.
Subsequent to the  agreement,  a $400,000  receivable  due to the Registrant was
allegedly diverted by Mr. Morelli,  II and Mr. Morelli,  III to agents of Bachik
for the purpose of applying  the funds to the  acquisition  of the Star  Casino.
Concurrently with the diversion of the Registrant's  funds, Mr. Morelli,  II was
identified by local newspaper articles as the owner of the Registrant's interest
in the  star  Casino.  Subsequently,  based  on  documentation  received  by the
Registrant,  the interest in the Star Casino  attributable  to the  Registrant's
funds was held in the name of FTF.  The  Registrant  subsequently  assigned  its
rights to the $400,000 receivable to Casino Management of America, Inc., ("CMA")
which  is now a  subsidiary  of  NuOasis  Gaming  but  which  at the time of the
assignment was a subsidiary of the Registrant. On May 9, 1994, Texas counsel for
CMA filed suit in Texas against Bachik and other defendants to recover the funds
improperly  diverted to Bachik.  Counsel for Mark  Bachik,  Bachik  Enterprises,
Inc.,  and East  Bennett  Limited  Liability  Company has  withdrawn  from their
representation.  Texas Counsel for CMA has negotiated a settlement  with Bachik.
Counsel for CMA and the  Registrant  and Counsel for  Defendant  Bruce West have
entered into a letter  agreement for settlement  with Bruce West calling for the
deposit of $25,000  into an  attorney's  escrow  until  certain  conditions  are
satisfied. A jury trial which was set to commence in October 1996 has been taken
off  calendar  pending  receipt of  documentation  to effect a dismissal  of the
action.

                                                         [NM\10-KSB:63096KSB]-45

                                       14

<PAGE>



(b)       Nona  Morelli's II, Inc. and Casino  Management  of America,  Inc. vs.
          Star Casinos International,  Inc., and Cripple Creek Properties, Inc.;
          Teller County, Colorado District Court; Case No. 94-CV-144

          In a further effort to recover the $400,000  receivable related to the
Star  Casino,  the  Registrant  and  CMA in  November  1994  filed a suit in the
District Court of Teller County,  Colorado  against Star Casinos  International,
Inc. ("Star International") and Cripple Creek Properties, Inc. ("Cripple Creek")
seeking imposition of a resulting trust,  constructive seal, constructive trust,
and an accounting of all money received and expended in connection with a gaming
facility known as the Star Casino.  The Defendants  answered and  counterclaimed
for slander of title given that the Registrant  filed a lis pendens  against the
real  property on which the Star Casino is located in Cripple  Creek,  Colorado.
The  Registrant  has  asserted  that the  counterclaim  for  slander of title is
substantially  frivolous and groundless due to existing  Colorado case law. Star
International  and Cripple  Creek have filed a  counterclaim  naming  Richard M.
Greene  ("Greene")  as a third  party  defendant  alleging  breach of  contract,
promissory  estoppel and fraud causes of action  asserting that Greene  received
$100,000   from  them  under  an  agreement   between   Greene,   FTF  and  Star
International,  that the funds would be paid to the  Registrant.  The funds were
never paid to the  Registrant,  resulting in the Registrant  filing suit.  After
taking  the  depositions  of  all  of  the  principal   players,   everyone  has
acknowledged that the original $400,000 used to purchase the Star Casino in 1993
came from the Registrant. On May 3, 1996 Star Casinos International,  Inc., (the
"debtor") filed a bankruptcy  petition under chapter 11 of the Bankruptcy  Code.
The  schedules  filed  with the  bankruptcy  court do not list the  Casino  real
property as an asset of the  bankruptcy  estate.  Prior to October 9, 1996,  the
casino real  property was held by Cripple  Creek,  one of the  defendants  and a
subsidiary  of the debtor,  the stock of which is listed as one of the  debtor's
assets.  In July 1996,  the first trust deed holder on the subject real property
instituted a quasi-judicial  foreclosure  proceeding in Teller County,  Colorado
District Court. A foreclosure sale occurred on October 9, 1996. The bid price by
the  foreclosing  party  was  $782,320.   Since  the  first  trust  deed  holder
foreclosed,  the ability of the  defendants to establish any damages as a result
of the filing of the lis pendens has been substantially impaired.  Additionally,
under  Colorado  law  subject  to  redemption   rights,   the  foreclosure  sale
effectively  eliminates all junior liens including the Registrant's lis pendens.
A trial date which was set for the week of November 4, 1996 has been vacated and
the suit has been indefinitely stayed pending resolution of the bankruptcy case.
Another creditor of the debtor unrelated to the Registrant has filed a motion to
dismiss the Chapter 11  bankruptcy  and that motion is  currently  pending.  The
Registrant  has  filed a Proof  of Claim in the  Bankruptcy  proceeding  for the
$400,000 plus accrued interest.

(c)       Chuck Arnold vs. Nona Morelli's II, Inc., Casino Management of America
          and MDM Gaming Partners,  L.P.; Denver,  Colorado District Court; Case
          No. 95-CV-104

          In January  1995,  Charles  Arnold  ("Arnold"),  a  consultant  to the
Registrant's prior management,  initiated a lawsuit against the Registrant,  CMA
and MDM Gaming Partners, L.P. ("MDM"),  alleging that the defendants have denied
him a 1% equitable  interest in MDM,  which was allegedly  verbally  promised to
Arnold  by  Frank  J.  Morelli,  II  and  Frank  J.  Morelli,  III  for  alleged
professional  services  rendered to MDM. Arnold is alleging damages in an amount
of  $90,000  in  connection  with  this  claim.  The  Registrant  and the  other
defendants have filed a third-party  complaint against FTF, Theodore E. DeTello,
Frank J. Morelli,  II and Frank J. Morelli,  III,  seeking full  indemnification
from them for any damages to which Arnold may be entitled in  accordance  with a
certain  Termination  Agreement  dated  December  17, 1993  between the parties.
Counsel for the Morelli's  has recently  indicated  that the Morelli's  would be
taking the Fifth Amendment  against  testifying in connection with this lawsuit.
Since Arnold may not have  witnesses  to prove the alleged  existence of an oral
promise,  the  likelihood  of any recovery  against the  Registrant,  CMA or MDM
appears  to be  remote.  Counsel  for the  parties  have  stipulated  to binding
arbitration to be held sometime in 1997.

                                                         [NM\10-KSB:63096KSB]-45

                                       15

<PAGE>



(d)       Ruben Kitay et al. vs. Nona  Morelli's II, Inc. et al.;  United States
          District  Court  for the  Central  District  of  California;  Case No.
          95-4375 RMT (SHx)

          On October 10, 1995, a Second Amended  Complaint was filed in the U.S.
District  Court for the Central  District  of  California  which  named  NuOasis
Gaming, Fred G. Luke, John D. Desbrow,  Kenneth R. O'Neal, O'Neal & White, P.C.,
a  Texas  professional  corporation,   New  World  Capital,  Inc.,  Rocci  Howe,
Euro-Belge (NA) N.V., Structure America, Inc., International Banking Corporation
Caribbean  (IBCC),  and the  Luke  Family  Trust  as  defendants  in an  alleged
shareholder  derivative  action  (the  "Derivative  Action")  filed on behalf of
certain  shareholders  of NuOasis  Gaming.  The  Derivative  Action arose from a
certain Stock  Purchase and Business  Combination  Agreement,  pursuant to which
Nona Morelli's II, Inc. acquired voting control of E.N.  Phillips Company,  Inc.
(now NuOasis Gaming,  Inc.) and the events  surrounding the bankruptcy of Ba-Mak
Gaming  International,  Inc. The Plaintiffs  sought damages  according to proof,
interest, rescission, attorneys' fees and exemplary damages. Outside counsel for
NuOasis  Gaming in the  Derivative  Action,  and the  management of both NuOasis
Gaming and Nona  believe,  among other things,  that the  Plaintiffs do not have
standing to file such  litigation,  have failed to state a proper claim,  and do
not qualify as representatives  in a shareholder  action. In response to NuOasis
Gaming's  filing a Motion to  Dismiss  the  Derivative  Action,  the  Action was
dismissed without prejudice pursuant to stipulation.

(e)       Gustavo Farias vs. Nona  Morelli's Inc. et al; United States  District
          Court for the Central District of California;  Case No. CV-96-2617 RMT
          (SHx)

          A  Second  Amended  Complaint  entitled  Ruben  Kitay  et al vs.  Nona
Morelli's II, Inc., et al; United States District Court for the Central District
of California: Case No. 95-4375 RMT(SHx), filed on October 10, 1995, in the U.S.
District Court for the Central District of California and subsequently dismissed
pursuant to  stipulation,  was refiled by the Plaintiffs on April 12, 1996, in a
complaint  entitled Gustavo Farias,  et al v. Nona Morelli's II Inc., et al. The
new complaint named the Registrant,  its officers,  the Registrant's  accounting
firm and other third parties as defendants in an alleged shareholder  derivative
action  (the  "Refiled  Action")  refiled on behalf of certain  shareholders  of
NuOasis Gaming.  The Refiled Action alleged securities fraud and RICO violations
in connection with a certain Stock Purchase and Business  Combination  Agreement
pursuant to which the  Registrant  acquired  voting  control of ENP (now NuOasis
Gaming),  and the events  surrounding the bankruptcy of BGI. The plaintiffs seek
damages  in  an  amount  not  yet  ascertained  according  to  proof,  interest,
rescission,  imposition of a constructive  trust,  diminution of share value for
the  individual  plaintiffs,  attorneys'  fees and  exemplary  damages.  Outside
counsel for the  Registrant in the Refiled  Action,  and the  management of both
NuOasis  Gaming and the Registrant  believe among other things,  that the action
was initiated by Mike Savage, a former consultant of NuOasis Gaming, and persons
affiliated  with him, as a part of an attempt to take control of NuOasis Gaming;
that the  Plaintiffs  do not have  standing  to file such  litigation;  that the
Plaintiffs have no competent and credible evidence to support their allegations;
that they have failed to state a proper  claim;  and that they do not qualify as
proper  representatives  in a  shareholder  action.  After  the  filing  of  the
Registrant's  Motion to Dismiss in the original action,  the original action was
voluntarily  dismissed by the  Plaintiffs.  The Registrant has filed a Motion to
Dismiss the Refiled Action. As of the date of this Report,  all but three of the
Plaintiffs have dropped out of the litigation.  In response to the  Registrant's
Motion to Dismiss, the remaining  Plaintiffs have voluntarily  dismissed most of
the other  Defendants  and have  dismissed  the RICO  claims.  The  Registrant's
accounting firm and chief  financial  officer have been dismissed as Defendants.
The Motion to Dismiss the remaining claims is currently pending.

                                                         [NM\10-KSB:63096KSB]-45

                                       16

<PAGE>



(f)       Louis Siegel vs. Nona Morelli's II, Inc.;  Case No.  703222,  Superior
          Court of California for the County of San Diego.

          In June  1993,  prior  management  of the  Registrant  issued  450,000
pre-reverse  split  shares  of its  common  stock  to Louis  Siegel  ("Siegel"),
allegedly in consideration for food conveyor equipment.  However, new management
found the apparatus stored in the parking lot at the Pueblo,  Colorado plant and
discovered  that the equipment  was nothing more than scrap metal.  In September
1994,  when Mr. Siegel failed to provide an appraisal for the apparatus  after a
demand  for  the  same  from  the  Registrant's  Chief  Executive  Officer,  the
Registrant's   Board  of  Directors   canceled  the  shares,   finding  that  no
consideration  had been  received for the issuance of the shares.  In July 1995,
Siegel requested reinstatement of the shares. The Registrant refused. No further
developments  occurred during fiscal year 1996.  However,  on September 6, 1996,
the  Registrant  was  served  with a  Complaint  filed  by  Siegel  against  the
Registrant in San Diego  Superior Court entitled Louis Siegel vs. Nona Morelli's
II, Inc. Case No.  703222  seeking  compensatory  damages in excess of $150,000,
interest,  punitive damages,  costs of suit and attorney's fees. Counsel for the
Registrant  and  Siegel  have  stipulated  to a  transfer  of the  action to the
Superior  Court for the County of Orange and the Superior Court of Orange County
assigned Case No. 772045 to the complaint.  The Registrant intends to vigorously
defend the  Complaint  and is in the process of filing a Demurrer  and Motion to
Strike the Complaint.

(g)       Ba-Mak  Gaming  International  Inc.,  Chapter 11  Bankruptcy,  Eastern
          District of Louisiana, Case No. 94-1366

          On October 28, 1994, Ba-Mak Gaming International, Inc. ("BGI") filed a
Chapter 11 Petition with the United States District Court (Bankruptcy  Division)
for the Eastern District of Louisiana,  Bankruptcy Case #94-13661.  On April 20,
1995,  the  Bankruptcy  Court granted the motion of the United States Trustee to
convert the case to a  proceeding  under  Chapter 7. A Trustee was  appointed to
liquidate the  bankruptcy  estate of BGI, and the  liquidation of its assets has
been  occurring  since July  1995.  The  Registrant's  remaining  obligation  in
connection with BGI is a claim, in the  approximate  amount of $47,000,  against
NuOasis  Gaming for legal fees incurred  during the bankruptcy if the bankruptcy
estate  does not pay such legal  fees in full.  The  Trustee  in the  bankruptcy
estate has been  ordered to pay such fees.  As of the date of this  Report,  the
Trustee has not yet closed the bankruptcy estate;  however, due to the claims of
other  creditors,  the  Registrant  does not expect to recover any amount on the
Proof of Claim it has filed for funds lent or advanced to BGI.

(h)      Investigation

          The Securities and Exchange  Commission ("SEC") has been conducting an
investigation into certain  transactions in the Registrant's shares which appear
to have occurred under the stewardship of former management. Outside counsel for
the  Registrant  has been  informed by the SEC's staff that they do not have any
intention  of  recommending  an  enforcement  action  against any of the present
management of the  Registrant.  It is not known whether the Registrant will ever
be named in an enforcement action for misconduct engaged in by prior management.
The  investigation  appears to focus on the issuance of shares to consultants in
1992  and  1993 by prior  management  and the  validity  of  certain  Consulting
Agreements executed by the Registrant's former President. Present management and
the SEC have  reviewed  the  transactions  in  question  and both agree that the
Registrant appears to be entitled to the cancellation or return of shares issued
by the Registrant to consultants in situations in which the Registrant could not
obtain evidence of these consultants rendering  consideration to the Registrant.
The Registrant has cooperated  fully with the SEC in this  investigation.  After
consultation with counsel,  present management  believes that,  ultimately,  any
action  brought  by the SEC will not have any  material  adverse  effect  on the
Registrant's  accompanying  consolidated financial statements. In the opinion of
outside counsel,  it is unlikely that any enforcement action would seek monetary
consideration  from  the  Registrant,  either  in the  form of  disgorgement  or
penalties.

                                                         [NM\10-KSB:63096KSB]-45

                                       17

<PAGE>



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

         None.

                                                         [NM\10-KSB:63096KSB]-45

                                       18

<PAGE>



                                     PART II


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

(a)      Market Information

         Through  August 16, 1995, the  Registrant's  common stock was traded on
the NASDAQ Small CapSM System under the symbol "NONA."  Subsequent to August 16,
1995, the Registrant's  shares have been traded on the Electronic Bulletin Board
under the  Symbol  "NONA".  The range of high and low "bid"  quotations  for the
Registrant's common stock for the last two fiscal years as reported by NASDAQ or
OTC Bulletin Board are provided below. These over-the-counter  market quotations
reflect  inter-dealer prices without retail markup,  markdown or commissions and
may not necessarily represent actual transactions.

                                          Bid Price of Common Stock
                                        ------------------------------
          Fiscal 1996                   High                     Low
          ----------------------        -----                    -----
          Quarter ended 06/30/96        $2.28                    $1.03
          Quarter ended 03/31/96        $1.81                    $ .78
          Quarter ended 12/31/95        $2.25                    $ .75
          Quarter ended 09/30/95        $2.78                    $1.46


          Fiscal 1995                   High                      Low
          ----------------------        -----                    -----
          Quarter ended 06/30/95        $2.78                    $ .41
          Quarter ended 03/31/95        $ .81
          Quarter ended 12/31/94        $1.25                    $ .31
          Quarter ended 09/30/94        $3.00                    $ .94

          The total number of shares  authorized  is  50,000,000.  There were no
stock splits during fiscal 1995 or 1996.

(b)       Holders

          The  approximate  number of  holders of record of each class of equity
securities of the Registrant as of June 30, 1996, was as follows:

            Title of Class              Number of Record Holders
----------------------------            ------------------------
Common Stock, $.01 par value                    2,015

Series D Preferred Stock,                         
$.01 par value                                    1

          This does not include an unknown  number of beneficial  holders of the
Registrant's common stock whose shares are registered in "street name."

                                                         [NM\10-KSB:63096KSB]-45

                                       19

<PAGE>



(c)       Dividends

          The  Registrant  has paid no cash dividends with respect to its common
stock since its inception.  However, during fiscal 1995, the Registrant declared
and paid a property dividend of approximately 1.5 million shares of common stock
of NuOasis  Gaming.  No cash or property  dividends were paid or declared during
fiscal  1996.  As of the date of this  Report,  the  Board of  Directors  of the
Registrant  have not  approved  a  dividend  distribution  policy.  There are no
contractual  restrictions on the  Registrant's  present or future ability to pay
dividends.

ITEM 6.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS

(a)       Significant Events During the Year Ended June 30, 1996.

          Purchase and Subsequent Sale of Peony Garden

          Effective December 31, 1995, the Registrant acquired from Silver Faith
Development  Limited  ("SFDL"),  an affiliate of the  Registrant  and Mr. Ng, an
interest in three  buildings  currently  under  construction  located in a large
master planned  commercial and residential  real estate  development  located in
Beijing,  Peoples  Republic of China ("PRC")  known as The Peony Garden  project
("Peony  Garden").  The  purchase  price of the  Registrant's  interest in Peony
Garden was $21 million for which the Registrant  issued an 8% Promissory Note in
the principal amount of $21 million (the "Peony Garden Note").  The Peony Garden
Note was non recourse and fully  collateralized by the interest  acquired,  with
the  outstanding   principal   balance   convertible  into  the  shares  of  the
Registrant's  common stock. In January 1996, the Registrant made a prepayment of
principal on the Peony Garden Note in the amount of $9.6 million.

              In April 1996, the  Registrant  requested a title opinion on Peony
Garden in conjunction with NuOasis  International's efforts to receive financing
on the  property.  Upon  receipt  of the title  opinion  in  October  1996,  the
Registrant learned that under PRC law, real property cannot be transferred until
completion of the project. Since the project was not completed at June 30, 1996,
and the Peony Garden Note was non recourse  other than against the  Registrant's
interest in Peony Garden,  the  Registrant has presented its investment in Peony
Garden as a beneficial ownership interest in the real estate development.

          Following the close of fiscal 1996, on August 8, 1996,  the Registrant
entered into an agreement with The Hartcourt  Companies,  Inc.  ("Hartcourt") to
sell  the  Registrant's  entire  interest  in  Peony  Garden  for  $22  million,
consisting  of  $10  million  of  Hartcourt  common  stock  and  a  $12  million
Convertible Promissory Note secured by the Peony Garden interest being sold (the
"Hartcourt  Note").  The sale  closed  on  October  8, 1996  and,  according  to
unaudited  information received from Hartcourt,  the Registrant's  investment in
the  Hartcourt  stock  represents  an  equity  interest  of  approximately  43%.
Concurrent  with the closing of the sale of the  Registrant's  interest in Peony
Garden, the Hartcourt Note was assigned to SFDL in exchange for the Peony Garden
Note  (the  "Note  Swap").  No  profit  was  recognized  on the Note Swap or the
transaction  since the difference  between the sales price and the  Registrant's
basis in Peony  Garden  represents  approximately  the amount of interest on the
Peony  Garden  Note that  would  otherwise  have  been  capitalized  during  the
construction  of the Peony  Garden  project.  At June 30, 1996,  the  beneficial
ownership  interest in Peony  Garden of $9.6 million was reduced to the value of
the  Registrant's   equity  in  Hartcourt  on  or  about  the  closing  date  of
approximately   $7  million   resulting  in  a  $2.6  million  write  down.  The
Registrant's  ultimate  realization of value from the investment in Hartcourt is
dependent  upon many factors,  such as changes in the equity value in Hartcourt,
which itself is dependent upon uncertainties  surrounding Peony Garden, and upon
the Registrant's  ability to dispose of its investment at its current basis. The
Registrant  intends to exchange the Hartcourt equity investment for other equity
investments.

                                                         [NM\10-KSB:63096KSB]-45

                                       20

<PAGE>



(b)       Significant Subsequent Events

          Gaming Interest

              On August 5,  1996,  NuOasis  International,  holder of the Gaming
Interest,  entered into an agreement with Mr. Ng to sell the Gaming Interest for
twenty million  (20,000,000)  shares of the Registrant's  common stock issued by
the  Registrant  in the original  purchase of the Gaming  Interest.  On or about
September 30, 1996,  the subject shares were tendered by Mr. Ng to a third party
escrow agent pending the closing of the purchase of replacement properties which
NuOasis  International  is currently  negotiating to purchase ("the  Replacement
Property").

          At June 30, 1996, the Registrant  recognized a $6.6 million write down
of the book value of the Gaming  Interest  to bring the value of the shares held
in escrow for the purchase of the Replacement Property to the basis of the stock
originally issued to Mr. Ng, which was $.50 a share or $10 million in aggregate.
Since the intended purchase of the Replacement  Property will be effective later
in fiscal 1997,  the book value of the escrowed  shares has been  presented in a
position similar to treasury stock as of June 30, 1996 .

         The  Registrant  earned  $2,111,228  and  $11,407,317 as gaming revenue
generated  from the Gaming  Interest for the 5-week period from inception on May
25, 1995 to June 30,1995 and fiscal year ended June 30, 1996, respectively.  Due
to the sale of the Gaming  Interest  subsequent  to the closing of fiscal  1996,
these revenues are not expected to recur in future years.

         The  gaming  revenues  for the six  months  ended  June 30,  1996  were
classified  as  Due  From  Affiliate  as of  June  30,  1996  in the  amount  of
approximately $3.9 million and were subsequently collected.  $3.2 million of the
$3.9 million  generated  from the Gaming  Interest was used by the Registrant as
full payment of the principal and accrued interest on the $3 million  promissory
note issued as part of the original  purchase of the Gaming  Interest on May 25,
1995.

         Peony Garden

         As discussed above,  the sale of the Peony Garden interest  occurred on
August 8, 1996 and closed on October 8, 1996.

         Cleopatra

         Subsequent to the close of fiscal 1996, NuOasis International  executed
letters  of  intent  and  was  negotiating   definitive  agreements  to  acquire
Replacement  Properties  related to its  international  gaming  and  hospitality
activities.

         In July 1996,  Cleopatra  signed two  letters of intent  with a company
owning a hotel and  casino  project  in  Monastir,  Tunisia,  pursuant  to which
Cleopatra (or its designee, Cleopatra World), would lease the casino and through
NuOasis  International manage the hotel (to be re-named "Cleopatra Palace Resort
- Monastir"), and provide Las Vegas casino gaming management for the casino (the
"Monastir Casino").

         Also in July 1996, the Registrant  entered into  negotiations  with the
owners of a newly built  hotel and casino  facility  in the  southern  Caribbean
area, to form a joint venture between NuOasis  International  and the owners for
the purpose of completing  the  construction  and managing the operations of the
subject  complex (to be re-named  "NuOasis Resort & Casino").  Negotiations  are
still  continuing,  but there have been no definitive  agreements  executed.  If
present  negotiations  result  in the  acquisition  of  that  facility,  capital
expenditures  for remodeling and  construction of that facility are estimated to
be in  excess  of $15  million,  which  neither  the  Registrant  nor any of its
subsidiaries have received a commitment for financing at this time.

                                                         [NM\10-KSB:63096KSB]-45

                                       21

<PAGE>



         In  September  1996,  the  Registrant  entered  into  an  agreement  in
principle with a European hotel management company pursuant to which the parties
plan to form a joint  venture.  In exchange  for a 50% interest in the new joint
venture,  the European hotel operator will provide the new joint venture with up
to $13.5  million  in  working  capital,  and the  Registrant,  through  NuOasis
International,  will  contribute or cause to be transferred  its interest in the
entities  which hold the rights to manage the Le Palace Hotel,  the Cap Gammarth
Casino, the Hammamet Casino and the Monastir Casino.

         In  October  1996,  the   Registrant  and  Cleopatra   entered  into  a
reorganization   agreement   with   Cleopatra   which  will  result  in  NuOasis
International issuing $13.5 million in secured promissory notes in consideration
for 70% of the  outstanding  stock of three  Cleopatra  subsidiaries,  including
Cleopatra Cap Gammarth Casino, Cleopatra Hammamet Casino and Cleopatra Monastir.
Additionally,   the  Registrant  and  Cleopatra   agreed  to  increase   NuOasis
International's equity interest in Cleopatra from 28% to 33%.

         Also, in October 1996, NuOasis  International entered into negotiations
to purchase a controlling  interest in the  corporate  entity which owns the Cap
Gammarth  Casino real  property and  improvements.  Additionally,  following the
restructuring  agreement  with  Cleopatra,  NuOasis  International  executed  an
agreement to purchase a 50% interest in Cleopatra World,  Inc., a British Virgin
Island corporation  ("Cleopatra  World"),  the lessor of the Le Palace Hotel and
the  commercial  center,  residential  complex,  real  estate  and  improvements
surrounding the Cap Gammarth Casino (the "Cap Gammarth Resort").

         National Pools Corporation

         On June 13, 1996,  Nona entered  into an Option  Agreement  with Joseph
Monterosso,  President of National  Pools  Corporation  ("NPC"),  an  individual
previously  unrelated to NuOasis Gaming or Nona, and granted such  individual an
option to purchase the 250,000 Series B Preferred Shares of NuOasis Gaming owned
by Nona at a purchase price of $13.00 per share, or a total of $3,250,000,  with
a minimum purchase of 110,000 shares.

         The exercise of the option is conditioned upon shareholder  approval of
a  proposal  to  increase  the  authorized  number of shares of common  stock of
NuOasis Gaming by at least twenty  million  (20,000,000)  shares.  The option is
assignable   and  shall  expire  90  days  after  the  next  Annual  Meeting  of
Shareholders of NuOasis Gaming.

         On November 21, 1996,  NuOasis Gaming's board of directors approved the
acquisition  of NPC. The  acquisition is expected to be financed by the issuance
of securities of NuOasis Gaming,  however,  a definitive  agreement has not been
signed.  Moreover,  the acquisition is contingent upon the occurrence of certain
events including but not limited to: (a) NPC shareholder approval;  (b) exercise
of that certain  option  agreement  between  Monterosso and Nona; (c) Monterosso
securing  financing  that would allow the  exercise of the option by  Monterosso
and/or one or more  qualified  private  investors;  (d) reaching an agreement to
sell CMA; and (e)  shareholder  approval of a proposal to increase the number of
authorized  shares  of common  stock of  NuOasis  Gaming by at least  20,000,000
shares. There are no assurances that such transaction will occur and, because of
on-going  negotiations  and  uncertainties  surrounding  the realization of such
transaction,  NuOasis  Gaming cannot  determine  the ultimate  effect on NuOasis
Gaming's financial position at this time.

(c)      Going Concern

          The  Registrant  has  experienced  recurring  net losses,  has limited
liquid resources, negative working capital and one of its operating subsidiaries
was  liquidated  during  fiscal  year 1995.  Management's  intent is to continue
searching for additional  sources of capital and, in the case of NuOasis Gaming,
new operating opportunities.  In the interim, the Registrant intends to continue
operating with minimal  overhead and key  administrative  functions  provided by
consultants who are compensated in the form of the Registrant's common stock. It
is  estimated,   based  upon  its  historical  operating  expenses  and  current
obligations, that the Registrant may need to utilize its common stock for future
financial support to finance its needs during fiscal year 1997. Accordingly, the
accompanying  consolidated  financial  statements  have been presented under the
assumption the Registrant will continue as a going concern.

                                                         [NM\10-KSB:63096KSB]-45

                                       22

<PAGE>



(d)       Liquidity and Capital Resources

         A comparison of working capital,  cash and cash equivalents and current
ratios for the past two fiscal years are reflected in the following table:

                                                     June 30,
                                   --------------------------------------------
                                          1996                     1995
                                   ------------------       -------------------
Working Capital (Deficit)          $      (1,923,964)       $        (830,069)
Cash and Cash Equivalents          $          50,436        $         628,870
Current Ratio                                    .68                       .8

         The most  significant  effects on working  capital  and its  components
during fiscal 1996 were (i) earned revenue of  approximately  $11.4 million from
the Gaming  Interest;  (ii) the  pre-payment of $9.6 million in principal on the
Registrant's  note issued to acquire  the  interest  in Peony  Garden;  (iii) an
increase  in current  liabilities  of  approximately  $2  million;  and;  (iv) a
decrease in cash of $578,434.

         The  Registrant's  current  plan for growth is to increase  its working
capital by  converting  the shares of Hartcourt  received from the sale of Peony
Garden into additional  equity  investments  and, in turn, use these  additional
equity investments along with external debt and equity financing,  if any can be
arranged,  to  finance  the  activities  of its  subsidiaries,  and  for  future
acquisitions  in its  three  business  segments.  Additionally,  the  Registrant
anticipates  receiving  a  distribution  of  net  operating  revenues  from  the
Cleopatra casinos,  which at the present time,  subject to obtaining  financing,
are scheduled to be completed during the next calendar year. However,  there are
no assurances  that the subject  casinos will open during the next calendar year
since the  financing  required by Cleopatra to complete and open its  properties
has not yet been committed. As of the date of this Report, the Registrant's sole
operations are derived from its food  manufacturing  subsidiary and,  therefore,
there is considerable  risk that the Registrant  will not have adequate  working
capital  to  sustain  its  current  status,  and  that  the  Registrant  or  its
subsidiaries  may not be able to secure the required debt or equity financing to
complete  their proposed  projects  during the next calendar year, in which case
the  Registrant  or its  subsidiaries  may be  forced  to sell the  projects  or
contribute  them to a third party on terms which would  preclude the  Registrant
from  realizing  significant  future  benefit,  or any  benefit  at all from the
projects. The Registrant may need to issue additional shares of its common stock
to pay for services incurred, to finance the operations of its subsidiaries, and
to continue to sustain itself.

(e)      Capital Expenditures

         General

         The Registrant has no commitments  for material  capital  expenditures,
however,  to date neither the Registrant nor its subsidiaries  have been able to
secure  adequate  third party  financing  commitments  to  complete  its various
projects.

         Capital Requirements of Cleopatra

          At June 30, 1996,  Cleopatra has  approximately  $3,500,000  deposited
with the builders of the Cap Gammarth Casino and the Hammamet Casino.  Cleopatra
has  approximately  $2,000,000  remaining to be paid,  as security  deposits and
advance rent,  before it can take  possession of the two casinos (see Note 12 of
the footnotes to the accompanying  financial  statements included herein at Item
7).  Construction  on the  Cap  Gammarth  Casino  and  Hammamet  Casino  is near
completion. In addition,  Cleopatra estimates remaining expenditures and working
capital  requirements,  including security deposits and advance rental payments,
related to equipping and opening the two casinos to be approximately $15 million
in aggregate.

                                                         [NM\10-KSB:63096KSB]-45

                                       23

<PAGE>



         To finance the expected $15 million in  remaining  expenditures  on the
Cap Gammarth  Casino and the Hammamet  Casino,  the  Registrant is negotiating a
joint venture  between  NuOasis  International  and a European hotel  management
company  whereby the European  hotel  management  company will  contribute up to
$13.5  million in exchange for a 50% interest in the joint  venture (see Note 13
of the footnotes to the  accompanying  financial  statements  included herein at
Item 7).  Alternatively,  subject  to  providing  satisfactory  collateral,  the
Registrant has arranged for a credit facility with Banque  Francaise de L'Orient
(the "Bank") which Cleopatra may utilize to borrow up to $25 million.

         Through June 30, 1996 the Registrant and its  subsidiaries  have,  with
few exceptions,  financed all operations with internally generated funds and the
Registrant's  common  stock.  Third  party  debt and equity  financing  has been
pursued, both domestically and internationally,  without success. And, while the
Registrant  and  its  subsidiaries  have  been  able  to  meet  their  financial
commitments  through the close of fiscal 1996,  if for any reason,  the proposed
joint venture is not formed,  or if Cleopatra is unable to borrow from the Bank,
or if Cleopatra  or NuOasis  International  are unable to  otherwise  meet their
commitments  under the various  agreements to provide the  furniture,  fixtures,
equipment  and working  capital for the proposed  casinos once  construction  is
completed, the Registrant may be required to intercede and provide the requisite
financing  and working  capital,  or be forced to sell all or a portion of their
respective  interest,  or lose  their  respective  rights  to the  projects  and
properties entirely.

(f)      Cash Flows

         Cash provided by operating activities was $8,861,699 for the year ended
June 30, 1996 as compared to $560,435 in cash used by operating  activities  for
the comparable  period last year. The increase is primarily  attributable to the
receipt of $9.6 million  generated from the Gaming Interest.  Although  revenues
were accrued,  there was no receipt of cash flow from the Gaming Interest during
the same period last year.

         Cash  used in  investing  activities  was  $9,666,393  as  compared  to
$114,791 in cash provided by investing activities for the comparable period last
year.  The increase is  primarily  attributable  to the $9.6  million  principal
payment made to acquire the Registrant's  beneficial ownership interest in Peony
Garden as discussed above.

         Cash provided by financing  activities  was $226,260 for the year ended
June 30, 1996 as compared to $122,177 in cash used by financing  activities  for
the  comparable  period last year. The increase is primarily  attributable  to a
$350,000  loan obtained by Fantastic  Foods for the repayment of existing  debt,
improvement of plant and equipment and for general working capital purposes.

(g)      Results of Operations

         Year Ended June 30, 1996 Compared to Year Ended June 30, 1995

         The Registrant's total food sales for the year ended June 30, 1996 were
$1,251,174  as  compared  to  $1,555,119,  for the year  ended  June  30,  1995,
resulting  in  a  decrease  of  $303,945  or  20%.  The  decrease  is  primarily
attributable to a combination of a $633,026  decrease in co-packing  sales and a
$345,217 increase in fresh pasta sales.

          The Registrant's  total cost of food sales for the year ended June 30,
1996 were  $838,453 as compared  to $938,848  for the year ended June 30,  1995,
resulting in a decrease of $100,395 or 11%, which is primarily  attributable  to
the lower  food  sales  discussed  above.  Additionally,  continued  efforts  to
increase  operating  efficiencies have not compensated for the higher absorption
of overhead on lower sales, and the  Registrant's  continued change in emphasis
from the sale of its own brand label products to sales through private  labeling
arrangements  has not yet had a positive effect on gross profit margin resulting
in a decrease  in gross  profit  margin to 33% for the year ended June 30,  1996
from 40% for the year ended June 30, 1995.

                                                         [NM\10-KSB:63096KSB]-45

                                       24

<PAGE>



         The Registrant's total gaming revenues for the year ended June 30, 1996
were  $11,407,317  as compared to  $3,292,273  for the year ended June 30, 1995,
resulting  in an increase  of  $8,115,044  or 247%.  The  increase is  primarily
attributable  to the timing of the  acquisition  of the Gaming  Interest,  which
contributed  a full year of  revenue  as  compared  to last  fiscal  year  which
included  revenues from inception on May 25, 1995,  through June 30, 1995. Since
the Gaming  Interest was sold after year end,  these  revenues will not exist in
the future.

         Since March 31, 1994, the  Registrant  has reported,  on a consolidated
basis, the revenues and net assets of NuOasis Gaming.  The Registrant's  cost of
gaming  revenue was $887,472 for the year ended June 30, 1995, as compared to $0
for the year ended June 30, 1996.  Since cost of gaming  revenue of $887,472 was
solely from the operations of BGI, the decrease is attributable to the cessation
of BGI's operations in April 1995 due to BGI's Chapter 7 bankruptcy proceedings.

         The Gaming Interest  acquired in May 1995 was an acquisition of a forty
percent  (40%) net  operating  profits  interest in the  operations of two Macau
casinos  and,  accordingly,  had no effect on the total cost of gaming  revenue.
Amortization  expense of  $4,268,544  contributed  to the  increase in the total
depreciation and amortization expense of $4,989,064 during fiscal 1996.

         The  Registrant's  total  legal and  professional  fees and general and
administrative  expenses  were  $3,475,422  for  fiscal  1996,  as  compared  to
$3,432,530  for fiscal  1995,  resulting  in an  increase  of $42,892 or 1%. The
increase is primarily  attributable to the combination of a $380,000 increase in
the  Registrant's  legal and  professional  fees and a $337,000  decrease in the
Registrant's general and administrative  expenses during fiscal 1996 from fiscal
1995.

         The Registrant  incurred a one time expense in connection with the sale
of the Gaming Interest on August 8, 1996. As discussed  above,  because the sale
of the Gaming  Interest was  structured  to be  effective  on July 1, 1996,  the
Registrant  recognized a write down of approximately  $6.6 million to bring down
the book  value of the  Gaming  Interest  to the basis of the  stock  originally
issued to Mr. Ng Man Sun which was $.50 per share or $10 million in aggregate.

         The Registrant incurred a one time valuation expense in connection with
the sale of Peony Garden  discussed  above.  Since the value of the Registrant's
equity in Hartcourt on or about the closing date was  approximately  $7 million,
which is lower than the Registrant's net investment in the Peony Garden interest
of $9.6 million,  the  Registrant  recognized a write down for the difference in
the amount of approximately $2.6 million.

         During  fiscal 1996,  the  Registrant  remodeled  and improved its food
processing  equipment  in its  California  locations  and  leased  its  Colorado
facility held for sale. In connection  therewith,  the Company  re-evaluated the
use and value of its older  equipment and wrote off certain  impaired  equipment
with a net book value of  approximately  $1 million  which is  included in Other
Valuation Expense.

         During fiscal year 1996, the Registrant  incurred expenses on behalf of
Cleopatra amounting to $955,439 which is included as a stockholders'  receivable
at June 30, 1996,  net of an allowance  for possible  loss of $766,180  which is
included in Other Valuation Expense.

          The  Registrant's  total operating loss for fiscal 1996 was $7,475,285
as compared to an operating  loss of $872,733  for fiscal 1995,  resulting in an
operating loss increase of $6,602,552.  The increase is  attributable to the one
time valuation expenses of approximately $ 6.6 million,$2.6 million, $1 million,
and $766,180 as discussed  above.  Comparatively,  there were no such  valuation
expenses in fiscal 1995.

                                                         [NM\10-KSB:63096KSB]-45

                                       25

<PAGE>



         The Registrant  recorded an income tax provision of $997,932 for fiscal
year 1996 and an income tax  benefit of $615,436  for fiscal year 1995.  For the
year ended June 30, 1996 and 1995,  the  Company's  effective  federal and state
income tax rate applied to book taxable income (loss) differs from the statutory
rate  primarily  from the effect of foreign  controlled  corporation  losses for
which no deferred  tax was  recognized,  the change in  valuation  allowance  to
offset  deferred tax benefits,  utilization of net operating loss carry forwards
and impact of state taxes net of federal effect.  The Company utilized  $989,356
and $192,353 in net operating  losses to offset federal and state taxable income
for the years ended June 30, 1996 and 1995, respectively.

         The deferred  taxes result from temporary  differences  relating to the
difference  in the  basis  of  assets  and  liabilities  for  financial  and tax
reporting purposes. The temporary differences relate mainly to the difference in
basis of the Gaming  Interest,  accounts  receivable and the  recognition of the
benefit of prior year losses carried forward.

         As a result of changes in stock  ownership  which  occurred in 1993 and
1995,  the  Registrant's  use of its net  operating  loss carry  forwards may be
limited by Section 382 of the  Internal  Revenue  Code until such net  operating
loss carry forwards expire.  The Registrant  intends to obtain independent third
party valuation of its stock for purposes of the calculation required by Section
382 in order to determine  whether such net operating loss carry forwards may be
limited.  As of the date of this Report,  the  Registrant  has not received such
independent  valuation and  accordingly  has accrued its income tax provision in
consideration of Section 382.

         Deferred  tax assets have been  computed  using the maximum  expiration
terms  of  13  and  5  years  (or  total  net  operating   losses  available  of
approximately  $11.9  million  and $7.8  million)  for  federal  and  state  tax
purposes,  respectively. Net operating losses expire from the years 2004 through
2009.

         A valuation  allowance was recorded at June 30, 1996 to offset benefits
of net operating losses in excess of any potential  federal loss carry back. The
change in the valuation allowance in fiscal 1996 is due to the sale of cash flow
producing assets.

         No provision was made or benefits  recognized  in 1996 for U.S.  income
taxes on the undistributed  earnings/losses  of the foreign  subsidiary as it is
the Registrant's  intention to utilize those earnings in the foreign  operations
for an indefinite period of time or repatriate  earnings only when tax effective
to do so. The foreign  subsidiary  had an  accumulated  deficit at June 30, 1996
which would have resulted in an  unrecognized  temporary  difference  for an NOL
carryforward of approximately $9.6 million with a related unrecognized  deferred
tax benefit of approximately $3.3 million.

(h)      Recent Accounting Developments

         In March  1995,  the  Financial  Accounting  Standards  Board  ("FASB")
adopted  Statement No. 121  "Accounting  for the Impairment of Long Lived Assets
and for Long Lived Assets to be Disposed Of" which  requires  entities to review
long  lived  assets  impairment  whenever  events or  changes  in  circumstances
indicate  that the  carrying  amount  of an  asset  may not be  recoverable  and
provides  guidance  as to  measurement  of the  carrying  value of  assets to be
disposed  of. The  statement  is  effective  for fiscal  years  beginning  after
December 15, 1995.  The Registrant has not determined the effect the adoption of
the statement  will have,  but does not believe its  implementation  will have a
material effect on its financial position.

         In October 1995, the FASB adopted  Statement  No.123,  "Accounting  for
Stock-Based  Compensation."  This Statement  encourages entities to adopt a fair
value method of accounting for stock- based  compensation  plans including stock
options and warrants  issued to employees.  For entities which do not adopt this
method,  the Statement  requires  disclosure  of the effect that the  fair-value
method  would have on net income  and  earnings  per  share.  The  Statement  is
effective  for  transactions  entered  into in fiscal  years  that  begin  after
December  15,  1995.  The  Registrant  has not  determined  the  effect  of this
Statement  nor  has it  decided  when  it  will  adopt  the  provisions  of this
Statement.

ITEM 7. FINANCIAL STATEMENTS.

         The required  financial  statements  are filed as a part of this Annual
Report on Form 10-KSB commencing on page F-1 attached hereto.

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

         A Current  Report on Form 8-K dated August 18, 1995 was filed on August
24, 1995, reporting under Item 4 a change of accountants on August 18, 1995 from
BDO Seidman,  LLP to Raimondo,  Pettit & Glassman.  There were no  disagreements
between  the  Registrant  and  its  former  auditors  regarding  accounting  and
financial disclosure.

                                                         [NM\10-KSB:63096KSB]-45

                                       26

<PAGE>



                                    PART III


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

(a)      Identification of Directors and Executive Officers.

         The Registrant, pursuant to its bylaws is authorized to maintain a five
(5) member Board of Directors,  and executive  officers as needed. The directors
and officers for fiscal 1996 were as follows:

<TABLE>
<CAPTION>


                           Position
Name                       Held with the Registrant                  Age      Dates of Service
-------------------        ----------------------------------        ---      ----------------------------------
<S>                        <C>                                       <C>      <C>

Fred G. Luke               Chairman of the Board and Chief           49       June 14, 1993 to Present
                           Executive Officer
John D. Desbrow            Director                                  41       December 20, 1993 to May 29, 1996
                           Secretary                                          December 20, 1993 to Present
Jonathan L. Small          Director                                  44       March 17, 1994 to January 22, 1996
Kenneth R. O'Neal          Director, Chief Financial Officer         51       August 24, 1994 to July 15, 1995
Carol Chen                 Director                                  43       January 22, 1996 to October 29,
                                                                              1996
Liu Mei Huan Chen          Director                                  32       October 9, 1995 to Present
Cheng Tai Chee             Director                                  62       October 9, 1995 to Present
Steven H.  Dong            Chief Financial Officer                   30       July 16, 1995 to Present

</TABLE>

         All  directors  of the  Registrant  hold  office  until the next annual
meeting  of  shareholders  and until  their  successors  have been  elected  and
qualified.  Vacancies  in the Board of  Directors  are  filled by the  remaining
members of the Board until the next annual meeting of shareholders. The officers
of the  Registrant  are elected by the Board of Directors  at its first  meeting
after each  annual  meeting of the  Registrant's  shareholders  and serve at the
discretion  of the Board of  Directors  or until their  earlier  resignation  or
death.

         The  Registrant,  pursuant  to  resolutions  adopted  by its  Board  of
Directors on December 15, 1993,  maintains a five-member Advisory Board. At June
30, 1996, the following individuals served on the Advisory Board:

                    Position
Name                Held with the Registrant      Age  Dates of Service
-----------------   ------------------------      ---  -----------------------
Fred Graves Luke    Member of Advisory Board      74   October 1993 to Present
Clifford A. Jones   Member of Advisory Board      84   October 1993 to Present
Kenneth Scholl      Member of Advisory Board      52   October 1993 to Present
Louis Weiner        Member of Advisory Board      81   October 1993 to Present
Royce Warren        Member of Advisory Board      57   October 1993 to Present

                                                         [NM\10-KSB:63096KSB]-45

                                       27

<PAGE>



(b)      Business Experience

         The following is a brief account of the business  experience during the
past five years of each director,  director nominee and executive officer of the
Registrant,   and  the  members  of  its  Advisory  Board,  including  principal
occupations  and  employment  during  that  period  and the name  and  principal
business of any  corporation or other  organization in which such occupation and
employment were carried on.

         Fred G. Luke.  Mr. Fred G. Luke has been a Director  of the  Registrant
since June 1993, and Chairman and Chief  Executive  Officer since July 22, 1993.
Mr.  Luke  has  more  than  twenty-six  years  of  experience  in  domestic  and
international  financing  and  the  management  of  private  and  publicly  held
companies. Since 1982, Mr. Luke has provided consulting services and has served,
for brief periods lasting  usually not more than six months,  as Chief Executive
Officer and/or Chairman of the Board of various publicly held and privately held
companies  in  conjunction  with  such  financial  and  corporate  restructuring
services.  In addition to his position with the  Registrant,  Mr. Luke currently
serves as Chairman  and  President  of NuOasis  Gaming,  as well as Chairman and
President  of NuVen  Advisors,  Inc.,  ("NuVen  Advisors")  formerly  New  World
Capital,  Inc.  ("New  World"),  President and Director of The Toen Group,  Inc.
("Toen"), President and Director of Hart Industries, Inc. ("Hart"), Chairman and
President of Diversified Land & Exploration  Company ("DL&E").  DL&E is a former
publicly traded  independent  natural  resource  development  company engaged in
domestic oil and gas  exploration,  development and  production.  Prior to 1995,
DL&E was a 90% owned subsidiary of Basic Natural Resources,  Inc. ("BNR").  From
1991 through 1994 Mr. Luke served as the  President  and Director of BNR. BNR is
presently  inactive.  Hart and DL&E were formerly in the environmental  services
and natural gas processing business, respectively. Both Hart and Toen are public
companies  which  were  formerly  traded on NASDAQ  or the OTC  Bulletin  Board.
Neither  Hart  nor  Toen  has  ongoing   operations.   NuVen  Advisors  provides
managerial,  acquisition,  and  administrative  services  to public and  private
companies including Nona, NuOasis Gaming,  Hart, Toen, and DL&E. NuVen Advisors,
which is controlled by Fred G. Luke, as Trustee of the Luke Family Trust,  is an
affiliate of both Nona and NuOasis  Gaming.  NuVen  Advisors is a stockholder of
Hart,  DL&E and  Nona,  and  provides  management,  general  and  administrative
services,  and merger and acquisition services to Hart, DL&E, NuOasis Gaming and
Nona pursuant to independent Advisory and Management  Agreements.  Mr. Luke also
served from 1973 through 1985 as President  of American  Energy  Corporation,  a
privately held oil and gas company involved in the operation of domestic oil and
gas  properties.  From 1970  through  1985 Mr.  Luke  served as an  officer  and
Director of Eurasia,  Inc., a private equipment leasing company  specializing in
oil and gas industry  equipment.  Mr. Luke received a Bachelor of Arts Degree in
Mathematics from California State University, San Jose in 1969.

          John D. Desbrow.  Mr. John D. Desbrow,  as an independent  consultant,
has been a Director and Secretary of the Registrant since December 20, 1993. Mr.
Desbrow is a member in good standing of the State Bar of California and has been
since  1980.  Prior to joining  the  Registrant  Mr.  Desbrow was in the private
practice of law. Mr. Desbrow received his Bachelor of Science degree in Business
Administration  from the  University of Southern  California in 1977,  his Juris
Doctorate from the University of Southern California Law Center in 1980, and his
Master of Business  Taxation  degree from the University of Southern  California
Graduate  School of Accounting in 1982. Mr. Desbrow has served as a Director and
Secretary of Hart Industries,  Inc. since July 1993, as the Secretary of NuOasis
Gaming  since April 1994 and as a Director  of Toen since  Septmeber  1994.  Mr.
Desbrow resigned as a Director of the Registrant in May 1996.

          Carol Chen.  Ms. Carol Chen has served as a Director of the Registrant
since January 22, 1996. From 1991 to the present,  Ms. Chen has been active as a
real estate agent for Park  Georgia  Realty  Limited  where she  specialized  in
industrial warehouses and commercial land projects.  From 1990 to 1991, Ms. Chen
served as a licensed real estate agent for Century 21  Prudential  Estates where
her focus was the residential  real estate market in British  Columbia,  Canada.
Ms. Chen resigned as a Director of the Registrant on October 29, 1996.

                                                         [NM\10-KSB:63096KSB]-45

                                       28

<PAGE>



          Liu Mei Huan Chen. Ms. Chen has served as a Director of the Registrant
since October 9th, 1995. From 1992 to the present,  Ms. Chen has been serving as
an Executive  Director of Silver Faith  Holding  (Macau) Ltd. and certain of its
subsidiaries,  where she acts as  corporate  liaison to the  central and certain
provincial governments of The Peoples Republic of China. Ms. Chen also serves as
a Director of Silver Faith (Hong Kong)  Holdings  Limited.  Both  companies  are
subsidiaries  of Silver  Faith  Holdings  Limited,  and both are involved in the
manufacturing and distribution of cigarettes in China, Hong Kong and Macau. From
1988 to 1992, Ms. Chen operated a Mitsubishi  car dealership in Canton  Province
and was an authorized fuel oil broker for Mainland China. From 1981 to 1988, Ms.
Chen lived in New York where she operated an import/export clothing business and
served as an advisor to Mainland Chinese companies regarding international hotel
projects.

         Cheng Tai Chee.  Mr.  Chee has served as a Director  of the  Registrant
since  October 9, 1995.  From 1970 through 1984,  Mr. Chee was a champion  horse
jockey and trainer for the Royal Hong Kong Jockey  Club.  After he retired  from
the Royal Hong Kong Jockey Club in 1984,  he joined  Dragon Sight  International
Amusement  (Macau)  Company as Marketing  Coordinator  for the  promotion of the
junket group from  Southeast  Asia. In 1992, he joined the Silver Faith Holdings
group of companies of Silver Faith Holdings Ltd.,  where he presently  serves as
Project  Coordinator  for the Peony Gardens real estate  development in Beijing,
Mainland China.

          Jonathan  L.  Small.   Mr.   Jonathan  L.  Small,  as  an  independent
consultant,  has been a Director of the Registrant from March 17, 1994,  through
January 22, 1996, at which date he resigned.  Mr. Small is currently a member in
good standing of the State Bar of California  and has been since 1980. Mr. Small
is in the private  practice of law.  Mr.  Small's law  practice  consists of the
regulation, due diligence, planning tax opinions for private placement offerings
in oil and gas, real estate, banking, alternative energy, investment and venture
capital programs;  financial business and individual planning;  civil litigation
and general  business  matters.  Prior to forming his private law practice,  Mr.
Small was a tax  accountant  with Arthur  Young & Company in 1981 and 1982.  Mr.
Small  served as  Director,  General  Counsel and  Assistant  Secretary of Basic
Natural  Resources,  Inc. from June 1992 to September 1994. Mr. Small has served
as Secretary and General  Counsel for  Diversified  Land and  Exploration  since
March 1988.

          Steven H. Dong.  Mr. Dong, a Certified  Public  Accountant,  and as an
independent consultant,  has served as Chief Financial Officer of the Registrant
since July 16, 1995.  Mr. Dong replaced  Kenneth R. O'Neal,  who resigned as the
Registrant's  Chief Financial Officer and as a Director effective July 15, 1995.
Prior to  joining  the  Registrant,  Mr.  Dong  worked  with  the  international
accounting  firm of Coopers & Lybrand since 1988.  As an Assurance  Manager with
Coopers & Lybrand,  Mr.  Dong's  experience  consisted  of  providing  financial
accounting and consulting services to privately and publicly held companies.  In
addition to his position with the Registrant, Mr. Dong currently serves as Chief
Financial  Officer of NuOasis  Gaming,  Toen and Hart.  Mr.  Dong  received  his
Bachelor of Science  degree in Accounting  from Babson College in 1988. Mr. Dong
is currently a member in good standing with the California  Society of Certified
Public Accountants and American Institute of Certified Public Accountants.

          Fred  Graves  Luke.  Mr. Fred Graves  Luke,  served as a Director  and
Secretary of the  Registrant  from June 14, 1993 to November 30, 1993.  Prior to
his association with the Registrant,  Mr. Luke served as Chief Executive Officer
of three private  firms  operating  oil and gas  properties  from 1954 until his
retirement  in 1985.  Mr. Luke also serves as Vice  President  of  International
Sales and as a Director of Fantastic Foods. He received his B.A. and LLB Degrees
from the  University  of  Arizona  and was  admitted  to the bar in the State of
Arizona in 1950. Mr. Luke served in the U.S. Army Air Corp. in World War II as a
pilot and served in the U.S. Air Force as a legal officer during the Korean War.

          Clifford A.  Jones.  Mr.  Clifford  A. Jones has been  involved in the
gaming and resort hotel  industry since 1941.  Mr. Jones  established  the first
American-style  casino in  several  foreign  countries  and is known as a global
pioneer of the gaming industry.  Mr. Jones served as Lieutenant  Governor of the
state of Nevada for two terms and founded the law firm of Jones,  Jones, Close &
Brown  in Las  Vegas in  1938.  Mr.  Jones  owns  10% of  Cleopatra,  one of the
Registrant's equity investments.

                                                         [NM\10-KSB:63096KSB]-45

                                       29

<PAGE>



          Kenneth  Scholl.  Mr.  Kenneth  Scholl is a consultant  to the gaming,
hotel and distribution business. Mr. Scholl has developed,  owned and operated a
hotel management company.

          Louis  Weiner.  Mr. Louis Weiner is a nationally  recognized  attorney
emphasizing in gaming operations.

          Royce Warren. Mr. Royce Warren is Director of Operations of the Indian
Springs  Casino in Indian  Springs,  Nevada.  Mr.  Warren has more than 25 years
experience in gaming personnel recruitment.

(c)      Identification of Certain Significant Employees and Consultants.

         In  connection  with the  acquisition  of Italfin  and Pasta  Fresca in
fiscal 1993, Fantastic Foods entered into an Employment Agreement with Giancarlo
Pino for his services as a Vice  President of Fantastic  Foods which was renewed
during fiscal 1996. He is  responsible  for the day to day operations of the two
food product manufacturing plants in Southern California.

          During fiscal 1996, Jon L. Lawver, through J. L. Lawver Corp. ("Lawver
Corp."),  renewed  his  Consulting  Agreement  with the  Registrant  to serve as
President of Fantastic  Foods.  Mr. Lawver has been President of Fantastic Foods
since June, 1993. Mr. Lawver has twenty-two (22) years of experience in the area
of bank  financing  where he has assisted  companies by locating  financing  for
expansion  requirements and was employed with Bank of America from 1961 to 1970,
ending his  employment as Vice  President.  Since 1970, Mr. Lawver has served as
President and a Director of J.L.  Lawver  Corp.,  a financial  consulting  firm.
Since 1988, Mr. Lawver has also served as President and a Director of Eurasia, a
private finance equipment  leasing company  specializing in oil and gas industry
equipment. Mr. Lawver has also served as an officer of both Toen and Hart.

         Albert Rapuano entered into a Consulting  Agreement with the Registrant
to serve as President of NuOasis  International.  Mr.  Rapuano has over 30 years
experience  in all  aspects  of hotel and casino  management.  Since,  1993,  Mr
Rapuano  has  been a  partner  and  principle  at  EOR  Weller  Advertising  and
Marketing, a full-service  advertising and marketing company specializing in the
gaming  industry.  Prior to his work  with EOR  Weller,  Mr.  Rapuano  served as
President and Chief Operating Officer of the 2,174 room Riviera Hotel and Casino
in Las Vegas.  Mr. Rapuano  successfully  guided the Riviera  through and out of
bankruptcy  within  fifteen  months.  From 1982 to 1987,  Mr.  Rapuano served as
Executive Vice President of the MGM Grand Hotel in Las Vegas, which was acquired
by Bally  Manufacturing  Company in April 1986 and became Bally's Casino Resort.
This 2,832 room casino hotel  facility  employed  over 4,000 people and achieved
gross annual  revenues of $276 million  with an annual  operating  income of $56
million.

(d)      Family Relationships

         Fred Graves Luke is the father of Fred G. Luke, Chief Executive Officer
of the Registrant.  At June 30, 1996, Fred Graves Luke served as the chairperson
of the Registrant's  Advisory Board;  and Vice President of International  Sales
and a Director  of  Fantastic  Foods.  Fred  Graves Luke holds 10% of the equity
interest  in  Cleopatra.  Giancarlo  Pino,  who  serves  as  Vice  President  of
Manufacturing  and a  Director  of  Fantastic  Foods is the  husband  of Daniela
Grechi, who serves as Corporate Secretary of Fantastic Foods.

(e)      Involvement in Certain Legal Proceedings.

During the past five years, no director or officer of the Registrant has:

(1) Filed or has filed against him a petition under the federal  bankruptcy laws
or any state insolvency law, nor has a receiver, fiscal agent or similar officer
been  appointed by a court for the  business or property of such person,  or any
partnership in which he was a general  partner,  or any  corporation or business
association  of which he was an executive  officer at or within two years before
such filings;  except,  however,  that Fred G. Luke was Secretary of Diversified
Production  Services,  Inc.,  an  Oklahoma  corporation  ("DPS")  which  filed a
Voluntary Petition under Chapter 11 of the U.S. Bankruptcy Code in 1991.  DPS
was  discharged  from  its  bankruptcy  proceedings  in May 10,  1994 following
the affirmative vote on its Plan of Reorganization.

                                                         [NM\10-KSB:63096KSB]-45

                                       30

<PAGE>



(2) Been convicted in a criminal proceeding;  except however, during fiscal year
1995, Kenneth R. O'Neal,  formerly a Director and Chief Financial Officer of the
Registrant,  was the subject of a lawsuit filed in United States District Court,
Middle District of Florida,  Orlando Division, Case No. 95-73-C-Orl-22,  wherein
the United States Attorney charged Mr. O'Neal with securities fraud in violation
of Rule  10b-  5(17C.F.R._240.10b-5)  in  connection  with an audit of a company
unrelated to the Registrant  performed by O'Neal & White, P.C. in 1991 while Mr.
O'Neal was a partner of O'Neal & White,  P.C. In April 1995,  Mr. O'Neal pleaded
guilty.  In July 1995,  Mr.  O'Neal  resigned as an Officer and  Director of the
Registrant.

(3) Been the  subject  of any  order,  judgment,  or  decree,  not  subsequently
reversed,  suspended  or  vacated,  of  any  court  of  competent  jurisdiction,
permanently or temporarily enjoining such person from, or otherwise limiting his
involvement in any type of business, securities or banking activities.

(4) Been found by a court of competent  jurisdiction in a civil action,  the SEC
or the Commodity Futures Trading Commission ("FTC") to have violated any federal
or state  securities or  commodities  law, which judgment has not been reversed,
suspended, or vacated.

(f)      Compliance with Section 16(a) of the Exchange Act

         Section  16(a) of the  Securities  Exchange Act of 1934 (the  "Exchange
Act") requires the Registrant's  directors and officers and persons who own more
than 10  percent  of the  Registrant's  equity  securities,  to file  reports of
ownership and changes in ownership with the SEC. Directors, officers and greater
than  ten-percent  shareholders  are required by SEC  regulation  to furnish the
Registrant with copies of all Section 16(a) reports filed.

         Based  solely on its  review of the copies of the  reports it  received
from persons  required to file, the  Registrant  believes that during the period
from June 30, 1995 through June 30, 1996, all filing re quirements applicable to
its officers,  directors and greater than ten-percent shareholders were complied
with except the following instances:

          Kenneth R. O'Neal  failed to file Form 3 to report his  acceptance  of
the office of Chief  Financial  Officer  and as a director in August  1994.  Mr.
O'Neal  further failed to file Form 4 reporting his  acquisition  and subsequent
sale of 170,000 shares of the Registrant's  common stock. Mr. O'Neal resigned in
July 1995 as an officer and director of the Registrant.

         Kenneth R.  O'Neal  failed to furnish  the  Registrant  with any Form 4
filings  reporting  the  termination  of  reporting   requirements  due  to  his
resignation in July 1995 as an Officer and Director of the Registrant.

         In January  1996,  Mr. Ng Man Sun, the  beneficial  owner of 13,000,000
shares owned of record by Dragon Star Securities Ltd.,  Sharp Profit  Investment
Limited,  Sunning Star Enterprises  Ltd., and Up- field Investment Ltd., filed a
late Form 3 for the month of July 1995  reporting the  acquisition  of 29.13% of
the Registrant's common stock.

          In March 1996, Jonathan L. Small filed a late Form 4 for the months of
December 1995 and January 1996. In September  1995 Mr. Small filed a late Form 4
for the month of June 1995.

          In May 1996,  J. L.  Lawver  Corp.,  which is owned by Jon L.  Lawver,
President of Fantastic Foods, filed a late Form 4 for the months of July through
October 1995,  December  1995,  February 1996 and March 1996. In May 1996, J. L.
Lawver Corp. filed two Form 5s for the fiscal years ended June 30, 1994 and June
30, 1995, respectively.

         In  April  1996,  Fred  G.  Luke  filed  a late  Form 5  reporting  his
acquisition in September 1995 of an option to purchase  1,000,000  shares of the
Registrant's common stock.

                                                         [NM\10-KSB:63096KSB]-45

                                       31

<PAGE>



         In February  1996,  Liu Mei Huan Chen filed a late Form 3 for the month
of October 1995 related to becoming a director of the Registrant.

         In February  1996,  Cheng Tai Chee filed a late Form 3 for the month of
October 1995 related to becoming a director of the Registrant.

ITEM 10.        EXECUTIVE COMPENSATION.

(a)      Summary Compensation Table

         The following summary compensation table sets forth in summary form the
compensation  received  during  each of the  Registrant's  last three  completed
fiscal years by the  Registrant's  Chief Executive  Officer and four most highly
compensated executive officers other than the Chief Executive Officer.


Name and Principal         Fiscal  Salary    Other Annual        Options
Position                   Year    ($)       Compensation($)     Granted (#) (3)
------------------         ----    -------   ---------------     ---------------

Fred G. Luke  (1) (2)      1996    174,000        130,000                   N/A
 Chief Executive           1995    192,000            N/A             1,000,000
 Officer (7-93 to          1994     22,500            N/A                   N/A
 Present)

John D. Desbrow  (1)       1996    206,250            N/A                50,000
 Secretary (12-93 to       1995    189,500            N/A                50,000
 Present)                  1994     84,000            N/A                   N/A

Steven H.  Dong  (1)       1996    165,000            N/A               100,000
Chief Financial Officer    1995        N/A            N/A                   N/A
(7-95 to Present)          1994        N/A            N/A                   N/A

Jon L.  Lawver             1996    100,000            N/A                50,000
President of               1995    100,000            N/A                50,000
Fantastic Foods            1994    100,000            N/A                   N/A

Albert Rapuano             1996    115,000            N/A               500,000
President of               1995        N/A            N/A                   N/A
NuOasis International      1994        N/A            N/A                   N/A

(1)      Salary dollar values include both Nona and NuOasis Gaming combined base
         salary (cash and non-cash) earned.

(2)      Other  Annual  Compensation  of  $130,000  includes  $84,000  of  value
         realized  on the  exercise  of 400,000  Nona  options,  and $21,000 and
         $25,000  amounting to the excess of reimbursable  expenses  pursuant to
         Mr.  Luke's  employment   agreements  with  Nona  and  NuOasis  Gaming,
         respectively.

(3)      During the period covered by the Table, the Registrant did not make any
         award of restricted stock, including share units. The number of options
         granted  are the sum of the  number of  shares  of  Common  Stock to be
         received  upon the exercise of all stock  options  granted.  Except for
         stock option  plans,  the  Registrant  does not have in effect any plan
         that is intended to serve as incentive for  performance to occur over a
         period longer than one fiscal year.

                                                         [NM\10-KSB:63096KSB]-45

                                       32

<PAGE>



b)       Stock Options - Nona Morelli's II, Inc.

         The following  table sets forth in summary form the  aggregate  options
granted during fiscal year 1996 to Nona's Chief Executive  Officer and four most
highly compensated executive officers other than the Chief Executive Officer.

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR
                               (Individual Grants)


                                             Percent of
                                             Total          Exercise
                                             Options/SAR's  or Base
                              Options/SAR's  Granted to     Price     Expiration
          Name                Granted (#)    Employees      ($/Sh)    Date
--------------------------    -------------  -------------  -------   ----------
Steven H.  Dong, CFO          100,000        14%            $  1.53   12/31/99

John D. Desbrow, Secretary    50,000         7%             $  1.53   12/31/99

Jon L. Lawver, President      50,000         7%             $  1.53   12/31/99
(Fantastic Foods)

Albert Rapuano, President     500,000        72%            $   .91   12/31/99
(NuOasis Intl.)

         The following  table sets forth in summary form the  aggregate  options
exercised  during fiscal year 1996,  and the June 30, 1996 value of  unexercised
options  for The  Registrant's  Chief  Executive  Officer  and four most  highly
compensated executive officers other than the Chief Executive Officer.

<TABLE>
<CAPTION>


                                                                                                    Value of Unexercised
                                                                      Number of Unexercised         In-the-Money
                                                                      Option/SAR's at Fiscal        Options/SAR's at Fiscal
                                                                      Year-End (#)                  Year-End ($)
                              Shares
                              Acquired on         Value               Exercisable/                  Exercisable/
            Name              Exercise (#)        Realized ($)        Unexercisable                 Unexercisable
----------------------------  ------------------  ------------        ----------------------        ----------------------
<S>                           <C>                 <C>                 <C>                           <C>

Fred G. Luke, Chief
Executive Officer  and        400,000             $524,000            600,000  Exercisable          -    Exercisable
Director

NuVen Advisors, Inc. (1)      _                   _                   100,000  Exercisable          -    Exercisable
Steven H. Dong, CFO           _                   _                   100,000  Exercisable          -    Exercisable
John D.  Desbrow,             _                   _                   100,000  Exercisable          -    Exercisable
Secretary

Jon L. Lawver,
President of Fantastic        _                   _                   100,000  Exercisable          -    Exercisable
Foods

Albert Rapuano,
President of NuOasis
International                 _                   _                   500,000  Exercisable          $140,000  Exercisable

</TABLE>

(1)       The Luke Family Trust (the "Luke  Trust") owns 93% of NuVen  Advisors,
          formerly  New World.  Fred G. Luke,  as  Co-Trustee  of the Luke Trust
          determines  the voting of such shares and, as a result,  may be deemed
          to control the Luke Trust.

                                                         [NM\10-KSB:63096KSB]-45

                                       33

<PAGE>



(c)      Stock Options - NuOasis Gaming, Inc.

            The following table sets forth in summary form the aggregate options
granted  during  fiscal year 1996 to NuOasis  Gaming's  President  and four most
highly compensated executive officers other than the President.

<TABLE>
<CAPTION>

                              Number of           Percent of Total
                              Shares              Options/
                              Under               SAR's Granted       Exercise or
                              Options/SAR's       to employees        Base Price     Expiration
Name                          Granted             in Fiscal Years     ($/Sh)         Date
-----------------------       -------------       ---------------     -----------    ----------
<S>                           <C>                 <C>                 <C>            <C>

Fred G. Luke, President       
 and Director                 3,000,000(1)        84%                 $.12           7/00
Steven H. Dong, CFO           275,000             8%                  $.12           7/00
John D.  Desbrow              275,000             8%                  $.12           7/00

</TABLE>

         The following  table sets forth in summary form the  aggregate  options
exercised  during fiscal year 1996,  and the June 30, 1996 value of  unexercised
options  for  NuOasis  Gaming's  President  and  four  most  highly  compensated
executive officers other than the President.

<TABLE>
<CAPTION>

                                                                                                         Value of Unexercised
                                                                         Number of Unexercised           In-the-Money
                                                                        Option/SAR's at Fiscal           Options/SAR's at Fiscal
                                                                             Year-End (#)                Year-End ($)
                                    Shares
                                  Acquired on          Value                 Exercisable/                Exercisable/
            Name                  Exercise (#)    Realized ($)               Unexercisable               Unexercisable
----------------------------  ------------------  ------------    -----------------------------------    -------------------------
<S>                           <C>                 <C>             <C>                                    <C>

Fred G. Luke, President                                             481,176  Exercisable                 $  173,205 Exercisable
and Director (1)              868,824             $ 104,258       1,650,000  Unexercisable               $  594,000 Unexercisable
NuVen Advisors, Inc. (2)            _                     _       2,000,000  Exercisable                 $  760,000 Exercisable
Steven H. Dong, CFO                 _                     _         275,000  Exercisable                 $  99,000 Exercisable
John D.  Desbrow,                   _                     _         275,000  Exercisable                 $  99,000 Exercisable
Secretary

</TABLE>

(1)       Options  vest at a rate of  50,000  per  month  over a five  year term
          ending March 31, 1999.

(2)       The Luke Family Trust (the "Luke  Trust") owns 93% of NuVen  Advisors,
          formerly  New World.  Fred G. Luke,  as  Co-Trustee  of the Luke Trust
          determines  the voting of such shares and, as a result,  may be deemed
          to control the Luke Trust.

(d)      Long-Term Incentive Plans

         Not applicable.

(e)      Compensation of Directors

          The Registrant has no standard  arrangement  for the  compensation  of
directors  or  their  committee   participation  or  special  assignments.   The
Registrant  has  established an Advisory Board to assist the Board of Directors.
Members of the Advisory Board are typically  compensated at the approximate rate
of  $1,000  per  month.   During  fiscal  1996,   Jonathan  L.  Small  was  paid
approximately  $12,000 for his services as a Director.  During fiscal 1996, John
D. Desbrow was paid approximately $11,000, for the eleven month period from July
1995 to May 1996 for his services  rendered as a Director.  No compensation  was
paid to other Directors during fiscal 1996.

                                                         [NM\10-KSB:63096KSB]-45

                                       34

<PAGE>



(f)      Contracts With Named Executive Officers

         In September 1994, the Registrant entered into an Employment  Agreement
with Fred G. Luke, the Registrant's  Chairman and Chief Executive  Officer.  Mr.
Luke has been serving as the Registrant's  Chairman and CEO since  approximately
July  1993.  From  July  1993  through  June 30,  1994,  Mr.  Luke  received  no
compensation  for his services as CEO but did receive $9,000 for his services as
a Director.  The terms of the Employment  Agreement call for Mr. Luke to receive
approximately $10,000 per month, retroactive to July 1, 1994, for five (5) years
as a base  salary;  granted  him an option to purchase  1,000,000  shares of the
Registrant's  common stock exercisable at $1.10 per share;  provides him with an
annual bonus based upon a number of factors related to the  Registrant's  growth
and  performance  which  include;  (a)  serving  on the  Registrant's  Board  of
Directors and as its Chief Executive  Officer;  (b) providing advice  concerning
mergers and acquisitions;  (c) corporate finance; (d) day to day management; (e)
guidance with respect to general business  decisions;  (f) other duties commonly
performed  by the  Chief  Executive  Officer  of a  publicly-held  company;  and
requires the Registrant to purchase life insurance  coverage,  reimbursement for
vehicle  expenses,  and provide  other  fringe  benefits.  No bonuses  have been
accrued, paid or are owed as of the date of this Report. The Registrant expensed
$120,000 and $120,000 during fiscal years 1996 and 1995,  respectively,  and had
no amounts due to Mr. Luke as of June 30, 1996.

         In August 1995,  NuOasis  Gaming  entered into an Employment  Agreement
with Fred G. Luke,  to save as NuOasis  Gaming's  President.  Mr.  Luke has been
serving as the NuOasis Gaming President since  approximately March 31, 1994. The
terms of the  Employment  Agreement  call for Mr. Luke to receive  approximately
$4,500 per  month,  retroactive  to April 1, 1994,  for five (5) years as a base
salary;  granted him an option to purchase  3,000,000 shares of NuOasis Gaming's
common stock at an exercise price of $.12 per share; provides him with an annual
bonus  based upon a number of factors  related  to NuOasis  Gaming's  growth and
performance which include (a) serving on NuOasis Gaming's Board of Directors and
as its President; (b) providing advice concerning mergers and acquisitions;  (c)
corporate  finance;  (d) day to day  management;  (e)  guidance  with respect to
general business decisions; (f) other duties commonly performed by the President
of a  publicly-held  company;  and  requires  NuOasis  Gaming to  purchase  life
insurance  coverage,  reimburse  vehicle  expenses,  and  provide  other  fringe
benefits.  Between March 31, 1994 and  September 30, 1994,  Mr. Luke received no
cash  payments  for his  services.  In August  1995,  NuOasis  Gaming  agreed to
retroactively compensate Mr. Luke for past services in the amount of $27,000 for
the  period  April 1, 1994 to  September  30,  1994 and  $59,000  for the period
October 1, 1994 to September 30, 1995. No bonuses have been accrued, paid or are
owed as of the date of this Report. NuOasis Gaming expensed $54,000 and $72,500,
during fiscal 1996 and 1995,  respectively,  and had $126,500 due to Mr. Luke as
of June 30, 1996.

         Effective  January 1, 1994, the Registrant and John D. Desbrow  entered
into a Consulting  Agreement for the  engagement of Mr. Desbrow to perform legal
services and to hold the office of Secretary on behalf of the  Registrant  until
December 31, 1994. Under the Consulting  Agreement the Registrant  contracted to
pay Mr. Desbrow $150,000  payable in the  Registrant's  common stock issuable in
monthly increments in arrears. Under the terms of the Consulting Agreement,  Mr.
Desbrow  invoices the Registrant and applies the net proceeds  received from the
sale of stock to the invoiced amounts.  For purposes of any "profit" computation
under Section 16(b),  Mr. Desbrow and the Registrant  have agreed the price paid
for the shares is deemed to be $150,000. Pursuant to the terms of the Consulting
Agreement,  the  Registrant  granted Mr.  Desbrow an option to  purchase  50,000
shares  of the  Registrant's  common  stock  exercisable  at a price of $.58 per
share.  Effective Janaury 1, 1996, the Consulting  Agreement was renewed through
December  31,  1996 and  50,000  shares  were  issued  during  fiscal  1996.  An
additional option of 50,000 shares exercisable at a price of $1.53 per share was
granted during fiscal 1996. The Registrant expensed $150,000 and $150,000 during
fiscal 1996 and 1995,  respectively,  and had  $70,378 due to Mr.  Desbrow as of
June 30, 1996.

          Effective  April 1, 1994,  NuOasis  Gaming  entered  into a Consulting
Agreement  with John D.  Desbrow for the  engagement  of Mr.  Desbrow to perform
legal services and to hold the office of Secretary, on behalf of NuOasis Gaming,
for the period from April 1, 1994 to March 31, 1995 for an amount of $36,000 per
annum.  Additionally,  in fiscal 1995 Mr. Desbrow billed and eventually received
from the sale of shares  $4,000 for services  rendered as a Director  from April
1994 to July 1994. Effective April 1, 1995, the Consulting Agreement was renewed
through March 31, 1996 for an amount of $50,000 per annum.  1,050,000  shares of
NuOasis Gaming common stock were registered for issuance on Forms S-8 filed with
the Securities and Exchange  Commission  during the 1995 fiscal year.  Under the
terms of the  Consulting  Agreement,  Mr.  Desbrow  invoices  NuOasis Gaming and
applies  the net  proceeds  received  from the  sale of  stock  to the  invoiced
amounts.  For purposes of any  "profit"  computation  under  Section 16 (b), Mr.
Desbrow and  NuOasis  Gaming have agreed the price paid for the shares is deemed
to be $50,000.  Effective  April 1, 1996, the  Consulting  Agreement was renewed
through  March 31,  1997 for an amount of $ 75,000 per annum and  granted him an
option to purchase 275,000 shares of NuOasis Gaming common stock at an exercise
price of $.12 per share.  NuOasis  Gaming  expensed  $56,250 and $39,500  during
fiscal 1996 and 1995,  respectively,  and had $8,252 due from Mr.  Desbrow as of
June 30, 1996.

                                                         [NM\10-KSB:63096KSB]-45

                                       35

<PAGE>



         Effective  January 1, 1994,  the  Registrant  entered into a Consulting
Agreement with Jon L. Lawver and J. L. Lawver Corp. pursuant to which Mr. Lawver
was to perform  professional  services  and to hold the office of  President  of
Fantastic Foods for calendar year 1994. Pursuant to the Consulting Agreement the
Registrant  agreed to pay Mr. Lawver 36,000  shares of the  Registrant's  common
stock,  issuable in monthly  increments  in arrears  and granted Mr.  Lawver the
option to purchase 50,000 shares of the Registrant's common stock at an exercise
price of $.58 per share. Under the terms of the Consulting Agreement, Mr. Lawver
invoices the Registrant  and applies the net proceeds  received from the sale of
stock to the invoiced  amounts.  For purposes of any "profit"  computation under
Section 16(b) Mr. Lawver and the  Registrant  have agreed the price paid for the
shares is deemed to be $100,000. Mr. Lawver's agreement was renewed for the year
ended June 30, 1995 and 124,000  shares were issued to him during  fiscal  1995.
During  fiscal 1996,  the  Consulting  Agreement was again renewed with the same
terms for fiscal 1997 and 85,000 shares were issued to him during fiscal 1996 to
apply  against  services  rendered.   An  additional  option  of  50,000  shares
exercisable  at a price of $1.53 per share was granted  during fiscal 1996.  The
Registrant   expensed  $100,000  and  $100,000  during  fiscal  1996  and  1995,
respectively and had $14,991 due to Mr. Lawver at June 30,1996.

         In July 1995, the Registrant  entered into a Consulting  Agreement with
Steven H. Dong, pursuant to which Mr. Dong is to perform accounting services and
to hold the office of Chief Financial Officer through June 30, 1996. Pursuant to
the agreement as amended in October 1995, the Registrant  agreed to pay Mr. Dong
$145,000 per annum in cash or in the  Registrant's  common stock payable monthly
in  arrears  and  granted  him an  option  to  purchase  100,000  shares  of the
Registrant's  common  stock at an exercise  price of $1.53 per share.  Under the
terms of the Consulting Agreement,  Mr. Dong invoices the Registrant and applies
the net proceeds  received from the sale of stock to the invoiced  amounts.  For
purposes  of any  "profit"  computation  under  Section  16(b) Mr.  Dong and the
Registrant  have agreed the price paid for the shares is deemed to be  $145,000.
During  fiscal 1996,  the  Consulting  Agreement was renewed with the same terms
through June 30, 1997. No cash payments were made to Mr. Dong during fiscal 1996
or 1995,  however 95,000 shares were issued during 1996 which were used to apply
against services rendered. The Registrant expensed $145,000 and $0 during fiscal
1996 and 1995 and had $42,635 due to Mr. Dong as of June 30, 1996.

         In July 1995,  NuOasis Gaming entered into a Consulting  Agreement with
Mr. Dong,  pursuant to which Mr. Dong is to perform  accounting  services and to
hold the office of Chief Financial  Officer  through June 30, 1996.  Pursuant to
the  agreement,  NuOasis  Gaming  agreed to pay Mr.  Dong  $20,000 in cash or in
NuOasis  Gaming's common stock,  payable monthly in arrears,  and granted him an
option  to  purchase  275,000  shares of  NuOasis  Gaming's  common  stock at an
exercise  price  of $.12 per  share.  Effective  July 1,  1996,  the  Consulting
Agreement was renewed  through June 30, 1997 for an amount of $39,000 per annum.
Cash  payments of $5,000 were made to Mr. Dong by NuOasis  Gaming  during fiscal
1996 and no stock has been issued pursuant to this Consulting Agreement. NuOasis
Gaming  expensed  $20,000 during fiscal 1996, and had $15,000 due to Mr. Dong as
of June 30, 1996.

          In January 1996,  the Registrant  entered into a consulting  agreement
with  Albert  Rapuano,  pursuant  to which  Mr.  Rapuano  is to  perform  gaming
consulting services and to hold the office of President of NuOasis International
through December 31, 1996.  Pursuant to the agreement,  the Registrant agreed to
pay Mr. Rapuano $250,000 per annum in cash or in the  Registrant's  common stock
payable monthly in arrears and granted him an option to purchase  500,000 shares
of the Registrant's  common stock at an exercise price of $.91 per share.  Under
the terms of the Consulting  Agreement,  Mr. Rapuano invoices the Registrant and
applies  the net  proceeds  received  from the  sale of  stock  to the  invoiced
amounts.  For  purposes of any  "profit"  computation  under  Section  16(b) Mr.
Rapuano and the  Registrant  have agreed the price paid for the shares is deemed
to be $250,000.  No cash payments were made to Mr.  Rapuano  during fiscal 1996,
however,  70,000 shares were issued during 1996 which were used to apply against
services  rendered.  The Registrant  expensed $115,000 and $0 during fiscal 1996
and 1995, respectively, and had $50,211 due to Mr. Rapuano as of June 30, 1996.

                                                         [NM\10-KSB:63096KSB]-45

                                       36

<PAGE>



(g)      Change of Control

         Not applicable.

(h)      Report on Repricing of Options

         Not applicable.

ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a) and (b)  Security Ownership of Certain Beneficial Owners and Management.

         The following table sets forth  information  regarding the ownership of
the  Registrant's  voting  securities  by  persons  owning  more than 5% of such
securities as of October 15, 1996, the most recent practicable date.

<TABLE>
<CAPTION>

                                         Amount and                       Amount and
                                         Nature of                        Nature of
                                         Beneficial                       Beneficial
Name and Address                         Interest of $.01                 Interest of Series
of Officers and                          par value            Percent     D Convertible        Percent
Directors                                Common Stock         of Class    Preferred Stock      of Class
---------------------------              ----------------     --------    ------------------   --------
<S>                                      <C>                  <C>         <C>                  <C>

C/A/K Trustkantoor N.V.(2)               20,000,000           44.40%                 0            0%
P.O. Box 210
Willemstad
Curacao

Dragon King Investment                     3,000,000           6.66%                 0            0%
Services Ltd.
8th Floor, Ruttonjee House
11 Duddell Street
Central Hong Kong
NuVen Advisors, Inc.(1)(3)                        0               0%           24,000,000         100%
2 Park Plaza, Suite 470
Irvine, CA  92714

</TABLE>

(1)       Gives  effect to the one vote per  share  for each of the  outstanding
          shares of Common, Series C Preferred and Series D Preferred stock.

(2)       The  shares  are  held  pursuant  to an  escrow  for the  purchase  of
          Replacement Property by NuOasis International, Inc.

(3)       The Luke Family Trust (the "Luke  Trust") owns 93% of NuVen  Advisors,
          formerly  New World.  Fred G. Luke,  as  Co-Trustee  of the Luke Trust
          determines  the voting of such shares and, as a result,  may be deemed
          to control the Luke Trust.

                                                         [NM\10-KSB:63096KSB]-45

                                       37

<PAGE>



         The following sets forth  information  with respect to the Registrant's
voting stock beneficially owned by each current and former officer and director,
and by all current and former  officers and directors as a group,  as of October
15, 1996:

<TABLE>
<CAPTION>

                                Amount and                         Amount and Nature
                                Nature of                          of Beneficial
                                Beneficial Interest                Interest of Series D
Name of Officers and            of $.01 par value    Percent       Convertible            Percent
Directors(1)                    Common Stock         of Class(3)   Preferred Stock        of Class
--------------------            -------------------  -----------   --------------------   --------
<S>                             <C>                  <C>           <C>                    <C>

Fred G. Luke                         11,100,000         19.91%        24,000,000(2)        100%
                                                                                             
John D. Desbrow                         171,000           .37%                0              0%

Steven H.  Dong                         102,000           .23%                0              0%


Jon Lawver(4)                           103,000           .23%                0              0%


Albert Rapuano                          500,000          1.11%                0              0%

All Officers and Directors as        11,976,000         21.18%        24,000,000           100%
a group

</TABLE>


(1) The address of each  executive  officer or  Director is 2 Park Plaza,  Suite
470, Irvine, CA 92614 unless otherwise shown.

(2) The Luke Trust owns 93% of NuVen Advisors Inc.,  formerly New World. Fred G.
Luke, as co- Trustee of the Luke Trust determines the voting of such shares and,
as a result,  may be deemed to control the Luke Trust and the disposition of the
24,000,000 shares of the Registrant's Series D Preferred Stock.

(3)  Percentage  ownership  amounts are computed for each holder  assuming  that
convertible  securities and options held by each holder are exercised  within 60
days,  however,  as of date of this  Report,  no shares are held by any  officer
except for Fred G. Luke who holds  400,000  shares and John D. Desbrow who holds
71,000 shares.

(4)  Options and shares are held by J.L. Lawver Corp.  of which John Lawver is
the President of J.L. Lawver Corp.

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

(a)      Transactions with  Directors and Affiliates.

         There  were no  related  transactions  or  series  of  similar  related
transactions  during fiscal 1995 and 1996 that  exceeded an aggregate  amount of
$60,000 other than the following:

          On March 17, 1994, Jonathan L. Small, Attorney at Law, became a member
of the Board of  Directors  to fill a vacancy  caused  by the  resignation  of a
former Director in June 1993. On October 29, 1993, the Registrant entered into a
Consulting Agreement with Mr. Small to retain his services to evaluate potential
acquisitions  and to  assist  the  Registrant  in the  general  development  and
execution of its business plan. Pursuant to the agreement,  Mr. Small was issued
1,600 shares of the  Registrant's  common stock.  On January 5, 1995,  Mr. Small
entered  into a  Consulting  Agreement  effective  November  1,  1994,  with the
Registrant to retain Mr. Small to serve on the Board of Directors. 15,000 shares
were issued to Mr.  Small  during  fiscal 1996 which were used to apply  against
services rendered.

                                                         [NM\10-KSB:63096KSB]-45

                                       38

<PAGE>



          The Luke  Trust and Lawver  Corp.  owns 93% and 7%,  respectively,  of
NuVen Advisors,  formerly New World. Fred G. Luke, as trustee of the Luke Trust,
controls  the Luke Trust and Mr.  Lawver is the majority  shareholder  of Lawver
Corp. and thereby controls Lawver Corp.

         On June 14, 1993,  NuVen  Advisors  acquired  24,000,000  shares of the
Registrant's $.01 par value Series D Convertible Preferred Stock. At the time of
the transaction, NuVen Advisors was unrelated to the Registrant.
As a result, NuVen Advisors became the Control Person of the Registrant.

         The  Registrant,   NuOasis  Gaming,  NuOasis   International,   NuOasis
Properties and CMA have entered into separate advisory and management agreements
with NuVen Advisors for the engagement of NuVen Advisors to perform professional
and advisory  services.  Each of the agreements provide for NuVen Advisors to be
paid $120,000 per year for services rendered. Each agreement also provides NuVen
Advisors with an option to purchase  common stock of the  respective  companies;
the  number  of shares  under  each  option  varies  as well as the  length  and
expiration of each  agreement - See Note 9 of the footnotes to the  accompanying
financial statements included herein at Item 7.

         During fiscal year 1994,  NuOasis Gaming entered into an agreement with
Structure America,  Inc. ("SAI") to issue 1,000,000 shares of NuOasis Gaming for
consulting  services.  Such services were  rendered  during fiscal 1995.  During
fiscal year 1996,  NuOasis  Gaming  entered into another  agreement  with SAI to
perform consulting services.  Pursuant to such agreement,  NuOasis Gaming agreed
to issue  1,000,000  common  shares of NuOasis  Gaming to SAI and granted SAI an
option to purchase  1,000,000  common shares of NuOasis  Gaming,  exercisable at
$.12 per share. Under Rule 13d-3 (d) (1) (c), SAI is deemed the beneficial owner
of  2,000,000   shares  of  NuOasis  Gaming  even  though  the  shares  are  not
outstanding.  The  agreement is fully  contingent  upon the final  execution and
closing of the purchase of National Pools  Corporation.  NuOasis Gaming expensed
$75,000 and $54,000  during  fiscal  years 1996 and 1995,  respectively  and had
approximately $40,000 due to SAI as of June 30, 1996.

         During fiscal year 1996,  Nona renewed an agreement with SAI to perform
consulting  services.  Pursuant to such agreement,  Nona incurred  approximately
$465,000  for  services   performed  during  fiscal  year  1996.  Nona  expensed
approximately   $465,000  and  $224,500  during  fiscal  years  1996  and  1995,
respectively and had approximately $6,000 due to SAI as of June 30, 1996.

(b)      Indebtedness of Management

         During fiscal 1996,  400,000 common shares were issued upon exercise of
options  by the Chief  Executive  Officer  of the  Registrant  in the  amount of
440,000,  or $1.10 per share.  The Registrant  received a note receivable in the
amount of $440,000  and cash  payments in the  aggregate  amount of $40,000 were
made prior to year end and  approximately  $120,000  subsequent to year end. The
note bears interest of 10% and is due in May 1997. The note  receivable has been
classified as Stockholder Receivable in the amount of $400,000 at June 30, 1996.

         During fiscal 1996, 868,824 common shares of NuOasis Gaming were issued
upon  exercise of options by the  President  of NuOasis  Gaming in the amount of
$104,258,  or $.12 per share.  NuOasis Gaming  received a note receivable in the
amount of $78,758,  bearing  interest of 10%,  and a cash  payment of $25,500 as
consideration  for the exercise of these options.  The note  receivable has been
classified as  Stockholder  Receivable in the amount of $78,758 at June 30, 1996
and was fully paid subsequent to June 30, 1996.

(c)      Transactions with Promoters

         Not applicable.

                                                         [NM\10-KSB:63096KSB]-45

                                       39

<PAGE>



                                     PART IV


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

(a)      Consolidated Financial Statements

          The  Consolidated  Financial  Statements  included  in this  Item  are
indexed on Page F-1, "Index to Consolidated Financial Statements."

(b)      Financial Statement Schedules

         Not applicable.

(c)      Exhibits

         Unless otherwise noted, Exhibits are filed herewith.

  Exhibit
  Number       Description
  --------     ----------------------------------------------------------------
  3.1*         Articles of Incorporation

  3.1(a)**     Articles of Amendment of Articles of Incorporation

  3.1(b)       Certificate of Amendment of Articles of Incorporation of
               International Casino Management, Inc.

  3.1(c)       Articles of Amendment to the Articles of Incorporation filed
               September 26, 1996

  3.2*         Bylaws

  3.3#         Certificate of Designations and Preferences of Series C
               Convertible Preferred Stock.

  10.94o       Consulting Agreement with Steven Dong

  10.95o       Consulting Agreement with Clifford Jones

  10.96o       Consulting Agreement with Louis Wiener

  10.97o       Consulting Agreement with Roy Warren

  10.98o       Consulting Agreement with Kenneth Scholl

  10.99X       Consulting Agreement with Lee Linton

  10.100X      Consulting Agreement with Clifford ("Buck") Jones II

  10.101X      Second Addendum to Fee Agreement with Morris Gore

  10.102X      Fee Agreement with Kenneth R. O'Neal

  10.103X      Fee Agreement with Geoffrey G. Riggs

                                                         [NM\10-KSB:63096KSB]-45

                                       40

<PAGE>



  Exhibit
  Number       Description
  -----------  ----------------------------------------------------------------

  10.104X      Fee Agreement with Jonathan L. Small

  10.105X      Addendum to Consulting Agreement with Sandra V. Alsina

  10.106X      Fee Agreement with Michael Manson, C.P.A.

  10.107X      Addendum to Consulting Agreement with Steven H. Dong

  10.108X      Third Addendum to Consulting Agreement with John D. Desbrow

  10.109X      Second Addendum to Consulting Agreement with J. L. Lawver Corp.

  10.110X      Non-Qualified Stock Option Agreement with Fred G.  Luke

  10.111o      Engagement Letter and Fee Agreement with Woocox Advertising &
               Communications

  10.112o      Third Addendum to Consulting Agreement with Structure America.

  10.113o      Second Addendum to Engagement Letter with OTC Communications

  10.114o      Consulting Agreement with Albert Rapuano

  10.115o      January 3, 1996 Addendum to Consulting Agreement with J.L. Lawver

  10.116o      1996 Employee Stock Benefit Plan

  10.117o      Second Addendum to Fee Agreement with Morris C. Gore

  10.118o      Third Addendum to Fee Agreement with James R.  Gordon

  10.119o      Contracting Agreement with Dynamic Telecommunications, Inc. dba
               Dynatel

  10.120       Lease Agreement with Theodore DeTello

  10.121       Promissory Note and Security Agreement with Foothill Capital
               Corporation

  10.122o      Asset Purchase Agreement dated September 28,1995 with Silver
               Faith Development Limited

  10.123o      Assignment and Bill of Sale dated September 30, 1995 from Silver
               Faith Development Limited

  10.124       Assignment dated December 29, 1995 to NuOasis International,
               Inc., a California Corporation

  10.125o      $21,000,000 Convertible Secured Promissory Note dated December
               31, 1995 to Silver Faith Development Limited

  10.126       Merger Agreement dated February 28, 1996 between NuOasis
               International Inc., a California Corporation and Albion Aviation
               Company Limited, a Bahamanian corporation

                                                         [NM\10-KSB:63096KSB]-45

                                       41

<PAGE>



   Exhibit
   Number      Description
   ----------  --------------------------------------------------------------- 

  10.127       Assumption Agreement and Release of Liability with Silver Faith
               Development Limited dated May 16, 1996

  10.128       Amendment, Modification and Ratification of Asset Purchase
               Agreement with Silver Faith Development Limited and Beijing
               Grand Canal Real Estate Development Co., Ltd.

  10.129       Purchase and Sale Agreement dated August 8, 1996 between NuOasis
               International Inc., and The Hartcourt Companies, Inc.

  10.130       $12,000,000 Convertible Secured Promissory Note dated August 8,
               1996 issued by The Hartcourt Companies, Inc. to NuOasis
               International Inc.

  10.131       Security Agreement dated August 8, 1996 between NuOasis
               International Inc. and The Hartcourt Companies, Inc.

  10.132       Assignment and Indemnification Agreement dated August 30, 1996
               between NuOasis International, Inc. and The Hartcourt Companies,
               Inc.

  10.133       Assignment and Bill of Sale between NuOasis International, Inc.
               and Silver Faith Development Limited

  10.134       Agreement between NuOasis International,  Inc.  and Silver Faith
               Development Limited

  10.135       $3,000,000 Secured Contingent Promissory Note dated May 25, 1995
               from Nona Morelli's II, Inc., to Ng Man Sun dba Dragon Sight
               International Amusement (Macau) Company

  10.136       Assignment dated December 29, 1995 from Nona Morelli's II, Inc.
               to NuOasis International Inc.

  10.137       Letter of Intent dated August 5, 1996 between the Registrant and
               Ng Man Sun dba Dragon Sight International Amusement (Macau)
               Company

  10.138       Purchase Agreement dated August 30, 1996 between NuOasis
               International Inc. and various purchasers

  10.139       Option Agreement with Joseph Monterosso dated June 13, 1996

  10.140       Casino Lease and Operating Management Contract between Societe
               Loisirs Club Hammamet and Cleopatra Place Limited

  10.141       Letter of Intent between Compagnie Monastirienne Immobiliere et
               Touristique and Cleopatra Palace Limited

  10.142       Letter of Intent dated September 24, 1996 between the Registrant
               and Grand Hotel Krasnapolsky N.V.

  10.143       Collateral Substitution Agreement dated December 29, 1995 between
               the Registrant and Ng Man Sun

                                                         [NM\10-KSB:63096KSB]-45

                                       42

<PAGE>



  Exhibit
  Number       Description
  ----------   ----------------------------------------------------------------

  10.144       Collateral Release Agreement dated September 30, 1996 between the
               Registrant and Ng Man Sun

  10.145       Agreement of Exchange dated September 30, 1996 between NuOasis
               International, Inc.  and C/A/K Trustkantoor N.V.

  10.146       Operating Agreement between Mr. Ng Man Sun and Nona Morellis II,
               Inc.

  10.147       Consent to Sale of Interest and Termination of Operating
               Agreement

  10.148       Agreement dated July 31, 1996 between NuOasis International, Inc.
               and Mr. Ng Man Sun

  10.149       Casino Lease and Operating Management Contact between Societe'
               d'Animation et de Loisirs Touristiques (S.A.L.T.)  and Cleopatra
               Palace Limited

  10.150       Fourth Addendum to Consulting Agreement with John P. Desbrow

  10.151       Assumption Agreement and Release of Liability with Ng Man Sun
               dated December 29, 1995

  10.152       Second Addendum to Consulting Agreement with Steven H. Dong

  10.153       Agreement dated October 2, 1996 between NuOasis International,
               Inc.  and Cleopatra World, Inc.

  22.1         Schedule of Subsidiaries of the Registrant

  *            Incorporated by reference from the like numbered exhibits filed
               with the Registrant's Registration Statement on  Form S-18, SEC
               File No. 33-32127-D.

  **           Incorporated by reference from the like numbered exhibits filed
               with the Registrant's Registration Statement on Form S-1, SEC
               File No. 33-43402.

  #            Incorporated by reference from the  like-numbered  exhibits filed
               with the  Registrant's  10-K for the  fiscal  year ended June 30,
               1992.

  ~            Incorporated by reference to Registration Statement on Form S-8,
               SEC File No. 33-57270

  o            Incorporated by reference to Registration Statement on Form S-8,
               SEC File No. 33-94498

  X            Incorporated by reference to Registration Statement on Form S-8,
               SEC File No. 33-99060

   o           Incorporated by reference to Registration Statement on Form S-8,
               SEC File No.  33-31064

  o            Incorporated by reference to Exhibit to Form 8-K  dated December
               31, 1995, filed on March 5, 1996

                                                         [NM\10-KSB:63096KSB]-45

                                       43

<PAGE>



(d)    Reports

       (1) On June 19, 1995, the Registrant  filed a Current Report on Form 8-K,
dated May 25, 1995,  reporting the purchase of a forty percent (40%) net profits
interest in the gaming operations  conducted at the Holiday Inn and Hyatt Hotels
in Macau (the "Gaming Interest").

       (2) On July 24, 1995, the Registrant  filed a Current Report on Form 8-K,
dated July 15, 1995  reporting  effective the close of business on July 15, 1995
the resignation of Mr. Kenneth R. O'Neal as Director and Chief Financial Officer
of the Registrant.

       (3) On August 28, 1995,  the  Registrant  filed a Current  Report on Form
8-K,  dated  August 18,  1995,  reporting  that  effective  August 18,  1995 the
Registrant   dismissed  BDO  Seidman,   LLP  as  the   Registrant's   certifying
accountants.  The Registrant  further  reported the engagement of the accounting
firm of Raimondo, Pettit & Glassman as a successor auditing firm for the purpose
of examining the Registrant's  consolidated  financial statements for the fiscal
year ended June 30, 1995 and rendering an Independent Accountant's Report.

       (4) On February 7, 1996,  the  Registrant  filed a Current Report on Form
8-K dated January 22, 1996 reporting  effective the close of business on January
22, 1996 the  resignation  of Jonathan L. Small as a Director of the  Registrant
and the election of Carol Chen as a Director.

       (5) On March 5, 1996 the  Registrant  filed a Current  Report on Form 8-K
reporting  the  closing of an Asset  Purchase  Agreement  pursuant  to which the
Registrant purchased three duplex residential  buildings totaling 104 units in a
master  planned  residential  and  commercial  complex  known as Peony Garden in
Beijing, China.

       (6) On June 11, 1996 the  Registrant  filed a Current  Report on Form 8-K
dated May 29, 1996 reporting effective the close of business on May 29, 1996 the
resignation of John D. Desbrow as a Director of the Registrant.

       (7) On November 15, 1996, the  Registrant  filed a Current Report on Form
8-K dated October 29, 1996 reporting  effective the close of business on October
29, 1996 the resignation of Carol Chen as a Director of the Registrant.

                                                         [NM\10-KSB:63096KSB]-45

                                       44

<PAGE>



                                    SIGNATURE



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

                                        NONA MORELLI'S II, INC.



Date: December 7, 1996                  By:  /s/  Fred G. Luke
                                             ---------------------------------
                                                  Fred G. Luke
                                                  Chief Executive Officer

Date:  December 7, 1996                 By:  /s/  Steven H. Dong
                                             ---------------------------------
                                                  Steven H. Dong
                                                  Chief Financial Officer

Date:  December 7, 1996                 By:  /s/  John D. Desbrow
                                             ---------------------------------
                                                  John D. Desbrow, Secretary

          In accordance with the requirements of the Securities  Exchange Act of
1934,  this report has been signed below by the  following  persons on behalf of
the Registrant and in the capacities and on the dates indicated.

                                        NONA MORELLI'S II, INC.


Date:  December 7, 1996                 By:  /s/  Fred G. Luke
                                                  -----------------------------
                                                  Fred G. Luke, Director


Date:  December 7, 1996                 By:  /s/  Liu Mei Huan Chen, Director
                                                  -----------------------------
                                                  Liu Mei Huan Chen, Director


Date:  December 7, 1996                 By:  /s/  Cheng Tai Chee, Director
                                             ----------------------------------
                                                  Cheng Tai Chee, Director

                                                         [NM\10-KSB:63096KSB]-45

<PAGE>


                                  EXHIBIT 22.1

<TABLE>
<CAPTION>


                   SCHEDULE OF SUBSIDIARIES OF THE REGISTRANT

<S>                                            <C>                     <C>                          <C>
                                               Jurisdiction of         Parent                       Percentage
Subsidiary                                     Incorporation           Corporation                  Ownership
------------------------------------           ---------------         --------------------         ----------
Fantastic Foods International Inc.             California              Registrant                   100%
NuOasis International Inc.                     Commonwealth            Registrant                   100%
                                               of the Bahamas

NuOasis Properties Inc.                        Colorado                Registrant                   100%

NuOasis Gaming Inc.                            Delaware                Registrant                   44%(2)

NuOasis Las Vegas Inc.(1)                      Colorado                Casino Management
                                                                       of America Inc.  (1)         100%

NuOasis Laughlin Inc.(1)                       Colorado                Casino Management
                                                                       of America Inc.  (1)         100%

Casino Management of America Inc.(1)           Utah                    NuOasis Gaming Inc.          100%

Ba-Mak Gaming International Inc.(3)            Louisiana               NuOasis Gaming Inc.          100%

Cleopatra Palace Limited                       Ireland                 NuOasis International        28%
                                                                       Inc.

</TABLE>

(1)       Have not commenced business.

(2)       The Registrant currently has voting control of NuOasis Gaming, Inc. If
          Series B Preferred  shares held by the  Registrant  are converted into
          common stock, the Registrant would own approximately 44% of the common
          stock of NuOasis Gaming, Inc., as of June 30, 1996.

(3)       Converted from Chapter 11 to Chapter 7 Bankruptcy  proceeding on April
          20, 1995.

                                                         [NM\10-KSB:63096KSB]-45

<PAGE>

                             NONA MORELLI'S II, INC.

                   Index to Consolidated Financial Statements



Description                                                               Page

Independent Auditors' Report ..............................................F-2

Consolidated Balance Sheet as of June 30, 1996 ............................F-3

Consolidated Statements of Operations for the years ended
  June 30, 1996 and 1995 ..................................................F-4

Consolidated Statements of Stockholders' Equity for the years
  ended June 30, 1996 and 1995 ............................................F-5

Consolidated Statements of Cash Flows for the years ended
  June 30, 1996 and 1995 ..................................................F-6

Notes to Consolidated Financial Statements ................................F-8

                                       F-1

<PAGE>



                           Raimondo, Pettit & Glassman
                A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
                          CERTIFIED PUBLIC ACCOUNTANTS
                          UNION BANK TOWER, SUITE 1250
                            21515 HAWTHORNE BOULEVARD
                           TORRANCE, CALIFORNIA 90503



                          INDEPENDENT AUDITORS' REPORT


Board of Directors
NONA MORELLI'S II, INC.
Irvine, California

We have audited the  accompanying  consolidated  balance sheet of Nona Morelli's
II, Inc. and subsidiaries (the "Company"),  as of June 30, 1996, and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
the years ended June 30, 1996 and 1995. These consolidated  financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an  opinion  on these  consolidated  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 our audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of the Company as of
June 30,  1996,  and the  results of its  operations  and its cash flows for the
years  ended June 30,  1996 and 1995,  in  conformity  with  generally  accepted
accounting principles

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has incurred recurring net losses
and negative cash flows from operating activities, has limited liquid resources,
and has negative working capital. Such matters raise substantial doubt about the
Company's ability to continue as a going concern.  Management's  plans regarding
those matters are described in Note 1. The consolidated  financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

                                        /s/  Raimondo, Pettit & Glassman
                                             ---------------------------------
                                             Raimondo, Pettit & Glassman

Torrance, California

November 8, 1996, except for information  relating to Cleopatra Palace, Ltd. and
National Pools Corporation  included in Notes 7, 12 and 13, as to which the date
is November 29, 1996.

                                                       [NM\10-KSB:63096FS.2] -45

                                       F-2

<PAGE>

<TABLE>
<CAPTION>

                             NONA MORELLI'S II, INC.
                           Consolidated Balance Sheet
                               As of June 30, 1996

ASSETS                                                                                  June 30, 1996
-------------------------------------------------------------------------------     ----------------------
<S>                                                                                 <C>
Current assets:
 Cash and cash equivalents                                                          $               50,436
 Accounts receivable, net                                                                          136,061
 Due from affiliate                                                                              3,887,435
 Inventory                                                                                          93,599
 Other current assets                                                                               15,000
                                                                                    ----------------------
     Total current assets                                                                        4,182,531
Property and equipment:
 Food manufacturing equipment                                                                    1,065,249
 Other                                                                                              84,911
Accumulated depreciation and amortization                                                         (804,556)
     Total property and equipment, net                                                             345,604
Other assets:
 Beneficial ownership interest                                                                   7,004,598
 Property held for sale                                                                            539,213
 Deferred tax asset, net                                                                           860,902
 Deposits and other                                                                                  7,850
                                                                                    ----------------------
     Total other assets                                                                          8,412,563
                                                                                    ----------------------
TOTAL ASSETS                                                                        $           12,940,698
                                                                                    =======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                                  $              327,215
  Accrued expenses                                                                                 353,968
  Interest payable to affiliate                                                                    263,672
  Due to affiliates                                                                                813,028
  Income taxes payable                                                                           1,243,396
  Current maturities of long-term debt to affiliate and others                                   3,105,216
                                                                                    ----------------------
     Total current liabilities 6,106,495 Long term liabilities:
  Long-term debt                                                                                   425,327
     Total liabilities                                                                           6,531,822
Commitments and contingencies  (Note 12)  Stockholders'  equity Preferred stock,
Series D, $.01 par value;
 24,000,000 shares authorized, issued and outstanding at
 June 30, 1996 (aggregate liquidation of up to $10,000,000)                                        240,000
Common stock, $.01 par value;  50,000,000 shares authorized;
 45,022,300 shares issued and outstanding at June 30, 1996                                         450,223
Additional paid-in-capital                                                                      47,648,677
Accumulated deficit                                                                            (30,220,100)
Cost of 20,000,115 treasury shares                                                             (10,002,425)
Common stock subscription and stockholders' receivables                                         (1,707,499)
                                                                                    -----------------------
     Total stockholders' equity                                                                  6,408,876
                                                                                    -----------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                                            $           12,940,698
                                                                                    =======================

</TABLE>

           See accompanying notes to consolidated financial statements

                                                       [NM\10-KSB:63096FS.2] -45

                                       F-3

<PAGE>

<TABLE>
<CAPTION>

                             NONA MORELLI'S II, INC.
                      Consolidated Statements of Operations
                               For the Years Ended
                             June 30, 1996 and 1995

                                                                     Years Ended June  30,
                                                        ----------------------------------------------
                                                                 1996                    1995
                                                        ----------------------- ----------------------
<S>                                                     <C>                     <C>

Food sales revenue                                      $            1,251,174  $            1,555,119
Gaming revenue                                                      11,407,317               3,292,273
                                                        ----------------------- ----------------------
                                                                    12,658,491               4,847,392
                                                        ----------------------- ----------------------
Cost of food sales revenues                                            838,453                 938,848
Cost of gaming revenue                                                       -                 887,472
                                                        ----------------------- ----------------------
                                                                       838,453               1,826,320
                                                        ----------------------- ----------------------
Gross profit                                                        11,820,038               3,021,072
                                                        ----------------------  ----------------------
Operating expenses:
 Legal and professional fees                                         2,135,363               1,755,175
 Depreciation and amortization                                       4,989,064                 826,689
 (Gain) loss on investments                                            (38,510)                140,949
 Minority interest                                                    (233,877)               (506,363)
 General and administrative expenses                                 1,340,059               1,677,355
 Write down of gaming interest                                       6,663,741                       -
 Write down of beneficial ownership                                  2,600,000                       -
 Other valuation expense                                             1,839,483                       -
                                                        ----------------------  -----------------------
    Total operating expenses                                        19,295,323               3,893,805
                                                        ----------------------- ----------------------
Operating loss                                                      (7,475,285)               (872,733)
                                                        ----------------------- -----------------------
Other income (expenses):
 Interest expense                                                     (309,757)                (17,190)
 Other income (expense)                                                 63,334                 (13,311)
                                                        ----------------------- -----------------------
Total other expenses                                                  (246,423)                (30,501)
                                                        ----------------------- -----------------------
Net loss before income tax (provision) benefit                      (7,721,708)               (903,234)
Income tax (provision) benefit                                        (997,932)                615,436
                                                        ----------------------- ----------------------
Net loss                                                $           (8,719,640) $             (287,798)
                                                        ======================= =======================
Net loss per common share                               $                 (.20) $                 (.03)
                                                        ----------------------- -----------------------
Weighted average number of common shares
 outstanding used to compute net loss per
 common share                                                       43,803,077              10,481,997
                                                        ======================= ======================

</TABLE>

           See accompanying notes to consolidated financial statements

                                                       [NM\10-KSB:63096FS.2] -45

                                       F-4

<PAGE>

<TABLE>
<CAPTION>

                             NONA MORELLI'S II, INC.
                 Consolidated Statement of Stockholders' Equity
                   For the Years Ended June 30, 1996 and 1995

                                                       Preferred                    Common                      Treasury
                                                        Stock                        Stock                        Stock             
                                             ----------------------------   -------------------------   ---------------------------
                                                 Shares        Amount        Shares         Amount       Shares          Amount
                                             -------------- -------------   -----------  ------------   -----------  --------------
<S>                                          <C>            <C>             <C>          <C>            <C>          <C>

Balance at July 1, 1994                          24,883,500 $     248,835     7,376,200  $    73,762            115  $      (2,425) 
Issuance of common stock for services                                         1,586,400       15,864                                
Issuance of common stock on conversion            
 of Series C preferred stock                      (870,000)       (8,700)     1,741,000       17,410                                
Property dividend declared and paid, and         
 minority interest adjustment                                                                                                       
Issuance of common stock for property                                             5,200           52                                
Issuance of common stock and transfer of              
 assets in the acquisition of Gaming Interest                                32,000,000      320,000                                
Net Loss                                                                                                                            
                                             -------------- -------------   -----------  ------------   -----------  -------------- 
Balance at June 30, 1995                         24,013,500      240,135     42,708,800      427,088            115         (2,425) 
Issuance of common stock for services                                         1,886,500       18,865                                
Exchange of Gaming Interest                                                                              20,000,000    (10,000,000) 
Issuance of common stock on conversion            
 of Series C preferred stock                       (13,500)         (135)        27,000          270                                
Issuance of common stock for exercised options                                  400,000        4,000                                
Change in common stock subscription and             
 stockholders receivable                                                                                                            
Net Loss                                                                                                                            
                                             -------------- -------------   -----------  ------------   -----------  -------------- 
Balance at June 30, 1996                         24,000,000 $    240,000     45,022,300  $   450,223     20,000,115  $ (10,002,425) 
                                             -------------- -------------   ===========  ============   ===========  ============== 

</TABLE>

<TABLE>
<CAPTION>

                                                  Additional    Common Stock
                                                  Paid-In       Subscription    Accumulated
                                                  Capital       Receivable      (Deficit)      Total
                                                  ------------  --------------  -------------  ------------
<S>                                               <C>           <C>             <C>            <C>
                                                                                
Balance at July 1, 1994                           $ 28,415,244  $  (3,289,536)  $(21,137,662)  $  4,308,218
Issuance of common stock for services                1,345,850                                    1,361,714
Issuance of common stock on conversion            
 of Series C preferred stock                            (8,710)                                           -
Property dividend declared and paid, and         
 minority interest adjustment                         (575,884)                      (75,000)      (650,884)
Issuance of common stock for property                   11,253                                       11,305
Issuance of common stock and transfer of              
 assets in the acquisition of Gaming Interest       15,680,000      2,342,722                    18,342,722
Net Loss                                                                            (287,798)      (287,798)
                                                  ------------- --------------  -------------  -------------
Balance at June 30, 1995                            44,867,753       (946,814)   (21,500,460)    23,085,277
Issuance of common stock for services                2,261,059                                    2,279,924
Exchange of Gaming Interest                                                                     (10,000,000)
Issuance of common stock on conversion            
 of Series C preferred stock                              (135)                                           -
Issuance of common stock for exercised options         520,000       (400,000)                      124,000
Change in common stock subscription and             
 stockholders receivable                                             (360,685)                     (360,685)
Net Loss                                                                          (8,719,640)    (8,719,640)
                                                  ------------- --------------  -------------  -------------
Balance at June 30, 1996                          $ 47,648,677  $  (1,707,499)  $(30,220,100)  $  6,408,876
                                                  ============= ==============  =============  ============

</TABLE>


          See accompanying notes to consolidated financial statements.

                                                       [NM\10-KSB:63096FS.2] -45

                                       F-5

<PAGE>

<TABLE>
<CAPTION>

                             NONA MORELLI'S II, INC.
                      Consolidated Statements of Cash Flows
                     For Years Ended June 30, 1996 and 1995



                                                                                      1996                   1995
                                                                              --------------------- -----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                           <C>                   <C>

Net loss                                                                      $         (8,719,640) $            (287,798)
  Adjustments to reconcile net loss to net cash provided by
  (used in) operating activities:
    Depreciation and amortization                                                        4,989,064                826,689
    Services exchanged for common stock                                                  1,139,227              1,361,714
    Valuation expenses                                                                  11,103,224                      -
    Deferred taxes                                                                           3,800               (864,702)
    (Gain) loss on investments                                                             (38,510)               140,949
    Minority interest                                                                     (233,877)              (506,363)
    Other                                                                                   84,000                323,790
  Increases (decreases) from changes in assets and liabilities:
    Accounts receivable, net                                                                19,280                108,724
    Due from affiliate                                                                  (1,776,307)            (2,111,228)
    Inventory                                                                                5,522                (27,297)
    Other current assets                                                                   158,906                  3,737
    Deposits and other assets                                                               29,230                      -
    Accounts payable                                                                       (26,016)               322,205
    Accrued expenses                                                                       287,360                149,145
    Interest payable to affiliate                                                          235,001                      -
    Due to affiliates                                                                      607,305                      -
    Income taxes payable                                                                   994,130                      -
                                                                              ---------------------  ----------------------
Net cash provided by (used in) operating activities                                      8,861,699               (560,435)
                                                                              ---------------------  ----------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Beneficial ownership interest                                                         (9,604,598)                     -
  Conversion of investment to cash                                                          38,510                114,791
  Purchase of leasehold improvements and equipment                                        (100,305)                     -
                                                                              --------------------- -----------------------
Net cash provided by (used in) investing activities                                     (9,666,393)               114,791
                                                                              --------------------- -----------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from stockholders' receivables                                                   65,500                      -
  Proceeds from issuance of note payable                                                   350,000                      -
  Principal payments on notes payables                                                    (189,240)              (122,177)
                                                                              --------------------- -----------------------
Net cash provided by (used in) financing activities                                        226,260               (122,177)
                                                                              --------------------- -----------------------

Net (decrease) increase in cash                                                           (578,434)              (567,821)
Cash and cash equivalents, beginning of period                                             628,870              1,196,691
                                                                              --------------------- ----------------------
Cash and cash equivalents, end of period                                      $             50,436  $             628,870
                                                                              ===================== ======================

</TABLE>

           See accompanying notes to consolidated financial statements

                                                       [NM\10-KSB:63096FS.2] -45

                                       F-6

<PAGE>

<TABLE>
<CAPTION>


                             NONA MORELLI'S II, INC.
                      Consolidated Statements of Cash Flows
                     For Years Ended June 30, 1996 and 1995

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
                                                                                      1996                   1995
                                                                              --------------------- ---------------------
Cash paid during the year for:
<S>                                                                           <C>                   <C>

    Interest                                                                  $            144,685  $              29,900
    Income taxes                                                              $              1,600  $                   -

Non-cash investing and financing activities:

    Purchase of assets for stock                                              $                  -  $          16,000,000
    Purchase of assets for common stock subscription receivable               $                  -  $           2,342,722
    Purchase of assets for note payable                                       $                  -  $           3,000,000
    Common stock issued for services                                          $          1,324,267  $           1,361,714
    Stock issued for services on behalf of Cleopatra                          $            955,439  $                   -
    Purchase of food equipment for media credits                              $                  -  $             140,000
    Common stock issued for stockholder notes receivable                      $            518,758  $                   -

</TABLE>

           See accompanying notes to consolidated financial statements

                                                       [NM\10-KSB:63096FS.2] -45

                                       F-7

<PAGE>




                             NONA MORELLI'S II, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1996


Note 1.         Summary of Significant Accounting Policies and Description of
                Business

Description of Business

Nona  Morelli's  II, Inc. and its  subsidiaries  (the  "Company")  operates as a
holding company for leisure and  entertainment-related  businesses.  At June 30,
1996, the company had three  wholly-owned and one controlled  subsidiary engaged
in  food   manufacturing  and  distribution,   casino  gaming  and  real  estate
investments.

The  activities of the Company's  subsidiaries  are domestic and  international,
with  existing food and gaming  activities  in the United  States and Asia,  and
proposed activities in North Africa and Europe.

Principles of Consolidation and Management Estimates

The Company was  incorporated  in the State of Colorado on February 6, 1989 as a
successor  to Nona  Morelli  Limited  Partnership.  The  consolidated  financial
statements,  and references therein to the Company,  include the accounts of the
Company and its wholly-owned subsidiaries; NuOasis International, Inc. ("NuOasis
International"),  Fantastic Foods  International,  Inc.  ("Fantastic Foods") and
NuOasis Properties,  Inc. ("NuOasis Properties").  In addition, the consolidated
financial statements include the accounts of the Company's controlled company --
NuOasis  Gaming,  Inc.  ("NuOasis  Gaming") and its  wholly-owned  subsidiaries,
Ba-Mak Gaming  International,  Inc. ("BGI"),  Casino Management of America, Inc.
("CMA"),  NuOasis Laughlin,  Inc., ("NuOasis Laughlin");  and NuOasis Las Vegas,
Inc.  ("NuOasis  Las Vegas").  The Company  currently  maintains  its  executive
offices  in  Irvine,   California.   All  material   intercompany  accounts  and
transactions have been eliminated in consolidation.

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  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid  investments  purchased with an original
maturity of three months or less to be cash equivalents. This amount includes $0
and $604,371 of certificates of deposit at June 30, 1996 and 1995, respectively.

Fair Value of Financial Instruments

The  carrying  value of  financial  instruments  included in current  assets and
liabilities  approximates  fair  value  because of the short  maturity  of these
items.

Inventory

Inventory  is stated at the lower of cost or market,  computed on the  first-in,
first-out basis.

Property and Equipment and Depreciation

Property and equipment,  including  amounts  recorded under capital leases,  are
stated at cost.  Repairs and  maintenance are charged to expense as incurred and
expenditures for improvements are capitalized.

                                                       [NM\10-KSB:63096FS.2] -45

                                       F-8

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996


During  fiscal  1994,  the Company  transferred  all of its pasta  manufacturing
operations from Pueblo,  Colorado to Southern  California.  At the end of fiscal
1994,  the  Company  placed for sale its  Pueblo  facility  consisting  of land,
buildings and improvements,  along with its food  manufacturing  equipment,  and
reclassified  them to assets held for sale. At June 30, 1996,  property held for
sale  was  carried  at its  estimated  net  realizable  value  of  approximately
$539,000.

During  fiscal 1996,  the Company  remodeled  and  improved its food  processing
equipment in its California  locations and leased its Colorado facility held for
sale. In connection therewith,  the Company reevaluated the use and value of its
older equipment and wrote off certain  impaired  equipment with a net book value
of $1,073,303 which has been recorded as Other Valuation Expense.

Depreciation of property and equipment, and amortization of assets under capital
leases are provided over the lesser of the estimated  useful lives of the assets
or the lease term using the straight-line method.  Estimated useful lives are 28
to 32 years for buildings, 7 to 10 years for factory equipment, 5 to 7 years for
furniture, fixtures and transportation equipment.

Depreciation  expense,  including  amortization  of assets under  capital  lease
arrangements,  charged to  operations  was  $360,520  and $416,252 for the years
ended June 30, 1996 and 1995, respectively.

Amortization of Gaming Interest

The Company  amortizes its interest in the profits of the two Macau casinos (see
Note 2) over a period of five years using the straight line method. Amortization
during fiscal 1995 for the period since acquisition,  May 25, 1995, through June
30,  1995,  amounted  to  $410,437.  Amortization  for fiscal  1996  amounted to
$4,268,544.

Loss Per Share

The net loss per share is computed  based upon the  weighted  average  number of
shares of common  stock and  common  stock  equivalents  outstanding  during the
period.  Common stock equivalents were not considered in the calculations as the
effect would have been anti-dilutive.

Income Taxes

The Company accounts for income taxes using the liability  method.  Income taxes
are provided on all revenue and expense items, regardless of the period in which
such items are recognized for tax purposes,  except for those items representing
a permanent  difference  between pre-tax accounting income and taxable income. A
valuation  allowance is recorded  when it is more likely than not that  benefits
resulting from deferred tax assets will not be realized.

Revenue Recognition

Food  sales and  related  cost of sales are  recognized  upon  shipment  of food
products.  Gaming  revenues  related to BGI are recognized  based upon the gross
funds deposited in the gaming  machines.  Net gaming revenues are referred to in
the industry as "Net Win", the difference between gross funds deposited into the
gaming machines and payments to customers.  Gaming  operating  expenses are paid
from the "Net Win".

Gaming  revenues  with respect to the Gaming  Interest in the two Macau  casinos
(see Note 2) are earned as the casinos report their net profits to the Company.

                                                       [NM\10-KSB:63096FS.2] -45

                                       F-9

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996


Issuance of Stock for Services

Shares of the  Company's  common  stock  issued for  services  are  recorded  in
accordance  with APB16 at the fair market  value of the stock issued or the fair
market of the services provided, whichever value is more clearly evident.

Reclassification of Prior Year Amounts

To enhance comparability,  the 1995 financial statements have been reclassified,
where appropriate,  to conform with the financial statement presentation used in
1996.

Going Concern

The Company has experienced  recurring net losses, has limited liquid resources,
negative  working capital and one of its operating  subsidiaries  was liquidated
during  fiscal  year 1995.  Management's  intent is to  continue  searching  for
additional sources of capital and new operating  opportunities.  In the interim,
the Company will continue operating with minimal overhead and key administrative
functions will be provided by consultants who are  compensated  primarily in the
form of the Company's common stock.  Management  estimates that the Company will
need to utilize up to approximately $3,000,000 worth of common stock to fund its
operations through fiscal year 1997. Accordingly,  the accompanying consolidated
financial  statements  have been presented under the assumption the Company will
continue as a going concern.

Recent Accounting Developments

In March  1995,  the  Financial  Accounting  Standards  Board  ("FASB")  adopted
Statement No. 121  "Accounting  for the  Impairment of Long Lived Assets and for
Long Lived  Assets to be  Disposed  Of" which  requires  entities to review long
lived assets  impairment  whenever events or changes in  circumstances  indicate
that  the  carrying  amount  of an asset  may not be  recoverable  and  provides
guidance as to measurement of the carrying value of asset to be disposed of. The
statement is effective for fiscal years  beginning  after December 15, 1995, and
the Company has not  determined  the effect the adoption of the  statement  will
have, but does not believe its implementation will have a material effect on its
financial position.

In October 1995, the FASB adopted Statement No. 123, "Accounting for Stock-Based
Compensation."  This Statement  encourages entities to adopt a fair value method
of accounting for  stock-based  compensation  plans  including stock options and
warrants issued to employees.  For entities which do not adopt this method,  the
Statement  requires  disclosure of the effect that the  fair-value  method would
have on net income and  earnings  per share.  The  Statement  is  effective  for
transactions  entered into in fiscal  years that begin after  December 15, 1995.
The Company has not  determined  the effect of this Statement nor has it decided
when it will adopt the provisions of this Statement.

Note 2.         Acquisition and Liquidation of Investments

Sino International Management Corp.

In August  1993,  the  Company  acquired a 50%  interest  in Sino  International
Management Corp.  ("Sino"),  a Vancouver,  BC,  Canada-based  development  stage
casino  property  investment  company  in  exchange  for  200,000  shares of the
Company's  common  stock.  At June 30,  1994,  the Company  assigned  its equity
interest  in  Sino  to  its  wholly-owned   subsidiary,   International   Casino
Management, Inc., now NuOasis International.

In May 1995,  the equity  interest in Sino was  transferred to Dragon as part of
the  consideration  given to purchase the Gaming  Interest (see Gaming  Interest
below).

                                                       [NM\10-KSB:63096FS.2] -45

                                      F-10

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996


Cleopatra Palace Limited

In October 1993, the Company  acquired a 70% equity interest in Cleopatra Palace
Limited, an Irish corporation  ("Cleopatra") in exchange for 1,689,000 shares of
its common stock and other assets.  Cleopatra is the lessee of a 200,000  square
foot casino and Las Vegas-style  showroom presently under construction (the "Cap
Gammarth Casino") pursuant to a Casino Lease Agreement and Operating  Management
Contract dated October 8, 1993, with Societe Touristique Tunisie-Golfe.

In October 1994,  Cleopatra  entered into an agreement with Societe Loisirs Club
Hammamet ("Club  Hammamet") to lease and operate a 60,000 square foot casino and
French-style  cabaret  presently under  construction  in Hammamet,  Tunisia (the
"Hammamet Casino").

In May 1995, as part of the Gaming Interest  acquisition,  described herein, the
Company sold a 42% interest in Cleopatra to Dragon Sight International Amusement
(Macau) Company ("Dragon").

E.N. Phillips Company Acquisition

On January 13,  1994,  the Company  entered  into a Stock  Purchase and Business
Combination  Agreement (the "ENP Agreement") with E.N. Phillips Company ("ENP"),
whereby  ENP  purchased  all of the  outstanding  capital  stock of CMA from the
Company. The ENP Agreement closed on March 30, 1994 (the "ENP Closing Date").

On September 30, 1994,  ENP's name was changed to NuOasis  Gaming,  Inc.  During
fiscal 1996, NuOasis Gaming changed its fiscal year from September 30 to June 30
in order to coincide with the Company's fiscal year end. The accounts of NuOasis
Gaming  are  consolidated  herein  at June 30,  1996 and  include  12  months of
operations for both fiscal years ended 1996 and 1995.

Agreement to Purchase Vessel

In May 1994,  the  Company  entered  into an Asset  Purchase  Agreement  for the
purchase of a former car ferry vessel (the  "Vessel") in exchange for certain of
the Company's investment securities and shares of the Company's common stock. In
May 1995,  as part of the  Gaming  Interest  acquisition  described  below,  the
Company  relinquished  its  interest  in  the  Vessel  and,  as a  result,  such
investment is no longer included in the Company's balance sheet.

Gaming Interest

On May 25,  1995 the Company  purchased  from Mr. Ng Man Sun ("Mr.  Ng"),  doing
business  as  Dragon,  a 40%  net  profits  interest  in the  gaming  operations
conducted  by Dragon at the Holiday Inn and Hyatt  Hotels in Macau (the  "Gaming
Interest").

The Gaming  Interest was recorded as an investment in gaming  property using the
accounting basis of the elements of the consideration  given having an aggregate
book value of $21,342,722,  and has been amortized on a straight line basis over
a period of five years.  Amortization expense and accumulated  amortization with
respect to the Gaming  Interest was  $4,268,544 and $410,437 for the years ended
June  30,1996 and 1995,  respectively.  The  Company  recorded  $11,407,317  and
$2,111,228 in gaming  revenues from the Gaming  Interest for the year ended June
30, 1996,  and for the period from May 25, 1995 to June 30, 1995,  respectively.
The Company has entered into an agreement to sell the Gaming  Interest and, as a
result, these revenues will not recur in future years.

On August 5, 1996, NuOasis International, holder of the Gaming Interest, entered
into an agreement with Mr. Ng to sell the Gaming Interest for 20,000,000  shares
of the Company's common stock issued by the Company in the original  purchase of
the Gaming  Interest.  On or about  September 30, 1996,  the subject shares were
tendered  by Mr. Ng to a third  party  escrow  agent  pending the closing of the
purchase of  replacement  properties  which NuOasis  International  is currently
negotiating to purchase ("the Replacement Property").

                                                       [NM\10-KSB:63096FS.2] -45

                                      F-11

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996



At June 30, 1996,  the Company  recognized a $6.6 million write down of the book
value of the Gaming Interest to bring the value of the shares held in escrow for
the purchase of the  Replacement  Property to the basis of the stock  originally
issued to Mr. Ng, which was $.50 a share or $10 million in aggregate.  Since the
intended purchase of the Replacement  Property will be effective later in fiscal
1997,  the book value of the  escrowed  shares has been  presented in a position
similar to treasury stock as of June 30, 1996 .

The gaming  revenues for the six months ended June 30, 1996 were  classified  as
Due from  Affiliate  as of June 30,  1996 in the  amount of  approximately  $3.9
million and were subsequently collected in August 1996. $3.2 million of the $3.9
million was used by the  Company as full  payment of the  principal  and accrued
interest  on the  original  note  issued as part of the  purchase  of the Gaming
Interest on May 25, 1995.

BGI

In  October  1994,  BGI  filed  for  protection  under  Chapter  11 of the  U.S.
Bankruptcy Code in the Eastern District of Louisiana. While under the protection
of Chapter 11, BGI continued to operate as a charitable  bingo route operator in
Louisiana as  Debtor-in-Possession.  It was management's objective to reorganize
BGI's  debt  under  Chapter  11  and  fully  continue  its  gaming   operations.
Accordingly,  BGI was accounted  for as a continuing  operation up through April
1995.

On April  20,  1995,  upon  motion  from the  United  States  Trustee,  an order
converting  the case to  Chapter  7 was  issued  and a  Chapter  7  Trustee  was
appointed.  The trustee took possession of BGI's assets and is in the process of
liquidating such assets for the benefit of BGI's bankruptcy estate. As such, all
gaming operations at BGI ceased and accordingly, BGI has been accounted for as a
disposition  of an investment  which resulted in (a) the write-off of $1,056,978
and $1,415,050 of total assets and liabilities, respectively; and (b) a net loss
on disposal of investment in the amount of approximately  $140,949.  Fiscal 1995
gaming revenues  include  approximately  $1.2 million in BGI revenues which will
not be recurring in future years.  As of the date of this report,  the Trustee's
administration of the bankruptcy estate is ongoing.

Note 3.         Accounts Receivable, Net

The following table sets forth the amounts due to the Company at June 30, 1996:

     Food sales customers               $ 169,929
     Other                                 16,523
                                        ----------
                                          186,452

     Allowance for doubtful accounts      (50,391)
                                        $ 136,061
                                        ==========

                                                       [NM\10-KSB:63096FS.2] -45

                                      F-12

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996


Note 4.         Inventories

Inventories  relating  to the  Company's  food  manufacturing  and  distribution
segment as of June 30, 1996 are comprised of the following:

     Raw materials                      $ 27,809
     Finished goods                       51,999
     Packing materials and supplies       13,791
                                        --------
                                        $ 93,599
                                        ========

Note 5.         Beneficial Ownership Interest

Effective  December 31, 1995, the Company acquired from Silver Faith Development
Limited ("SFDL"),  an affiliate of the Company and Mr. Ng., an interest in three
buildings  currently  under  construction  located  in a  large  master  planned
commercial and residential real estate development  located in Beijing,  Peoples
Republic of China ("PRC") known as The Peony Garden  project  ("Peony  Garden").
The purchase price of the Company's interest in Peony Garden was $21 million for
which the Company  issued an 8% Promissory  Note in the principal  amount of $21
million (the "Peony  Garden  Note").  The Peony Garden Note was non recourse and
fully  collateralized by the interest acquired,  with the outstanding  principal
balance  convertible  into the shares of the Company's  common stock. In January
1996, the Company made a prepayment of principal on the Peony Garden Note in the
amount of $9.6 million.

In April  1996,  the  Company  requested  a title  opinion  on Peony  Garden  in
conjunction  with NuOasis  International's  efforts to receive  financing on the
property. Upon receipt of the title opinion in October 1996, the Company learned
that under PRC law, real property cannot be transferred  until completion of the
project.  Since the project was not  completed at June 30,  1996,  and the Peony
Garden Note was non recourse other than against the Company's  interest in Peony
Garden, the Company has presented its investment in Peony Garden as a beneficial
ownership interest in the real estate development.

Following the close of fiscal 1996, on August 8, 1996, the Company  entered into
an  agreement  with The  Hartcourt  Companies,  Inc.  ("Hartcourt")  to sell the
Company's  entire  interest in Peony Garden for $22 million,  consisting  of $10
million of Hartcourt common stock and a $12 million Convertible  Promissory Note
secured by the Peony Garden interest being sold (the "Hartcourt Note"). The sale
closed on October 8, 1996 and, according to unaudited  information received from
Hartcourt,  the Company's investment in the Hartcourt stock represents an equity
interest of  approximately  43%.  Concurrent with the closing of the sale of the
Company's  interest in Peony Garden,  the Hartcourt Note was assigned to SFDL in
exchange for the Peony Garden Note (the "Note Swap").  No profit was  recognized
on the Note Swap or the transaction since the difference between the sales price
and the Company's basis in Peony Garden  represents  approximately the amount of
interest on the Peony  Garden Note that would  otherwise  have been  capitalized
during the  construction  of the Peony Garden  project.  At June 30,  1996,  the
beneficial ownership interest in Peony Garden of $9.6 million was reduced to the
value of the  Company's  equity in  Hartcourt  on or about the  closing  date of
approximately  $7 million  resulting in a $2.6 million write down. The Company's
ultimate realization of value from the investment in Hartcourt is dependent upon
many factors, such as changes in the equity value in Hartcourt,  which itself is
dependent upon  uncertainties  surrounding Peony Garden,  and upon the Company's
ability to dispose of its investment at its current basis.  The Company  intends
to exchange the Hartcourt equity investment for other equity investments.

                                                       [NM\10-KSB:63096FS.2] -45

                                      F-13

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996


Note 6.         Long-Term Debt

Long-term debt for the years ended June 30, 1996 consist of the following:

     Note Payable to affiliate - Dragon
          8% interest, paid in August 1996                  $ 3,000,000

     Note Payable - Bank
          Due November 1999, payable in monthly
          principal installments of $7,290 plus interest  
          at Prime plus 4%                                      309,414
     Mortgage Loan
          Due August 2000, payable in monthly
          principal installments of $2,455, with final
          installment of $186,500, at 10.25% interest           221,129
                                                            ------------
                                                              3,530,543
     Current Maturities of Long Term Debt                    (3,105,216)
                                                            -------------
                                                            $   425,327
                                                            =============

In October 1995,  Fantastic  Foods entered into a working capital loan agreement
(the "Loan") with a financial  institution,  whereby  Fantastic  Foods  borrowed
$350,000 for a term of forty seven months bearing an interest rate of prime plus
4% (prime rate at June 30, 1996 was 8.25%) per annum and  collateralized  by all
accounts  receivable,  inventory,  and equipment related to Fantastic Foods food
manufacturing activities.

All real  property has been  pledged to lenders  under the terms of the mortgage
loan.

Minimum annual  principal  repayments of long-term debt in each of the next five
fiscal years, are as follows:


Year Ending    Amounts
June 30,       Due
----------     -----------
1997             3,105,216
1998                95,551
1999                97,124
2000                46,433
Thereafter         186,219
Total          $ 3,530,543
               ===========

Note 7.     Stockholders' Equity

Capitalization

There were no reverse  stock splits or stock  splits  during the year ended June
30, 1996. Except for shares issued for services, there were no private offerings
conducted in fiscal 1996 or 1995.

                                                       [NM\10-KSB:63096FS.2] -45

                                      F-14

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996


Preferred Stock

The Company has  authorized  25,000,000  shares of  preferred  stock,  which are
divided into four classes or series:  Series A, Series B, Series C and Series D.
All Series A and Series B preferred  stock was redeemed by the Company  prior to
or during fiscal 1993, and returned to the preferred stock treasury.

In  October  1992,  the  Company  conducted  a  private  offering  of  Series  C
Convertible  Preferred Stock. The Series C Convertible  Preferred Stock entitles
holders  to  receive  the same  dividends  as  common  stockholders  when and if
declared by the Board of Directors  and, at June 30, 1994, was  convertible,  at
the option of the holder, commencing August 1, 1993 to one share of common stock
for each share of Series C Preferred Stock held,  subject to adjustment.  During
the year ended June 30, 1995, the Company  amended and restated the  Certificate
of Designations, Rights and Preferences of Series C Convertible Preferred Stock,
such that the  Series C  Preferred  Stock is  convertible  at the  option of the
holder to two shares of common stock for each share of Series C Preferred Stock,
and shall  entitle  the holder to receive  common  stock  dividends  when and if
declared by the Board of  Directors at the rate of one share of common stock for
each ten shares of Series C Preferred Stock.

During the year  ended June 30,  1995,  870,033  shares of Series C  Convertible
Preferred  Stock were  converted to  1,740,066  shares of common  stock.  During
fiscal 1996 all  remaining  Series C  Preferred  Stock was  converted  to common
stock, and no Series C Preferred Stock remains outstanding at June 30, 1996.

During the year ended June 30,  1993,  the Company  designated a Series D Voting
Convertible  Preferred Stock out of the 24,130,000  redeemed shares of Series A,
Series B and Series C Preferred Stock. The Series D Convertible Voting Preferred
Stock consists of 24,000,000  shares which were issued to New World Capital Inc.
(now NuVen  Advisors) in exchange for the German Bonds with an estimated  market
value,  based  upon  independent  legal  and  valuation   opinions,   discounted
approximately 50% at the date of transfer, of $10,000,000.  Due to the lack of a
date and value certain as to the redemption and  incomplete  trading  history of
the German Bonds, at June 30, 1993, the $10,000,000  aggregate  estimated market
value of the German Bonds was fully  reserved by the Company by a charge against
Additional Paid-in Capital.

The Series D Convertible Preferred Stock is redeemable,  in whole or in part, at
the option of the Board of Directors,  at any time, at a redemption  price of up
to $24,000,000,  or convertible,  at the option of the holder, into a maximum of
10,000,000 shares of the Company's common stock. The right to convert the Series
D Convertible Preferred Stock expires in July 1998.

Common Stock Subscriptions and Stockholders' Receivable

Stock  subscriptions  and  stockholders'  receivable for the year ended June 30,
1996 consists of the following:

                                             Amount
                                             -----------
Stock Subscription Receivable - Cleopatra    $   946,814
Receivable from Cleopatra, net                   189,259
Receivable from Officer                          478,758
Receivables from Consultants                      92,668
                                             -----------
                                             $ 1,707,499

In October  1993,  the Company  acquired a 70% equity  interest in  Cleopatra in
exchange for shares of the Company's  common stock.  In May 1995,  the Company's
70% equity  interest  in  Cleopatra  decreased  to 28% as a result of the Gaming
Interest acquisition (see Note 2).

                                                       [NM\10-KSB:63096FS.2] -45

                                      F-15

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996


At June 30,  1996,  the  investment  related to Cleopatra is carried as a Common
Stock Subscription  Receivable based on the market value of the Company's shares
issued  discounted  50% at the date of issuance.  The investment in Cleopatra is
maintained at cost, as a Common Stock  Subscription  Receivable until all of the
Company's  common stock held by Cleopatra is sold and all financing  commitments
have been fulfilled (Note 13).

During fiscal year 1996,  the Company  incurred  expenses on behalf of Cleopatra
amounting to $955,439  which is included as a  stockholders'  receivable at June
30, 1996, net of an allowance for possible loss of $766,180 which is included in
Other Valuation Expense.

During fiscal year 1996,  Cleopatra  devoted most of its resources to completing
its gaming projects in Tunisia, raising financing to fulfill its commitments and
preparing for the opening of the casinos.  As of the filing date of this Report,
Cleopatra has no operations.

Cleopatra's ability to continue as a going concern is dependent upon Cleopatra's
ability  to  fulfill  its  financial  commitments  (see Note 13) and the  future
profitability of the casinos and other  properties it will manage.  Accordingly,
the  uncertainties  surrounding  these  matters  raise  substantial  doubt about
Cleopatra's  ability to  continue  as a going  concern  and about the  Company's
ultimate recoverability of its investment.  No adjustments have been made to the
accompanying   consolidated  financial  statements  of  the  Company  for  these
uncertainties  at  this  time  and it is at  least  possible  that  management's
estimate of the recoverability of its investment could change in the near term.

During fiscal 1996,  400,000  common shares were issued upon exercise of options
by the Chief Executive Officer of the Company in the amount of 440,000, or $1.10
per share.  The Company received a note receivable in the amount of $440,000 and
cash payments in the aggregate amount of $40,000 were made prior to year end and
approximately  $120,000  subsequent to year end. The note bears  interest of 10%
and is due in May 1997. The note  receivable has been  classified as Stockholder
Receivable in the amount of $400,000 at June 30, 1996.

During fiscal 1996,  868,824  common  shares of NuOasis  Gaming were issued upon
exercise  of  options  by the  President  of  NuOasis  Gaming  in the  amount of
$104,258,  or $.12 per share.  NuOasis Gaming  received a note receivable in the
amount of $78,758,  bearing  interest of 10%,  and a cash  payment of $25,500 as
consideration  for the exercise of these options.  The note  receivable has been
classified as  Stockholder  Receivable in the amount of $78,758 at June 30, 1996
and was fully paid subsequent to June 30, 1996.

Dividends

The Company has paid no cash  dividends  with  respect to its common stock since
its  inception.  However,  during fiscal 1995,  the Company  declared and paid a
property dividend of approximately 1.5 million shares of common stock of NuOasis
Gaming. No cash or property  dividends were paid or declared during fiscal 1996.
As of the date of this  Report,  the Board of  Directors of the Company have not
approved a dividend distribution policy.

Employee Stock Benefit Plan

An employee stock benefit plan ("ESBP") was established  during fiscal year 1996
covering  substantially all employees and consultants of the Company.  There are
no mandatory  contributions  required by either the Company or the employees and
consultants, however, the ESBP provides for the issuance of up to 500,000 common
shares of the Company at the discretion of the Board of Directors. During fiscal
year 1996,  16,000 shares were issued under the ESBP.  As of June 30, 1996,  the
Board of Directors  has not approved any  additional  issuances of common shares
under the ESBP.

                                                       [NM\10-KSB:63096FS.2] -45

                                      F-16

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996


Note 8.     Stock Option Plan

A summary of the status of option transactions for the years ended June 30, 1996
and 1995 is as follows:


                                        1996           1995
                                        ----------     ----------
Outstanding at beginning of year        1,320,000        200,000
     Granted                              700,000      1,120,000
     Exercised                           (400,000)             -
     Canceled                             (60,000)             -
                                        ----------     ----------
Outstanding at end of year              1,560,000      1,320,000
                                        ==========     ==========
Range of option exercise prices
 granted                                $0.91 - $1.53  $0.58 - $4.00

At  June  30,  1996,   options  for  1,560,000  shares  were  fully  vested  and
exercisable.  The Company recognized $84,000 in compensation expense for options
exercised during fiscal 1996.

During fiscal year 1996, the Chief  Executive  Officer of the Company  exercised
400,000 options to purchase shares of common stock of the Company (Note 7).

Note 9.     Related Party Transactions

Contracts With Executive Officers

In September 1994, the Company entered into an Employment Agreement with Fred G.
Luke,  the Company's  Chairman and Chief  Executive  Officer.  Mr. Luke has been
serving as the Company's  Chairman and CEO since  approximately  July 1993. From
July 1993 through  June 30,  1994,  Mr. Luke  received no  compensation  for his
services as CEO but did receive $9,000 for his services as a Director. The terms
of the Employment Agreement call for Mr. Luke to receive  approximately  $10,000
per month,  retroactive  to July 1, 1994,  for five (5) years as a base  salary;
granted him an option to purchase 1,000,000 shares of the Company's common stock
exercisable  at $1.10 per share;  provides him with an annual bonus based upon a
number of factors related to the Company's growth and performance which include;
(a)  serving on the  Company's  Board of  Directors  and as its Chief  Executive
Officer; (b) providing advice concerning mergers and acquisitions; (c) corporate
finance;  (d) day to day  management;  (e)  guidance  with  respect  to  general
business  decisions;  (f) other duties commonly performed by the Chief Executive
Officer of a  publicly-held  company;  and requires the Company to purchase life
insurance coverage, reimbursement for vehicle expenses, and provide other fringe
benefits.  No bonuses have been accrued, paid or are owed as of the date of this
Report.  The Company expensed $120,000 and $120,000 during fiscal years 1996 and
1995, respectively, and had no amounts due to Mr. Luke as of June 30, 1996.

In August 1995, NuOasis Gaming entered into an Employment Agreement with Fred G.
Luke, to save as NuOasis  Gaming's  President.  Mr. Luke has been serving as the
NuOasis Gaming  President since  approximately  March 31, 1994. The terms of the
Employment  Agreement  call for Mr.  Luke to  receive  approximately  $4,500 per
month,  retroactive  to April 1,  1994,  for  five (5)  years as a base  salary;
granted him an option to purchase  3,000,000  shares of NuOasis  Gaming's common
stock at an exercise price of $.12 per share;  provides him with an annual bonus
based  upon  a  number  of  factors  related  to  NuOasis  Gaming's  growth  and
performance which include (a) serving on NuOasis Gaming's Board of Directors and
as its President; (b) providing advice concerning mergers and acquisitions;  (c)
corporate  finance;  (d) day to day  management;  (e)  guidance  with respect to
general business decisions; (f) other duties commonly performed by the President
of a  publicly-held  company;  and  requires  NuOasis  Gaming to  purchase  life
insurance  coverage,  reimburse  vehicle  expenses,  and  provide  other  fringe
benefits.  Between March 31, 1994 and  September 30, 1994,  Mr. Luke received no
cash  payments  for his  services.  In August  1995,  NuOasis  Gaming  agreed to
retroactively compensate Mr. Luke for past services in the amount of $27,000 for
the  period  April 1, 1994 to  September  30,  1994 and  $59,000  for the period
October 1, 1994 to September 30, 1995. No bonuses have been accrued, paid or are
owed as of the date of this Report. NuOasis Gaming expensed $54,000 and $72,500,
during fiscal 1996 and 1995,  respectively,  and had $126,500 due to Mr. Luke as
of June 30, 1996.

                                                       [NM\10-KSB:63096FS.2] -45

                                      F-17

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996


Effective  January 1, 1994,  the  Company  and John D.  Desbrow  entered  into a
Consulting Agreement for the engagement of Mr. Desbrow to perform legal services
and to hold the office of Secretary on behalf of the Company until  December 31,
1994. Under the Consulting  Agreement the Company  contracted to pay Mr. Desbrow
$150,000 payable in the Company's common stock issuable in monthly increments in
arrears.  Under the terms of the Consulting Agreement,  Mr. Desbrow invoices the
Company  and  applies the net  proceeds  received  from the sale of stock to the
invoiced amounts.  For purposes of any "profit" computation under Section 16(b),
Mr.  Desbrow and the Company have agreed the price paid for the shares is deemed
to be $150,000.  Pursuant to the terms of the Consulting Agreement,  the Company
granted Mr. Desbrow an option to purchase 50,000 shares of the Company's  common
stock  exercisable at a price of $.58 per share.  Effective Janaury 1, 1996, the
Consulting  Agreement  was renewed  through  December 31, 1996 and 50,000 shares
were  issued  during  fiscal  1996.  An  additional   option  of  50,000  shares
exercisable  at a price of $1.53 per share was granted  during fiscal 1996.  The
Company   expensed   $150,000  and  $150,000   during   fiscal  1996  and  1995,
respectively, and had $70,378 due to Mr. Desbrow as of June 30, 1996.

Effective April 1, 1994, NuOasis Gaming entered into a Consulting Agreement with
John D. Desbrow for the  engagement of Mr. Desbrow to perform legal services and
to hold the office of  Secretary,  on behalf of NuOasis  Gaming,  for the period
from  April 1,  1994 to March  31,  1995 for an amount  of  $36,000  per  annum.
Additionally, in fiscal 1995 Mr. Desbrow billed and eventually received from the
sale of shares  $4,000 for  services  rendered as a Director  from April 1994 to
July 1994. Effective April 1, 1995, the Consulting Agreement was renewed through
March 31, 1996 for an amount of $50,000 per annum.  1,050,000  shares of NuOasis
Gaming  common  stock were  registered  for issuance on Forms S-8 filed with the
Securities and Exchange  Commission during the 1995 fiscal year. Under the terms
of the Consulting Agreement, Mr. Desbrow invoices NuOasis Gaming and applies the
net  proceeds  received  from the sale of stock  to the  invoiced  amounts.  For
purposes of any  "profit"  computation  under  Section 16 (b),  Mr.  Desbrow and
NuOasis  Gaming  have  agreed  the  price  paid for the  shares  is deemed to be
$50,000.  Effective April 1, 1996, the Consulting  Agreement was renewed through
March 31,  1997 for an amount of $ 75,000 per annum and granted him an option to
purchase  275,000 shares of NuOasis Gaming common stock at an exercise price of
$.12 per share. NuOasis Gaming expensed $56,250 and $39,500,  during fiscal 1996
and 1995, respectively, and had $8,252 due from Mr. Desbrow as of June 30, 1996.

Effective January 1, 1994, the Company entered into a Consulting  Agreement with
Jon L. Lawver and J. L. Lawver Corp. pursuant to which Mr. Lawver was to perform
professional services and to hold the office of President of Fantastic Foods for
calendar year 1994.  Pursuant to the Consulting  Agreement the Company agreed to
pay Mr. Lawver 36,000 shares of the Company's common stock,  issuable in monthly
increments  in arrears  and granted  Mr.  Lawver the option to  purchase  50,000
shares of the  Company's  common  stock at an exercise  price of $.58 per share.
Under the terms of the Consulting Agreement, Mr. Lawver invoices the Company and
applies  the net  proceeds  received  from the  sale of  stock  to the  invoiced
amounts. For purposes of any "profit" computation under Section 16(b) Mr. Lawver
and the  Company  have  agreed  the  price  paid for the  shares is deemed to be
$100,000.  Mr.  Lawver's  agreement was renewed for the year ended June 30, 1995
and 124,000  shares were issued to him during  fiscal 1995.  During fiscal 1996,
the  Consulting  Agreement was again renewed with the same terms for fiscal 1997
and  85,000  shares  were  issued to him  during  fiscal  1996 to apply  against
services rendered.  An additional option of 50,000 shares exercisable at a price
of $1.53 per share was granted during fiscal 1996. The Company expensed $100,000
and $100,000  during fiscal 1996 and 1995,  respectively  and had $14,991 due to
Mr. Lawver at June 30, 1996.

                                                       [NM\10-KSB:63096FS.2] -45

                                      F-18

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996


In July 1995,  the Company  entered into a Consulting  Agreement  with Steven H.
Dong,  pursuant to which Mr. Dong is to perform accounting  services and to hold
the office of Chief  Financial  Officer  through June 30, 1996.  Pursuant to the
agreement  as  amended in  October  1995,  the  Company  agreed to pay Mr.  Dong
$145,000 per annum in cash or in the Company's  common stock payable  monthly in
arrears and granted him an option to purchase  100,000  shares of the  Company's
common  stock at an  exercise  price of $1.53 per share.  Under the terms of the
Consulting Agreement, Mr. Dong invoices the Company and applies the net proceeds
received  from the sale of stock to the  invoiced  amounts.  For purposes of any
"profit"  computation  under  Section 16(b) Mr. Dong and the Company have agreed
the price paid for the shares is deemed to be $145,000.  During fiscal 1996, the
Consulting  Agreement  was renewed with the same terms through June 30, 1997. No
cash payments were made to Mr. Dong during fiscal 1996 or 1995,  however  95,000
shares  were  issued  during  1996  which  were used to apply  against  services
rendered.  The Company expensed  $145,000 and $0 during fiscal 1996 and 1995 and
had $42,635 due to Mr. Dong as of June 30, 1996.

In July 1995, NuOasis Gaming entered into a Consulting  Agreement with Mr. Dong,
pursuant to which Mr.  Dong is to perform  accounting  services  and to hold the
office  of Chief  Financial  Officer  through  June 30,  1996.  Pursuant  to the
agreement,  NuOasis  Gaming agreed to pay Mr. Dong $20,000 in cash or in NuOasis
Gaming's common stock,  payable monthly in arrears, and granted him an option to
purchase 275,000 shares of NuOasis Gaming's common stock at an exercise price of
$.12 per share.  Effective July 1, 1996,  the  Consulting  Agreement was renewed
through  June 30,  1997 for an amount of $39,000  per annum.  Cash  payments  of
$5,000 were made to Mr. Dong by NuOasis  Gaming  during fiscal 1996 and no stock
has been issued pursuant to this Consulting  Agreement.  NuOasis Gaming expensed
$20,000 during fiscal 1996, and had $15,000 due to Mr. Dong as of June 30, 1996.

In January 1996,  the Company  entered into a consulting  agreement  with Albert
Rapuano,  pursuant to which Mr. Rapuano is to perform gaming consulting services
and to hold the office of President of NuOasis  International  through  December
31,  1996.  Pursuant to the  agreement,  the Company  agreed to pay Mr.  Rapuano
$250,000 per annum in cash or in the Company's  common stock payable  monthly in
arrears and granted him an option to purchase  500,000  shares of the  Company's
common  stock at an  exercise  price of $.91 per  share.  Under the terms of the
Consulting  Agreement,  Mr.  Rapuano  invoices  the  Company and applies the net
proceeds received from the sale of stock to the invoiced  amounts.  For purposes
of any "profit" computation under Section 16(b) Mr. Rapuano and the Company have
agreed the price paid for the shares is deemed to be $250,000.  No cash payments
were made to Mr. Rapuano during fiscal 1996, however,  70,000 shares were issued
during  1996 which were used to apply  against  services  rendered.  The Company
expensed  $115,000  and $0 during  fiscal 1996 and 1995,  respectively,  and had
$50,211 due to Mr. Rapuano as of June 30, 1996.

Transactions with  Directors and Affiliates

On March 17, 1994,  Jonathan L. Small,  Attorney at Law,  became a member of the
Board of  Directors  to fill a  vacancy  caused by the  resignation  of a former
Director  in June  1993.  On  October  29,  1993,  the  Company  entered  into a
Consulting Agreement with Mr. Small to retain his services to evaluate potential
acquisitions and to assist the Company in the general  development and execution
of its  business  plan.  Pursuant to the  agreement,  Mr. Small was issued 1,600
shares of the Company's common stock. On January 5, 1995, Mr. Small entered into
a Consulting  Agreement  effective  November 1, 1994, with the Company to retain
Mr. Small to serve on the Board of  Directors.  15,000 shares were issued to Mr.
Small during fiscal 1996 which were used to apply against services rendered.

The  Luke  Trust  and  Lawver  Corp.  owns  93% and 7%,  respectively,  of NuVen
Advisors,  formerly  New  World.  Fred G. Luke,  as  trustee of the Luke  Trust,
controls  the Luke Trust and Mr.  Lawver is the majority  shareholder  of Lawver
Corp. and thereby controls Lawver Corp.

                                                       [NM\10-KSB:63096FS.2] -45

                                      F-19

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996


On June 14, 1993,  NuVen Advisors  acquired  24,000,000  shares of the Company's
$.01  par  value  Series  D  Convertible  Preferred  Stock.  At the  time of the
transaction,  NuVen  Advisors was unrelated to the Company.  As a result,  NuVen
Advisors  became the Control  Person of the Company.  On June 14, 1993,  Fred G.
Luke became a Director.  On July 22, 1993,  following the  resignation  of Frank
Morelli II, Fred G. Luke became the Company's  Chief  Executive  Officer,  Chief
Financial  Officer and Chairman of the Board of  Directors.  The Luke Trust owns
93% of NuVen Advisors.  Fred G. Luke, as Co-Trustee of the Luke Trust determines
the voting of such shares  and,  as a result,  may be deemed to control the Luke
Trust  and the  disposition  of  24,000,000  shares  of the  Company's  Series D
Preferred Stock.

Effective  February 1, 1994, the Company entered into an Advisory and Management
Agreement  with NuVen  Advisors for the  engagement of NuVen Advisors to perform
professional  and  advisory  services for  calendar  year 1995.  Pursuant to the
Consulting  Agreement,  the  Company  agreed  to  pay  NuVen  Advisors  $120,000
annually,  payable monthly in $10,000  increments in arrears,  and granted NuVen
Advisors an option to purchase  100,000  shares of the  Company's  common  stock
exercisable  at a price of $.80 per share.  During fiscal 1996, the Advisory and
Management  Agreement  was  renewed  for fiscal  1997 with the same  terms.  The
Company   expended   $120,000  and  $120,000   during   fiscal  1996  and  1995,
respectively, and had $2,958 due to NuVen Advisors as of June 30, 1996.

Effective April 1, 1994,  NuOasis Gaming entered into an Advisory and Management
Agreement  with NuVen  Advisors for the  engagement of NuVen Advisors to perform
professional and advisory services.  Pursuant to such Agreement,  NuOasis Gaming
agreed to pay NuVen  Advisors  $180,000  annually,  payable  monthly  in $15,000
increments  in  arrears,  and  granted  NuVen  Advisors  an option  to  purchase
2,000,000  shares of common stock of NuOasis  Gaming  exercisable  at a price of
$.10 per share.  During fiscal 1996, the Advisory and  Management  Agreement was
renewed  effective  October 1,  1995,  for  $120,000  annually.  NuOasis  Gaming
expensed  $135,000 and $180,000 during fiscal 1996 and 1995,  respectively,  and
had $118,000 due to NuVen Advisors as of June 30, 1996.

Effective  July 1, 1994,  NuOasis  International  entered  into an Advisory  and
Management Agreement with NuVen Advisors for the engagement of NuVen Advisors to
perform  professional and advisory services for calendar year 1995.  Pursuant to
such  agreement,  NuOasis  International  agreed to pay NuVen Advisors  $120,000
annually,  payable monthly in $10,000  increments in arrears,  and granted NuVen
Advisors  an option to  purchase  1,100,000  shares of common  stock of  NuOasis
International  exercisable at a price of 110% of the book value per share on the
day of the grant. During fiscal 1996, the Advisory and Management  Agreement was
renewed  for fiscal  1997 with the same terms.  NuOasis  International  expended
$120,000  and  $120,000  during  fiscal  1996 and  1995,  respectively,  and had
$224,499 due to NuVen Advisors as of June 30, 1996.

Effective  July  1,  1994,  NuOasis  Properties  entered  into an  Advisory  and
Management Agreement with NuVen Advisors for the engagement of NuVen Advisors to
perform  professional and advisory services on behalf of NuOasis  Properties for
the calendar year 1995. Pursuant to such agreement, NuOasis Properties agreed to
pay NuVen  Advisors  $120,000  annually,  payable  monthly in arrears in $10,000
increments, and granted NuVen Advisors an option to purchase 1,100,000 shares of
common stock of NuOasis  Properties  exercisable  at a price of 110% of the book
value per share on the date of the grant.  During fiscal 1996,  the Advisory and
Management  Agreement  was renewed for fiscal 1997 with the same terms.  Minimal
amounts were billed by NuVen Advisors to NuOasis Properties,  as little activity
occurred in NuOasis  Properties for fiscal 1996 and 1995. NuOasis Properties had
$80,000 due from NuVen Advisors as of June 30, 1996.

Effective  April 1, 1994, CMA entered into an Advisory and Management  Agreement
with NuVen Advisors for the engagement of NuVen Advisors to perform professional
and  advisory  services.  Pursuant  to such  agreement  CMA  agreed to pay NuVen
Advisors $120,000  annually,  payable monthly in $10,000  increments in arrears,
and granted NuVen  Advisors an option to purchase up to 5% of CMA's common stock
outstanding at the time of exercise,  exercisable at a price of 110% of the book
value of such shares.  During fiscal 1996, the Advisory and Management Agreement
was  renewed  for fiscal 1997 with the same terms.  CMA  expended  $120,000  and
$120,000  during  fiscal 1996 and 1995,  respectively,  and had  $159,000 due to
NuVen Advisors as of June 30, 1996.



                                                       [NM\10-KSB:63096FS.2] -45

                                      F-20

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996


During fiscal year 1994, NuOasis Gaming entered into an agreement with Structure
America, Inc. ("SAI") to issue 1,000,000 shares of NuOasis Gaming for consulting
services.  Such services were  rendered  during fiscal 1995.  During fiscal year
1996,  NuOasis  Gaming  entered  into  another  agreement  with  SAI to  perform
consulting services. Pursuant to such agreement,  NuOasis Gaming agreed to issue
1,000,000  common  shares of NuOasis  Gaming to SAI and granted SAI an option to
purchase  1,000,000  common shares of NuOasis  Gaming,  exercisable  at $.12 per
share.  Under Rule  13d-3 (d) (1) (c),  SAI is deemed  the  beneficial  owner of
2,000,000  shares of NuOasis Gaming even though the shares are not  outstanding.
The agreement is fully  contingent  upon the final  execution and closing of the
purchase of National  Pools  Corporation.  NuOasis Gaming  expensed  $75,000 and
$54,000 during fiscal years 1996 and 1995,  respectively  and had  approximately
$40,000 due to SAI as of June 30, 1996.

During  fiscal  year  1996,  Nona  renewed  an  agreement  with  SAI to  perform
consulting  services.  Pursuant to such agreement,  Nona incurred  approximately
$465,000  for  services   performed  during  fiscal  year  1996.  Nona  expensed
approximately   $465,000  and  $224,500  during  fiscal  years  1996  and  1995,
respectively and had approximately $6,000 due to SAI as of June 30, 1996.

Note 10.    Income Taxes

The Company and its  subsidiaries,  NuOasis  International,  Fantastic Foods and
NuOasis  Properties  file a  consolidated  return  for both  federal  and  state
purposes.  The Company's controlled  subsidiary,  NuOasis Gaming, files separate
consolidated returns with its subsidiaries.

The 1996 and 1995 provision for income taxes is as follows:

<TABLE>
<CAPTION>

                                                      1996                                    1995
                                       ----------------------------------        ---------------------------------------
                                          The Company                                The Company
                                              and                                        and
                                         Subsidiaries         NuOasis Gaming        Subsidiaries         NuOasis Gaming
                                          (excluding               and               (excluding               and
                                        NuOasis Gaming)        Subsidiaries        NuOasis Gaming)        Subsidiaries
                                     --------------------- --------------------  -------------------  -------------------
<S>                                  <C>                   <C>                   <C>                  <C>

Liability:
  Current tax expense
            Federal                  $           (784,210) $                 -   $         (192,070)  $                 -
            State                                (209,920)                   -              (57,196)                    -
                                     --------------------- --------------------  -------------------  -------------------
  Total current tax expense                      (994,130)                   -             (249,266)                    -
                                     --------------------- --------------------  -------------------  -------------------

Deferred taxes:
            Federal                              2,060,904           2,570,356            1,884,098               349,003
            State                                  558,092             379,808              105,212                47,731
            Change in valuation
            allowance                          (2,622,798)          (2,950,164)          (1,124,608)             (396,734)
                                     --------------------- --------------------  -------------------  --------------------
 Total deferred tax benefit
(provision)                                        (3,802)                   0              864,702                     0
                                     --------------------- --------------------  -------------------  -------------------

Income tax benefit (provision)       $           (997,932) $                 0   $          615,436   $                 0
                                     ===================== ====================  ===================  ===================

</TABLE>

For the year ended June 30, 1996 and 1995, the Company's  effective  federal and
state  income tax rate applied to book taxable  income  (loss)  differs from the
statutory rate as follows:

                                                  1996           1995
                                                --------         --------

Federal statutory rate                          (34.00%)         (34.00%)
Minority interest                                (1.03%)               -
Effect of foreign controlled
  corporation loss for which no
  deferred tax amount was recognized             45.91%                -
Change in estimate of prior year liability       (2.49%)               -
Change in valuation allowance                    17.11%          (25.25%)
State taxes, net of federal effect               (4.39%)          (6.33%)
Utilization of net operating loss                (4.36%)          (1.36%)
Other                                            (3.83%)          (1.06%)
                                                --------         --------
Effective tax rate                               12.92%          (68.00%)
                                                ========         ========

The Company  utilized  $989,356 and $192,353 in net  operating  losses to offset
federal  and state  taxable  income for the years  ended June 30, 1996 and 1995,
respectively.

At June 30, 1996, the components of net deferred tax asset are as follows:

<TABLE>
<CAPTION>

                                                         The Company                 NuOasis
                                                             and                   Gaming and
                                                        Subsidiaries              Subsidiaries
                                                         (excluding
                                                       NuOasis Gaming)
                                                  ------------------------  ------------------------
Current:
<S>                                               <C>                       <C>


            Deferred tax assets resulting
               from temporary differences         $                21,588   $               154,224
            Valuation allowance                                   (21,588)                 (154,224)
                                                  ------------------------  ------------------------
Total current deferred tax asset                  $                     0   $                     0
                                                  ========================  ========================

Non-Current:
               Deferred tax liability
                  resulting from temporary                                                        
                  differences                     $               (136,967) $                     -
            Deferred tax assets resulting
               from loss carry forward                           4,723,686                2,795,940
            Valuation allowance                                 (3,725,817)              (2,795,940)
                                                  ------------------------- ------------------------
Total non-current tax asset                                        860,902                        0
                                                  ------------------------- ------------------------
Net deferred tax asset                            $                860,902  $                     0
                                                  ========================= ========================

</TABLE>

The deferred taxes result from temporary  differences relating to the difference
in the basis of assets and liabilities for financial and tax reporting purposes.
The temporary differences relate mainly to the difference in basis of the Gaming
Interest,  accounts  receivable and the recognition of the benefit of prior year
losses carried forward.

As a result of changes in stock  ownership  which occurred in 1993 and 1995, the
Company's use of its net operating loss carry forwards may be limited by Section
382 of the Internal  Revenue Code until such net operating  loss carry  forwards
expire.  The Company intends to obtain  independent third party valuation of its
stock for  purposes  of the  calculation  required  by  Section  382 in order to
determine  whether such net operating loss carry forwards may be limited.  As of
the date of this Report, the Company has not received such independent valuation
and,  accordingly,  has accrued its income tax  provision  in  consideration  of
Section 382.


                                                       [NM\10-KSB:63096FS.2] -45

                                      F-21

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996



Deferred tax assets have been computed using the maximum  expiration terms of 13
and 5 years (or total net  operating  losses  available of  approximately  $11.9
million and $7.8 million) for federal and state tax purposes,  respectively. Net
operating losses expire from the years 2004 through 2009.

A valuation  allowance  was recorded at June 30, 1996 to offset  benefits of net
operating losses in excess of any potential  federal loss carry back. The change
in the  valuation  allowance  in  fiscal  1996 is due to the  sale of cash  flow
producing assets.

No provision was made or benefits  recognized  in 1996 for U.S.  income taxes on
the  undistributed  earnings/  losses  of the  foreign  subsidiary  as it is the
Company's  intention to utilize those earnings in the foreign  operations for an
indefinite  period of time or repatriate  earnings only when tax effective to do
so. The foreign  subsidiary  had an  accumulated  deficit at June 30, 1996 which
would  have  resulted  in  an  unrecognized  temporary  difference  for  an  NOL
carryforward of approximately $9.6 million with a related unrecognized  deferred
tax benefit of approximately $3.3 million.

Note 11.     Segment Information and Concentration of Credit Risk

Industry Segments

The relative contributions to revenues,  gross profit and identifiable assets of
the  Company's  active  industry  segments for the years ended June 30, 1996 and
1995 are as follows:

                                             1996           1995
                                             ------------   -----------
Revenues
   Food Manufacturing and Distribution       $  1,251,174   $ 1,555,119
   Gaming/Entertainment                      $ 11,407,317   $ 3,292,273
Gross Profit
   Food Manufacturing and Distribution       $    412,721   $   616,271
   Gaming/Entertainment                      $ 11,407,317   $ 2,404,801

Identifiable assets of the Company's food manufacturing and distribution segment
is approximately $1.9 million as of June 30, 1996.

Identifiable  assets  exclude  intercompany  loans,  advances  and  investments.
Intercompany  trade  receivables  between  segments have also been excluded from
identifiable   assets.   Corporate  assets  are  principally  cash,   marketable
securities, deferred charges and assets held for disposition.

Significant Customers and Concentration of Credit Risk

Approximately  90% of the  Company's  net  revenues  for the year ended June 30,
1996,  resulted from its Gaming  Interest in the two Macau casinos.  At June 30,
1996, the Company has  approximately  $3.8 million of related gaming  receivable
which was collected subsequent to year end.

The Company  maintains  several cash accounts with a bank. At June 30, 1996, the
aggregate  bank  balance of such  accounts  do not exceed the  federally-insured
limit.

                                                       [NM\10-KSB:63096FS.2] -45

                                      F-22

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996


The Company had sales to five customers and three  customers,  each in excess of
10% of total food sales during  fiscal 1996 and 1995,  respectively  all of whom
were  distributors.  At June 30,  1996,  the  Company  had amounts due from four
customers, each in excess of 10% of total food sales receivables.

Note 12.    Commitments and Contingencies

Operating Leases

The  Company  leases  two  manufacturing  plants  in  California  for  its  food
processing   operations.   The  Company   also  leases   certain   equipment  on
non-cancelable  operating leases related to its food  manufacturing  activities.
NuVen Advisors provides office space to the Company and its subsidiaries,  along
with general and  administrative  personnel,  office  furniture  and  equipment,
telephone and fax services,  accounting and automobiles  pursuant to the various
Management and Advisory Agreements.

At June 30, 1996  future  rental  payments  due under  non-cancelable  operating
leases,  ranging from 1-3 years for buildings and equipment  related to its food
manufacturing activities, are as follows:

           Year Ending                  Amounts
            June 30,                      Due
       ------------------         ------------------
              1996                $          130,581
              1997                            11,400
              1998                            12,900
              1999                            12,100
              2000                             5,400
                                  ------------------
                                  $          172,381
                                  ==================

Rent expense  charged to operations was $96,328 and $132,183 for the years ended
June 30, 1996 and 1995, respectively.

Legal Proceedings

In January 1995, Charles Arnold ("Arnold"),  a consultant to the Company's prior
management,  initiated  a  lawsuit  against  the  Company,  CMA and  MDM  Gaming
Partners,  L.P.  ("MDM"),  alleging  that the  defendants  have  denied him a 1%
equitable  interest in MDM, which was allegedly  verbally  promised to Arnold by
Frank J. Morelli, II and Frank J. Morelli, III for alleged professional services
rendered  to MDM.  Arnold  is  alleging  damages  in an  amount  of  $90,000  in
connection  with this claim.  The Company and the other  defendants have filed a
third-party complaint against FTF, Theodore E. DeTello, Frank J. Morelli, II and
Frank J. Morelli, III, seeking full indemnification from them for any damages to
which Arnold may be entitled in accordance with a certain Termination  Agreement
dated  December  17, 1993  between the parties.  Counsel for the  Morelli's  has
recently  indicated  that the  Morelli's  would be taking  the  Fifth  Amendment
against  testifying in connection  with this lawsuit.  Since Arnold may not have
witnesses to prove the alleged  existence of an oral promise,  the likelihood of
any recovery against the Company,  CMA or MDM appears to be remote.  Counsel for
the parties have stipulated to binding arbitration to be held sometime in 1997.

A Complaint  entitled  Ruben Kitay et al vs. Nona  Morelli's  II,  Inc.,  et al;
United States  District Court for the Central  District of California:  Case No.
95-4375 RMT(SHx),  filed on October 10, 1995, in the U.S. District Court for the
Central   District  of  California  and  subsequently   dismissed   pursuant  to
stipulation,  was refiled by the  Plaintiffs  on April 12, 1996,  in a complaint
entitled  Gustavo  Farias,  et al v.  Nona  Morelli's  II Inc.,  et al.  The new
complaint  named the Company,  its officers,  the Company's  accounting firm and
other third parties as defendants in an alleged  shareholder  derivative  action
(the  "Refiled  Action")  refiled on behalf of certain  shareholders  of NuOasis
Gaming.  The Refiled  Action  alleged  securities  fraud and RICO  violations in
connection  with a certain  Stock  Purchase and Business  Combination  Agreement
pursuant  to which the  Company  acquired  voting  control  of ENP (now  NuOasis
Gaming),  and the events  surrounding the bankruptcy of BGI. The plaintiffs seek
damages  in  an  amount  not  yet  ascertained  according  to  proof,  interest,
rescission,  imposition of a constructive  trust,  diminution of share value for
the  individual  plaintiffs,  attorneys'  fees and  exemplary  damages.  Outside
counsel  for the  Company in the  Refiled  Action,  and the  management  of both
NuOasis Gaming and the Company  believe among other things,  that the action was
initiated by Mike Savage,  a former  consultant of NuOasis  Gaming,  and persons
affiliated  with him, as a part of an attempt to take control of NuOasis Gaming;
that the  Plaintiffs  do not have  standing  to file such  litigation;  that the
Plaintiffs have no competent and credible evidence to support their allegations;
that they have failed to state a proper  claim;  and that they do not qualify as
proper  representatives  in a  shareholder  action.  After  the  filing  of  the
Company's  Motion to Dismiss in the original  action,  the  original  action was
voluntarily  dismissed  by the  Plaintiffs.  The  Company  has filed a Motion to
Dismiss the Refiled Action. As of the date of this Report,  all but three of the
Plaintiffs  have  dropped out of the  litigation.  In response to the  Company's
Motion to Dismiss, the remaining  Plaintiffs have voluntarily  dismissed most of
the  other  Defendants  and  have  dismissed  the  RICO  claims.  The  Company's
accounting firm and chief  financial  officer have been dismissed as Defendants.
The Motion to Dismiss the remaining claims is currently pending.

                                                       [NM\10-KSB:63096FS.2] -45

                                      F-23

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996


In June 1993, prior management of the Company issued 450,000  pre-reverse  split
shares  of  its  common   stock  to  Louis  Siegel   ("Siegel"),   allegedly  in
consideration  for food conveyor  equipment.  However,  new management found the
apparatus stored in the parking lot at the Pueblo, Colorado plant and discovered
that the equipment was nothing more than scrap metal.  In September  1994,  when
Mr. Siegel  failed to provide an appraisal for the apparatus  after a demand for
the same from the Company's  Chief  Executive  Officer,  the Company's  Board of
Directors  canceled the shares,  finding that no consideration had been received
for the issuance of the shares. In July 1995, Siegel requested  reinstatement of
the shares. The Company refused. No further developments  occurred during fiscal
year  1996.  However,  on  September  6, 1996,  the  Company  was served  with a
Complaint  filed by Siegel  against  the  Company  in San Diego  Superior  Court
entitled  Louis  Siegel vs. Nona  Morelli's  II, Inc.  Case No.  703222  seeking
compensatory damages in excess of $150,000, interest, punitive damages, costs of
suit and attorney's fees.  Counsel for the Company and Siegel have stipulated to
a transfer of the action to the Superior  Court for the County of Orange and the
Superior Court of Orange County  assigned Case No. 772045 to the complaint.  The
Company  intends to  vigorously  defend the  Complaint  and is in the process of
filing a Demurrer and Motion to Strike the Complaint.

The Company is involved,  both as plaintiff and  defendant,  in litigation  that
originates  in  the  normal  course  of  business   development  or  operations.
Respective  counsels for the Company do not believe that any existing litigation
will result in an adverse  judgment which would have a negative  material impact
on the Company's financial condition. Accordingly, no provision has been made in
the accompanying financial statements for such contingencies.

Capital Requirements of Cleopatra

At June 30, 1996,  Cleopatra has  approximately  $3,500,000  deposited  with the
builders of the Cap  Gammarth  Casino and the  Hammamet  Casino.  Cleopatra  has
approximately  $2,000,000 remaining to be paid, as security deposits and advance
rent,  before  it can take  possession  of the two  casinos  (see Note 13 of the
footnotes to the  accompanying  financial  statements).  Construction on the Cap
Gammarth Casino and Hammamet Casino is near completion.  In addition,  Cleopatra
estimates  remaining  expenditures and working capital  requirements,  including
security deposits and advance rental payments,  related to equipping and opening
the two casinos to be approximately $15 million in aggregate.

                                                       [NM\10-KSB:63096FS.2] -45

                                      F-24

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996


To finance  the  expected  $15  million  in  remaining  expenditures  on the Cap
Gammarth  Casino and the Hammamet  Casino,  the Company is  negotiating  a joint
venture between NuOasis  International  and a European hotel management  Company
whereby the  European  hotel  management  Company  will  contribute  up to $13.5
million in exchange for a 50% interest in the joint  venture (see Note 13 of the
footnotes to the accompanying financial statements).  Alternatively,  subject to
providing  satisfactory  collateral,  the  Company  has  arranged  for a  credit
facility  with Banque  Francaise de L'Orient  (the "Bank")  which  Cleopatra may
utilize to borrow up to $25 million.

Through  June  30,  1996  the  Company  and  its  subsidiaries  have,  with  few
exceptions,  financed all operations  with  internally  generated  funds and the
Company's common stock.  Third party debt and equity financing has been pursued,
both domestically and internationally,  without success.  And, while the Company
and its subsidiaries have been able to meet their financial  commitments through
the close of fiscal 1996, if for any reason,  the proposed  joint venture is not
formed,  or if Cleopatra  is unable to borrow from the Bank,  or if Cleopatra or
NuOasis  International  are unable to otherwise meet their commitments under the
various  agreements to provide the  furniture,  fixtures,  equipment and working
capital for the proposed casinos once construction is completed, the Company may
be  required  to  intercede  and provide  the  requisite  financing  and working
capital, or be forced to sell all or a portion of their respective interest,  or
lose their respective rights to the projects and properties entirely.

Commitments of Cleopatra

As discussed above, and in Note 13, the Company is actively  pursuing  financing
which may involve the pledge of or hypothecation of some or all of the Company's
assets.  The  Company  has no  commitment  for  material  capital  expenditures,
however, it is a guarantor of the obligation of Cleopatra under the Cap Gammarth
agreement.

Note 13. Subsequent Events

Cleopatra

Subsequent to the close of fiscal 1996, NuOasis  International  executed letters
of intent and was  negotiating  definitive  agreements  to  acquire  Replacement
Properties related to its international gaming and hospitality activities.

In July 1996,  Cleopatra  signed two letters of intent  with a company  owning a
hotel and casino project in Monastir,  Tunisia,  pursuant to which Cleopatra (or
its  designee,  Cleopatra  World),  would lease the casino and  through  NuOasis
International  manage  the  hotel (to be  re-named  "Cleopatra  Palace  Resort -
Monastir"),  and provide Las Vegas casino gaming  management for the casino (the
"Monastir Casino").

In September  1996,  the Company  entered into an agreement in principle  with a
European hotel  management  Company pursuant to which the parties plan to form a
joint  venture.  In exchange  for a 50% interest in the new joint  venture,  the
European  hotel  operator  will  provide the new joint  venture with up to $13.5
million in working capital and the Company, through NuOasis International,  will
contribute or cause to be  transferred  its interest in the entities  which hold
the rights to manage the Le Palace Hotel, the Cap Gammarth Casino,  the Hammamet
Casino and the Monastir Casino.

In October  1996,  the  Company  and  Cleopatra  entered  into a  reorganization
agreement  with  Cleopatra  which will result in NuOasis  International  issuing
$13.5  million  in  secured  promissory  notes in  consideration  for 70% of the
outstanding  stock of three  Cleopatra  subsidiaries,  including  Cleopatra  Cap
Gammarth Casino, Cleopatra Hammamet Casino and Cleopatra Monastir. Additionally,
the Company and  Cleopatra  agreed to increase  NuOasis  International's  equity
interest in Cleopatra from 28% to 33%.

                                                       [NM\10-KSB:63096FS.2] -45

                                      F-25

<PAGE>


                             NONA MORELLI'S II, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  JUNE 30, 1996

Additionally,  following the  restructuring  agreement with  Cleopatra,  NuOasis
International  executed an  agreement  to purchase a 50%  interest in  Cleopatra
World, Inc., a British Virgin island corporation ("Cleopatra World"), the lessor
of the Le Palace Hotel and the  commercial  center,  residential  complex,  real
estate and improvements  surrounding the Cap Gammarth Casino (the "Cap Gammarth.
Resort").

National Pools Corporation

On June 13, 1996, Nona entered into an Option Agreement with Joseph  Monterosso,
President  of National  Pools  Corporation  ("NPC"),  an  individual  previously
unrelated to the NuOasis Gaming or Nona,  and granted such  individual an option
to purchase the 250,000 Series B Preferred Shares of the NuOasis Gaming owned by
Nona at a purchase price of $13.00 per share,  or a total of $3,250,000,  with a
minimum purchase of 110,000 shares.

The  exercise  of the  option is  conditioned  upon  shareholder  approval  of a
proposal  to increase  the  authorized  number of shares of common  stock of the
NuOasis Gaming by at least twenty  million  (20,000,000)  shares.  The option is
assignable   and  shall  expire  90  days  after  the  next  Annual  Meeting  of
Shareholders of NuOasis Gaming.

On  November  21,  1996,  NuOasis  Gaming's  board  of  directors  approved  the
acquisition  of NPC. The  acquisition is expected to be financed by the issuance
of securities of NuOasis Gaming,  however,  a definitive  agreement has not been
signed.  Moreover,  the acquisition is contingent upon the occurrence of certain
events including but not limited to: (a) NPC shareholder approval;  (b) exercise
of that certain  option  agreement  between  Monterosso and Nona; (c) Monterosso
securing  financing  that would allow the  exercise of the option by  Monterosso
and/or one or more  qualified  private  investors;  (d) reaching an agreement to
sell CMA; and (e)  shareholder  approval of a proposal to increase the number of
authorized  shares  of common  stock of  NuOasis  Gaming by at least  20,000,000
shares. There are no assurances that such transaction will occur, and because of
on-going  negotiations  and  uncertainties  surrounding  the realization of such
transaction,  NuOasis  Gaming cannot  determine  the ultimate  effect on NuOasis
Gaming's financial position at this time.

                                                       [NM\10-KSB:63096FS.2] -45

                                      F-26