Securities and Exchange Commission
                             Washington, D.C., 20549

                                   FORM 10-KSB
                 Annual Report Pursuant To Sections 13 Or 15 (D)
                     Of The Securities Exchange Act Of 1934
                   For the Fiscal Year Ended December 31, 1997
  Filed Pursuant To Sections 13 Or 15(D) Of The Securities Exchange Act of 1934

             Securities and Exchange Commission File Number O-28416

================================================================================

                            SBI Communications, Inc.
            (Name of small business issuer specified in its charter)

================================================================================

                     Delaware                                 58-1700840
         (State or other jurisdiction of         (I.R.S. Employer Identification
          incorporation or organization)                       Number)
               Post Office Box 729
               103 Firetower Road                         (912) 759-0701
               Leesburg, GA 31763                    Issuer's telephone number
(Address of Principal executive offices) (Zip code)
================================================================================

        Securities registered pursuant to Section 12(b) of the Act: None
        Securities to be registered pursuant to Section 12(g) of the Act:
        Common Stock, Par value $0.001 - Preferred Stock, Par Value $5.00
                                (Title of Class)

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-B is not contained  herein,  and will not be contained,  to the
best of  Registrant's  knowledge,  in definite proxy or  information  statements
incorporation  by reference in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB.   YES [X]  NO [ ]

<TABLE>
<CAPTION>
<S>                                                                                        <C>        
Registrant's revenues for its most current fiscal year:                                      $544,662.00
                                                                                             -----------
Aggregate market value of the voting stock held by non-affiliates as of April 30, 1998:    $1,336,360.00
                                                                                           -------------
Number of common shares outstanding as of latest practical date at $.001 par value:            5,345,430
                                                                                               ---------
</TABLE>

Documents Incorporated By Reference:  None
Location of Exhibit Index: The index of exhibits  is contained in part IV herein
                           on page number 49.

Transitional Small Business Disclosure Format:     Yes [ ]      No [X]
================================================================================
                                                   Dated April 30, 1998

<PAGE>
--------------------------------------------------------------------------------
                                Table of Contents
                                -----------------
Item         Page
Number       Number   Item Caption
------       ------   ------------

Part I
------

Item 1.      3        Description of Business
Item 2.      15       Description of Properties
Item 3.      16       Legal Proceedings.
Item 4.      16       Submission of Matters to a Vote of Security Holders

Part II
-------

Item 5.      16       Market Price of and Dividends on the Registrant's Common
                      Equity and other Shareholder Matters
Item 6.      22       Management's Discussion and Analysis or Plan of Operation
                      Executive Compensation
Item 7.      25       Financial Statements and Summary Financial Data
Item 8.      33       Changes in and Disagreements with Accountants on
                      Accounting and Financial Disclosure

Part III
--------

Item 9.      34       Directors, Executive Officers, Promoters and Control
                      Persons
Item 10.     42       Executive Compensation
Item 11.     44       Security Ownership of Certain Beneficial Owners and
                      Management
Item 12.     45       Certain Relationships and Related Transactions

Part IV
-------

Item 13.     45       Exhibits, Financial Statement Schedules, and Reports on
                      Form 8-K

Signatures   49
----------

        Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 2
<PAGE>

                                     Part I
                                     ------
Item I.   Description of Business
-------   -----------------------
General
-------

SBI   Communications,   Inc.,  a  publicly   held  Delaware   corporation   (the
"Registrant"),  was  originally  organized in the State of Utah on September 23,
1983,  under the  corporate  name Alpine  Survival  Products,  Inc. Its name was
changed to Justin Land and  Development,  Inc.,  during  October of 1984, and to
Supermin, Inc., on November 20, 1985.

The  Registrant  was  originally  formed  to engage  in the  acquisition  of any
speculative investment or business opportunity without restriction as to type or
classification.   On  September   29,   1986,   Supermin,   Inc.,   concluded  a
reorganization  under Section 368(a)(1)(B) of the Internal Revenue Code of 1954,
as amended,  pursuant to which it exchanged  200,000 shares of its common stock,
$.001 par value (all shares  numbers used in this  registration  statement  are,
unless otherwise  stated,  adjusted to reflect a one for 20 reverse stock split)
for all of the capital  stock of Satellite  Bingo,  Inc., a Georgia  corporation
organized on January 10, 1986,  and the originator of the  Registrant's  current
business (the "SBI Subsidiary").  In conjunction with such  reorganization,  the
former  stockholders of the SBI Subsidiary,  acquired  control of the Registrant
and the Registrant changed its name to Satellite Bingo, Inc.

On March 10, 1988, the Registrant changed its name to SBI Communications,  Inc.,
its current name, and on January 28, 1993, the  Registrant  reincorporated  into
Delaware through a statutory  merger with a wholly owned Delaware  subsidiary in
reliance on the exemption  from  registration  requirements  of Section 5 of the
Securities  Act of 1933,  as  amended,  provided by Rule  145(a)(2)  promulgated
thereunder.

The  Registrant  has two  subsidiaries,  SBI  Communications,  Inc.,  an  Nevada
corporation;  and, Satellite Bingo, Inc., a Georgia corporation. As used in this
registration  statement,   unless  the  context  requires  otherwise,  the  term
"Registrant"  includes  SBI  Communications,  Inc.,  a  publicly  held  Delaware
corporation, and, its subsidiaries, predecessors and affiliates whose operations
or assets  have been taken over by SBI  Communications,  Inc.,  a publicly  held
Delaware corporation.

A report  by the  National  Association  of  Fund-raising  Ticket  Manufacturers
estimated  that in 1992 annual  gross  receipts to  charities  in the U. S. from
charity bingo games were  approximately  $2.6 billion.  Industry groups estimate
the growth rate of the industry at more than 10% annually.  Management therefore
estimates the U. S. charitable bingo market  currently  totals  approximately $5
billion in annual receipts. Thus, while the charity bingo market is only a small
percentage of the total U. S. gaming market,  the Company  believes that charity
bingo is,  and will  continue  to be, an  attractive,  growing  market  segment,
despite the proliferation of alternative gaming options available to the public.
Management believes that the U. S. commercial bingo

        Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 3
<PAGE>

industry will remain  attractive due to: i) increased  customer  recognition and
participation;  ii) favorable demographic trends,  including an aging population
with  increasing   disposable  income;  iii)  reduced  governmental  funding  of
charities  due to budgeting  pressures;  iv) the trend towards  legalization  of
gaming  activities;  and v) the requirement in most  jurisdictions  that charity
lessors  operate  commercial  bingo  centers and retain  responsibility  for all
staffing and marketing costs. Management is also confident that the Company will
prosper in the bingo industry based on: i) management's industry and operational
experience;  ii) the Company's early entry into the nationally  fragmented bingo
market,  with  no  competition  on a  similar  scale;  and  iii)  the  Company's
positioning of its bingo centers in demographically  and economically  desirable
markets, primarily in the southern part of the U. S.

Business Overview

Although state  regulations  vary, the Company's  basic operation is as follows.
The Company identifies and analyzes desirable bingo markets that offer favorable
population  and income  demographics.  After the Company  selects an  attractive
market for expansion,  the Company determines whether it would be more desirable
to build a new bingo  center or  acquire  an  existing  center,  if one  exists.
Building and  finishing  out a new  commercial  center,  which  typically  costs
$100,000 - $250,000,  is often less expensive than acquiring an existing  center
and  allows  the  Company  to  potentially  earn a  higher  rate of  return  and
accelerated payback on its investment.  Conversely,  acquisitions typically cost
more than building a comparable new center,  but offer certain  advantages  over
building,  including:  i) greater  predictability of investment return since the
center's past performance is known, ii) no dilution of the existing bingo market
through the  addition of another  bingo  center,  and iii)  preservation  of the
Company's cash resources (if the  acquisition is funded in whole or in part with
seller-financed  notes and/or Company stock. The Company will continue to expand
through  both  developments  and  acquisitions.  The  Company  will only  pursue
acquisitions of desirable  halls that offer proven cash flows and  opportunities
for enhanced financial performance. Concurrent with new bingo center development
or acquisitions,  the Company will acquire all necessary  operating  permits and
licenses from the appropriate state or local municipality.

After the company  selects a site for  development or acquisition  and initiates
legal  fulfillment  activities,  the Company then  contacts  local  charities to
promote the  Fund-raising  possibilities  which  charity  bingo  provides.  When
selecting  charities,  the Company  considers such factors as; i) the charitable
cause and  presence  in the  local  community;  ii) the  background  of  charity
officers or trustees;  and iii) a charity's  financial  stability.  Once charity
selection is complete,  the Company  assists the charities in the development of
an operating plan  consistent  with current  regulations,  which may include the
creation  of a bingo  management  team  comprise  of  representatives  from  the
participating charities. The management team hires and oversees center employees
and  volunteers,  sets up an accounting  system and bank  accounts,  and hires a
center manager/head cashier who manages the center. Lease agreements between the
Company and the  charities are  typically  structured  on an annual basis,  with
cancellation  options for both  parties.  The Company  believes  that short term
leases allow it to limit commitments to under-performing charities.

        Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 4
<PAGE>

After  the  bingo  center  is  opened,   the  Company  continues  to  act  as  a
consultant/service  provider to the participating charities, as well as property
manager for the building in which the bingo games are held.  The Company's  role
is to ensure  profitable  operation of the center and help resolve any conflicts
that may arise.  The Company's  primary  income is derived from rental  payments
from the  charities  for the  lease of the  building  and  equipment  for  bingo
sessions at the center.  These rental payments are generally controlled by state
or local  regulations  and typically  place a cap or ceiling on the amount to be
realized by the Company per session  (See Item 1 - Government  Regulation).  The
participating  charities  keep the net  proceeds  after  payment  of rent to the
Company and payroll costs to the bingo center  employees.  Additional income may
also be earned by the Company through vending and  concessions  operations,  the
sale of bingo paper and  supplies at certain of the  centers and  revenues  from
video gaming, where legal.

The  thrust  of  most  applicable   state  or  local   regulations  is  to  make
participating charities responsible for the direct operation of the bingo center
and employment and payment of personnel.  These regulations  generally  prohibit
management  control  by  the  Company,  which  reduces  the  Company's  staffing
obligations and expenses.  In addition,  most states require that  participating
charities be  responsible  for all  marketing  and  advertising  activities  and
expenses.  The Company's role as  consultant/service  provider does permit it to
advise in the selection of key employees and the  formulation and execution of a
center's business plan.

The  Company   normally  bears   responsibility   for  all   non-personnel   and
non-advertising costs of a bingo center,  including property rental,  finish-out
of the property  for bingo  operations,  bingo  supplies,  janitorial  services,
utilities,  maintenance  and  repairs,  security,  property  taxes,  permits and
insurance.  The Company  must be able to cover these  expenses,  plus  corporate
overhead,  from its charity rental payments in order to earn a profit.  However,
as a  center  becomes  better  established  and  more  profitable,  the  Company
transfers  a portion  of these  expenses  to the  participating  charities.  The
Company's objective is to allow the operation to run on a "turnkey" basis by the
charities to the extent possible.  However, because of the Company's substantial
investment  in opening a bingo center and  significant  continued  commitment in
funding operating and overhead costs, the Company must maintain an advisory role
with  respect to its bingo  center  operations.  The Company  and  participating
charities  each has a vested stake in making sure that  operations are conducted
in a mutually  profitable  way. The  Company's  objective  is to ensure  maximum
proceeds from center operations,  which allows charities to generate substantial
funds,  and, in turn,  allows the  Company to earn the  maximum  legal rent from
leasing its properties to charities.

Current Operations
------------------

The Company's bingo center strive to offer first class facilities and amenities,
are committed to customer  satisfaction and offer generous charity support.  The
Company believes that these principles,  together with the Company's  management
experience, site selection methodology and ability to raise capital, distinguish
the Company from direct  competition  and allow the Company and its charities to
mutually prosper.  The Company's  participating  charities raised  approximately
$300,000  proceeds  in 1996 and  1997.  The  Company's  current  operations  and
potential expansions will likely remain focused on the southern part of the

        Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 5
<PAGE>

U. S. which offers  favorable  demographics  and  logistical  advantages  to the
Company. A brief description of the Company's current operations is as follows.

Alabama (One) bingo center)
---------------------------

The Company owns and leases a hall for bingo  operations  in  Piedmont,  Alabama
that have been in  existence  since  1994,  respectively.  Bingo in  Alabama  is
regulated at the local level with varying laws between counties and cities. Most
local laws provide limits on the number of weekly  charity  sessions that can be
conducted  except in Piedmont with no limits and ten hour sessions,  five days a
week.

        Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 6
<PAGE>

Expansion Plans
---------------

The Company  continuously  reviews  industry  developments  and  regulations for
potential expansion opportunities.  It plans to acquire or develop bingo centers
in markets that meet the Company's financial, legal, operational and demographic
selection  criteria.  The Company will continue to target those states that have
enacted  legislation  enabling charities to raise money through bingo and gaming
events.  Such states  recognize that most charities lack the investment  capital
and/or business  acumen to  independently  establish such centers.  These states
have provided a regulatory  structure that allows commercial lessors such as the
Company to act as landlord  and source  provider to the  charities.  The Company
operates within this regulatory structure and essentially provides the charities
with the expertise needed to open and operate a profitable  bingo  entertainment
center.  As a public  company,  the Company  benefits  from  operating in highly
regulated markets which levels the competitive playing field.

It is imperative that the Company continue to grow its operational revenues. The
Company has made a significant  investment in assembling its management team and
operational  infrastructure.  This  investment  cost  is now  relatively  fixed,
however,  and the  Company  has the  potential  to  significantly  leverage  its
profitability through incremental revenue increases.  The Company will therefore
continue to employ an aggressive yet methodical  growth strategy.  It intends to
make strategic  expansions in markets with: i)  accommodating  regulations;  ii)
amenable  charities;  iii) favorable  demographics (areas with concentrations of
middle-lower  income  earners and/or elderly  population);  and iv)  significant
driving distance to competing gaming  establishments.  Once the Company has made
an  expansion  decision,  the success of the venture is  determined  by: i) site
selection;  ii)  a  continued  favorable  legal  environment;   iii)  successful
operations management; and iv) customer acceptance and patronization.

The Company intends to grow through both acquisitions and developments.  it uses
extensive  review  procedures  to evaluate  expansion  opportunities,  including
market studies,  legal evaluations,  financial analyzes and operational reviews.
The Company determines  development  budgets and acquisition prices based on the
proposed  investment's  expected  financial   performance,   competitive  market
position,   risk  profile  and  overall   strategic  fit  within  the  Company's
operational plans.  Acquisition terms typically include cash payments,  issuance
of Company securities and seller-financed notes.  Consulting and non-competition
agreements may also be included.

The Company  expects to continue its expansion  activities in those markets that
allow charity gaming  activities.  Some states  currently  allow video gaming in
charity centers,  while other states are considering the legalization of charity
video gaming.  Assuming  continued  government and charity funding shortages and
demonstrated  customer interest,  the Company believes that the number and types
of games that  charities  can offer in  conjunction  with bingo will continue to
increase.  Management believes that video gaming such as bingo, blackjack,  keno
and poker,  as well as video pull-tab  machines,  has tremendous  appeal to both
existing bingo clientele and potential new

        Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 7
<PAGE>

customers,  and would substantially increase charity fund-raising and expand the
overall market for charity gaming.  The Company will remain actively involved in
the legislative  process of bringing  charity gaming to states where the Company
operates.

Other Products or Services and Their Markets
--------------------------------------------

1. Broadcast And Internet
-------------------------

The   Registrant   has  experience  in  the   interactive   communications   and
entertainment   fields  which  brings  together  elements  of  the  "information
superhighway."  It has created and  broadcast  interactive  national  television
programs  using  state-of-the-art  computer  technology,   proprietary  software
programs, satellite communications, and advanced telecommunications systems.

The  Registrant's  management  believes that its  experience  in developing  and
delivering  interactive  television  programs,  as  well  as  its  ownership  of
proprietary systems and software,  provide an advantage in its ability to launch
new entertainment and information programs based on comparable resources.

A. Globalot Bingo
-----------------

Introduction
------------

Globalot Bingo and Satellite Bingo are proprietary interactive Bingo games which
were  broadcast by the  Registrant  in the past via  satellite to  participating
cable  and  television  stations.   The  Registrant  plans  to  resume  expanded
broadcasts  in the near future,  when it repairs  required  telephone  switching
equipment.

The use of  telephones  for game card  distribution  makes it possible  for home
viewers to also participate in the Registrant's broadcast programs. The Globalot
Bingo  program  was  designed  to provide  larger  jackpots  than  participating
operations could individually pay, permitting  participating cable and broadcast
stations  to attract  larger  viewing  audiences,  increase  profits and attract
commercial sponsors.

A broadcast took place on June 15, 1996;  however,  subsequent  broadcasts  have
been delayed by a problem with the Registrant's  telephone switching  equipment,
which should be resolved in the near future.  Future plans include expanding the
game to other week nights.  The game was broadcast over PandaAmerica  Network in
the past and daily  broadcasts  resumed  during the forth  quarter of 1997.  The
Registrant  intends to broadcast a Million  Dollar  Globalot  game each Saturday
evening at 11:00 p.m. (eastern time).

        Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 8
<PAGE>

Operation
---------

In order to play the game each player must be playing a different card or cards.
Globalot Bingo has developed a "Super Jackpot Bingo"  computer  program that can
generate a series of one billion individual cards without duplication. Each card
is unique and all cards are serially numbered to preclude anyone from submitting
a fraudulent cards and/or counterfeiting.

Globalot  Bingo cards may be obtained by telephone  until a specified  time.  At
that point the Registrant  provides the serial number of cards obtained for that
night's game to its central processing office.

In order to encourage  participation  and to develop a broad  playing  audience,
Globalot Bingo developed a special Million Dollar Globalot game, designed to air
each Saturday  evening at 11:00 p.m.  (eastern  time). A broadcast took place on
June 15, 1996;  however,  subsequent  broadcasts  have been delayed by a problem
with the Registrant's telephone switching equipment, which should be resolved in
the near future.

When  broadcasts  resume,  the game will pay the first person who attains  Bingo
each broadcast night an advertised cash prize.  The prizes will involve a chance
to win $1,000,000 by being the first  participant to cover the correct 8 numbers
in 16 calls (the term call  referring  to the first 16 numbers  selected  in the
game) or less (the "Quick Pick 8" game) or, guaranteed second prizes of $25,000.
If there is no winner in the $1,000,000  game, the Registrant will pay the first
person to cover the shaded area or  complete  the Quick Pick 8 game  $5,000.  In
addition to the Quick Pick 8 game, the Registrant will award a $20,000.00 dollar
grand prize to the first person covering an entire card.  Cards obtained to play
the Registrant's 24 hour program will be good for the entire week, including the
Saturday Million Dollar Globalot game.

As additional  players  participate,  the Registrant plans to increase the grand
prize to $50,000.

When the televised  game begins,  each number being called on the televised show
is also recorded by the master computer.  The computer system, by monitoring all
of the cards in play, is able to determine when a Bingo has occurred and provide
the  location of the winning card holder.  The viewing  audience is  immediately
shown the image of the winning card.

        Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 9
<PAGE>

All games are called at the rate of  approximately  one Bingo number every 12-15
seconds in order to allow  players to play multiple  cards.  If it is determined
that,  based  on the  cards  in  play,  the  call is too  fast or too  slow,  an
adjustment is made.

The national  winner will be called during the broadcast by the program's  host,
or, may call the Globalot  Bingo 800 number shown on the program.  Upon contact,
the winner will provide the Registrant's staff with his or her serial number and
other necessary  identification,  including name and address. The winner is then
instructed on how to claim the prize.

If for reasons  beyond the control of Globalot  Bingo the regular  telecast  and
game cannot be broadcast, all prize moneys announced for that week will be added
to the jackpot for the next succeeding game.

Technology

The Registrant will use proprietary  technologies that enable viewers at home to
participate in Bingo games televised live in specific English speaking  Hispanic
markets in the US and Worldwide (local laws permitting).

Globalot Bingo has a special telephone number, 800-729-BINGO (2464), which is an
access code to gain entry into long distance network.  Upon dialing the number a
caller  hears a 45  second  message  disclosing  who  the  caller  has  reached,
providing  information  about Globalot  Bingo,  the caller's  options and how to
receive Globalot Bingo playing cards by telephone (including the cost and method
of billing).  A caller must have a prepaid  calling card in order to obtain free
Globalot  Bingo  playing cards via the phone,  which must be purchased  from the
Registrant.  The prepaid  calling card also  permits the  purchaser to make long
distance  telephone  calls at savings of up to 70% from  regular  long  distance
rates and will provide access to other  services  which the Registrant  plans to
make available in the future.

In the event the caller,  (who must be 18 or over),  wishes to proceed after the
45 second  announce ment he or she must activate the system.  Upon activation by
the  caller,  the call is  automatically  switched  to the  Globalot  Bingo card
distribution  center,  and  charges for the call begin.  The time  necessary  to
receive three Globalot Bingo playing cards by telephone is eight minutes and the
caller is charged $9.60 or $1.20 per minute. The charge for the call is deducted
from the caller's prepaid calling card. The prepaid calling card may be obtained
from the Tele-communications switch via credit cards or by sending in payment to
the Registrant.

Interactive  players  will also be able to obtain a strip of three cards free of
any charge by sending a stamped, self addressed envelope to the Registrant.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 10
<PAGE>

The Registrant has  established a winners  hot-line that will allow card holders
to obtain information  concerning winning cards. This will allow players to play
and win even if they didn't have an opportunity to see the show.  This number is
800-684-8493.

The  Registrant  also has the  ability to receive  long  distance  calls from 65
countries  for  Globalot  Bingo  playing  cards,  provided in the same manner as
domestic  callers  except that service is provided in the  predominant  language
used in the originating  country.  The cost for such calls will differ depending
on the country of origin.  The Registrant  receives a portion of each call paid,
payment being different in each originating country.  International  callers can
obtain play information over the Internet.

The Registrant's software and communications  technology eliminates the need and
minimizes the expense related to the printing and distribution of Bingo cards by
permitting viewers to receive up to four "cards" (numbers) by phone; and, allows
its telephone  switching  network to handle  thousands of calls  simultaneously,
permitting  optimum  viewer  participation  in  each  game.  The  use  of  these
technologies also eliminates the need for live operators.

The  Registrant's  production  offices and  computer  center are located at 1239
South  Glendale  Avenue,  Glendale,   California  91205.  Its  phone  number  is
1-800-460-2170.  Each strip of three cards gives the holder nine  chances to win
the Super Jackpot Prize.

Registrant's Income
-------------------

The  Registrant's  income will be based on the difference  between the telephone
charges paid by players and the negotiated cost charged to by the  participating
long distance  company.  The long distance  charges will appear on each caller's
prepaid calling card, eliminating collection functions.  Since no live operators
are employed in recording and processing the calls and awards, the only expenses
are related to the prizes offered, production and telecast of the Bingo game and
administrative costs.

Internet
--------

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 11
<PAGE>

Competition

There are  currently  numerous  entities  engaged in the operation of commercial
bingo  entertainment  centers  in the U. S.  Commercial  bingo  center  start-up
expenses are generally comprised of site selection and preparation,  finish-out,
equipment and licensing  fees,  and typically cost from $100,000 to $250,000 per
center.  Thus, there are no significant  financial  barriers to entry.  However,
rigorous  regulatory  requirements and legal  complexities of the involvement of
non-profit  organizations  serve to reduce the entry of new  competitors.  Since
bingo prize payout are often legally limited,  competition,  where it exists, is
normally  focused  on  a  center's  amenities.  Bingo  centers  with  convenient
locations,  attractive  facilities,  maximum bingo prize payout,  ample parking,
attentive security, comfortable environment, friendly personnel and value-priced
concessions  usually  succeed in their market.  The Company seeks to provide the
most desirable  bingo  center(s) in its respective  markets in order to generate
long-term  player  loyalty.  The Company is committed to ensuring that its bingo
centers remain appealing and that its customers are provided maximum comfort and
enjoyment.  Additional competition within the bingo market comes from charitable
bingo  operations  owned  and  run  by  charities.  In  general,  however,  such
operations  have not been able to compete  with  commercial  operations  due to,
according  to most bingo  players,  smaller and less  desirable  facilities  and
amenities, lower bingo prize payout and fewer bingo sessions.

Additional  competition  comes from other sectors of the gaming industry such as
lotteries,  horse and dog  racing and casino  operations.  While the  Company is
cognizant of these competing  operations,  and does try to locate its facilities
in areas insulated from such competition,  the Company believes that its patrons
represent  unique,  value-oriented  customers  for  whom a day or night of bingo
represents  a small  investment  of $10 - $100 that  provides  several  hours of
entertainment  with payout that rival the average slot machine.  Lottery players
seek much larger  payout with less time  commitment,  despite the  infinitesimal
odds.  Horse and dog  racing  bettors  and casino  patrons  do enjoy  comparable
entertainment  value that bingo provides,  but generally require longer commutes
to the gaming establishment as well as higher investments for the same period of
playing  time.  In  addition,  these  other  gaming  venues do not  provide  the
socializing value that bingo provides.  The Company also recognizes  competition
from  American  Indian  gaming   establishments,   which  enjoy  certain  legal,
operational and tax advantages. The Company currently has no plans to compete in
American Indian gaming markets.

1.  Broadcast
-------------

Interactive Technology
----------------------

A number of important trends support  management's belief that the Registrant is
re-entering the interactive television programming market at the right time with
the right products. As the

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 12
<PAGE>

phenomenon  known as the "Information  Superhighway"  continues to shape the way
people  communicate  with  one  another,   receive  information  and  facilitate
transactions, a number of events are beginning to occur.

Numerous  books and recent  articles  indicate  that  people are  becoming  more
comfortable with services and entertainment  offered in the privacy of their own
home through their telephones or personal computers. The data highway also known
as the National  Information  Infrastructure  (NII), is helping  facilitate this
trend by linking homes, offices and entertainment sources into one big network.

The data  highway and its ability to reach  millions of  consumers  is providing
unprecedented  opportunities  for  manufacturers  and  marketers of products and
services.  These  companies  are being  challenged  to find ways to use advanced
technology,  like interactive technology,  to make it easy for consumers to find
out about and purchase their products and services.

Popular  examples of  interactive  technology  in the  consumer  market  include
on-line  computer  services  (like  Prodigy  and  CompuServe),  voice  automated
telephone services (like consumer banking and financial  services),  and at-home
television  shopping services (like the Home Shopping  Network).  The success of
these have convinced  management that  interactive  television  programming like
that being  offered will be well  received by a public that  continues to accept
more and more interactive technology into their daily lives.

The Bingo and Gaming Industry
-----------------------------

Management believes that the past success of the Registrant's  interactive bingo
programs  are evidence  that the game is as popular as ever among people  around
the world.  Recent statistics  generated by the United States government seem to
strongly support this belief.  According to a recent survey of American Gambling
Attitudes and Behavior  conducted by the United States  Commission on the Review
of a National Policy Toward Gambling, bingo is the fourth leading "entertainment
sport" in the  United  States,  generating  some  60,000,000  spectators  and/or
participants    each   month.    This   figure    represents    7,300,000   more
participants/spectators   than  Major  League   Baseball   attracts  and  almost
40,000,000  more  participants/spectators  than NFL Football and NBA  Basketball
attracts.

The  survey  also  shows  that  the  game  has  equal  appeal   among   genders.
Approximately 30% of bingo players have an income of $25,000 and over, and bingo
players are more likely to use their  leisure  time by doing  indoor  activities
such as reading books, newspapers and magazines.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 13
<PAGE>

As Americans become older as a population and choose to spend more time at home,
management believes that interactive  television programs like those it plans to
offer will increase in popularity.  Current statistics  indicate that persons 65
and older that play Bingo play the game at least once a week.

These research  findings and past experience  support  management's  belief that
bingo is as popular as ever and that there is a viable  market  opportunity  for
the Registrant's nationally and internationally interactive broadcast programs

The Registrant's Competitive Position
-------------------------------------

The Registrant has no direct local  competition for its current  operations (the
operation of its facility in Piedmont,  Alabama). However, its operations are in
competition  with all aspects of the  entertainment  industry,  both locally and
nationally.

Broadcast Bingo
---------------

The Registrant  competes with all broadcast game shows and, more generally,  all
types  of  broadcast   promotions   designed  to  increase  audience  share  and
advertising  revenues.  Management  is not aware of any  nationally  broadcasted
bingo  shows.  Some   locally-originated   shows  exist  in  various  locations.
Management  believes,  without  assurance,  that it has a competitive  edge over
other broadcast bingo promotions since Ron Foster originated the concept and has
been  promoting  it since 1984.  Management  believes  that the  Registrant  has
established a reputation of equitable and complete  service to the broadcast and
gaming industry.

With  respect to game shows and other types of broadcast  promotion,  management
believes  that the  simplicity  of the bingo game and its mass  audience  appeal
enables the Registrant to successfully compete with other game shows.

Other Activities
----------------

The Registrant is not an established  participant in the other areas in which it
expects to operate; however, management believes that the fields involve rapidly
developing  markets  which no single  entity  currently  dominates,  with  great
opportunities  for entry  level  participants  possessing  an  understanding  of
developing  technologies.  Consequently,  although  the  interactive  television
fields

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 14
<PAGE>

are  highly  competitive  and  include  major  cable  television  and  telephone
companies,  management  is confident  that its  endeavors  constitute a niche in
which it can successfully compete.

2.  Sources  and  Availability  of Raw  Materials  and the  Names  of  Principal
--------------------------------------------------------------------------------
Suppliers
---------

None of the  Registrant's  proposed  activities  are  reliant on raw  materials.
Rather,  they depend on the ability to exploit  emerging  technologies  that are
expected to be readily available.

3. Dependence on One or a Few Major Customers
---------------------------------------------

The Registrant's  current  operations are highly reliant on two local charities.
Its former  broadcast  operations  and  contemplated  future  operations are not
expected to be reliant on any single or small group of customers.

Employees
---------

As of December 31, 1997, the Company had 12 permanent employees,  including four
officers,  three professional staff, three maintance and five kitchen staff. The
Company  also  retains the  services of property  managers  who oversee the hall
maintance & grounds in Alabama.  No employee of the Company is  represented by a
labor union or is subject to a collective bargaining agreement.

Premises

Frontier Palace
458 Highway 278 Bypass - Piedmont, Alabama  36272                  Company-owned

Government Regulation

Approximately  45  states  and  the  District  of  Columbia  have  enacted  laws
permitting and controlling  the operation of bingo centers.  A small but growing
number of these states also allow video gaming in charity sponsored centers. The
Company   complies  within  this  regulated   structure  as  both  landlord  and
consultant/service  provider  to the  charities.  In most  states the Company is
required to obtain and maintain  permits  and/or  licenses  from state and local
regulatory  agencies.  State  regulations often limit the dollar amount that the
Company can charge a charity for rent per bingo session.  Some states also limit
the number of weekly sessions that may be conducted in a given bingo center,  as
well as the prize money that a charity may pay out per session.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 15
<PAGE>

The Company views this situation as a "double-edged sword," however, because the
regulatory limitations and complexities discourage new competitors that lack the
Company's  experience  and  charity  relationships.  However,  there  can  be no
assurance that current laws and  regulations  will not be changed or interpreted
in such a way as to require the Company to further  restrict its  activities  or
rentals.  It is also possible that liberalization of such regulations in certain
areas would diminish the Company's competitive  advantage.  In states that limit
the number of charity  sessions,  the Company  recruits a  sufficient  number of
local charities to ensure that the maximum number of sessions are conducted.

All states  providing  for the  operation of charity  bingo  centers have unique
regulations.  While the vast majority of these states  assign the  regulation of
charity bingo to a state agency, in some states, regulation is under the control
of localities.  The requirements  typically imposed on a commercial bingo lessor
include the acquisition of necessary licenses and permits, a limit on the rental
payments to be made by a charity to the  commercial  lessor,  and a  prohibition
against the lessor  directly  operating a center.  The Company is thus typically
prohibited from paying the wages of those employees operating the center as well
as any marketing or advertising expenses for the center. The regulations against
the direct  operation and marketing of a bingo center by the Company  reduce the
Company's  payroll and  advertising  costs for the center.  Since the Company is
allowed to act as a service provider, the Company can advise in the selection of
key employees and the creation and execution of a bingo center's operating plan.

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

The  Registrant's  principal  offices  were  located  in  Piedmont,  Alabama  in
facilities  purchased by the  Registrant  on December 16, 1994,  for  $6,500,000
(paid in shares of the Registrant's preferred stock, valued at $5.00 per share).
The facility is comprised of 80,000 square feet of usable space under roof,  and
includes a Bingo hall. The Bingo hall,  including the personal property owned by
the Registrant and maintained  properties therein, has been leased on a month to
month basis by the Registrant to Piedmont  Jaycees,  Inc. since August 10, 1995.
The rental for the building and equipment  located  therein is $75,000 per month
or $7,000  per day,  whichever  is  greater,  plus all other  defined  expenses,
excluding insurance, ad valorem taxes, assessments, repairs, upkeep, maintenance
and  similar  expenses.  However,  the  Piedmont  Jaycees  were  not able to pay
$75,000.00  per month and the rent was reduce to a minium  payment of $25,000.00
through the start period.

The Registrant also has a branch office at 1239 South Glendale Avenue, Glendale,
California,  and Production Studio and transmission facilities are obtained from
third parties at competitive  rates. The premises are comprised of approximately
3,000 square feet for which the Registrant pays $1,000

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 16
<PAGE>

per month.  The lease is scheduled  to expire on December 31, 1997;  however the
Registrant is confidant that the lease would be renewed on favorable terms.

Patents, Trademarks,  Licenses, Franchises,  Concessions,  Royalty Agreements or
--------------------------------------------------------------------------------
Labor Contracts, Including Duration
-----------------------------------

The Registrant has no patent rights. It has the following service marks:

Satellite Bingo:    International  Class  41  (production  and  distribution  of
                    television game shows) granted Registration Number 1,473,709
                    on January 19, 1988 to Satellite Bingo, Inc. 20 years.

Globalot Bingo:     International  Class  41  (production  and  distribution  of
                    television game shows) applied for on September 24, 1993, by
                    SBI Communications, Inc.

Rico Bingo:         International  Class  41  (production  and  distribution  of
                    television game shows) applied for on September 24, 1993, by
                    SBI Communications, Inc.

C-Note:             International  Class  41  (production  and  distribution  of
                    television game shows) applied for on September 24, 1993, by
                    SBI Communications, Inc.

The Registrant obtained an assignment to a copyrights for "the Works," copyright
registrations  for Globalot Bingo and derivatives:  Number PAU 855-931 (June 10,
1986);  Number PAu 847-876 (March 11, 1986);  Number PAu 788-031  (September 19,
1985);  Number PAu 927-410  (November 4, 1986);  Number PA 370-721  (February 9,
1988);  Number PA 516-494  (January 17,  1991);  Number PA 533-697  (January 17,
1991); from Satellite Bingo, Inc., to SBI Communica tions, Inc., dated September
14, 1993.

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

Involvement in Certain Legal Proceedings
----------------------------------------

To the best knowledge and belief of the Registrant,  during the past five years,
no present  or former  director,  executive  officer  or person  nominated  as a
director or appointed as an executive  officer of the  Registrant  or any of its
affiliated subsidiaries, has been involved in:

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 17
<PAGE>

     (1)  Any  bankruptcy  petition  by or against  any  business  of which such
          person was a general  partner or  executive  either at the time of the
          bankruptcy or within two years prior to that time;

     (2)  Any conviction in criminal proceeding or subject to a pending criminal
          proceeding (excluding traffic violations and other minor offenses);

     (3)  Being  subject to any order,  judgment  or  decree,  not  subsequently
          reversed,   suspended   or   vacated,   of  any  court  of   competent
          jurisdiction,  permanently or  temporarily,  barring,  suspending,  or
          otherwise limiting his involvement in any type of business, securities
          or banking activities; and

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

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

There were no matters  submitted to a vote of security holders during the fourth
quarter of fiscal 1997. The Company's annual shareholder  meeting with voting on
proxy issues is on April 28, 1998.

                                     PART II

Item 5. Market Price of and  Dividends  on the  Registrant's  Common  Equity and
--------------------------------------------------------------------------------
        Related Stockholder Matters
        ---------------------------

Preferred Stock
---------------

All attributes of the currently  unissued  preferred stock will be determined by
the  Registrant's  board of  directors  prior to  issuance,  as permitted by and
subject  to  the   requirements  of  applicable   Delaware  law.  The  currently
outstanding  preferred  stock  has a $5.00  per  share par value and a $5.00 per
share  liquidation  preference;  paying no dividend but convertible  into common
stock upon demand at a

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 18
<PAGE>

conversion  rate equal to $5.00 per share  divided  by the  market  value of the
common stock at the date of conversion. The preferred stock has no voting rights
except as to matters  specifically dealing with changes in the attributes of the
preferred stock.

Market for Common Equity
------------------------

The  Registrant's  stock is traded on the NASDAQ OTC Electronic  Bulletin Board.
The Registrant currently has 5,345,439 shares of stock outstanding, with 950,000
in the public float.  There are approximately  3,368 shareholders of record. For
the fiscal year ended December 31st,  1997 the Registrant  reported  revenues of
$544,662.00 and a net loss of $($4,723,202.00).

The Common Stock of Registrant has been traded  over-the-counter since 1983. Its
trading  symbol is "SBID." No  established  public trading market exists for the
Common Stock of Registrant at this time.

     No  common  equity is  subject  to  options  or  warrants  to  purchase  or
     securities  convertible into common stock,  except for the currently issued
     168,000 shares of preferred stock which are  convertible  into common stock
     1,500,000 were used to repurchase property in Piedmont, AL.

     No common stock is currently  being offered or proposed to be offered which
     offering could be reasonably  expected to have a materially  adverse effect
     on the  market  price of the  Registrant's  common  equity;  and  There are
     approximately  5,135,439  shares of common stock which will become eligible
     for sale by December 31, 1997, pursuant to the provisions of Securities and
     Exchange Commission Rule 144.

     The Registrant  has not agreed to register  securities for resale under the
     Securities Act of 1934, as amended, for anyone.

The  following  table sets forth in United  States  dollars the high and low bid
quotations for such shares.  Such bid quotations  reflect  inter-dealer  prices,
without  retail  mark-up,  mark-down  or  commissions,  and do  not  necessarily
represent actual  transactions.  The source of the following  information is the
National  Daily  Quotation  System,   Inc.'s  "Pink  Sheets"  and  the  National
Association of Securities Dealers, Inc.'s NASDAQ Electronic Bulletin Board.

                                  Common Stock
                                  ------------
                      Date                   Low       High
                   Fiscal 1996             $ 0.62     $1.37
                   -----------

                   Fiscal 1997
                   -----------
                   First Quarter            $0.25     $0.50
                   Second Quarter         $0.1875    $0.375
                   Third Quarter           $0.125     $0.25
                   Fourth Quarter         $0.1875    $0.375

                                     ------
Prices quoted reflect a one share for twenty reverse split effective on February
1, 1993.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 19
<PAGE>

Dividend Policy
---------------

The Registrant has never paid any dividends.  it is the present intention of the
Registrant  to pay  dividends as soon as  possible.  There can,  however,  be no
assurance  that funds for payment of dividends  will ever be available,  or that
even if available, the Registrant's board of directors then serving will resolve
to declare them.

Market
------

The Registrant's  securities are currently  quoted on the Nation  Association of
Securities  Dealers,  Inc.'s  NASDAQ  Bulletin  Board and on the National  Daily
Quotation  System,  Inc.'s  "Pink  Sheets."  The  Registrant  expects  that  its
securities  will be listed on the National  Association  of Securities  Dealers,
Inc.'s automated  quotation system ("NASDAQ") within the next 12 months and that
they will be traded under its current symbol "SBID".

Section 15(g) of the Securities  Exchange Act of 1934, as amended (the "Exchange
Act"), requires brokers and dealers to make risk disclosures to customers before
effecting any transactions in "penny stocks". It also directs the Securities and
Exchange  Commission  to adopt rules  setting  forth  additional  standards  for
disclosure of information concerning transactions in penny stocks.

Penny  stocks  are  low-priced,  over-the-counter  securities  that are prone to
manipulation  because of their price and a lack of reliable  market  information
regarding  them.  Under  Section  3(a)(51)(A)  of the  Exchange  Act, any equity
security  is  considered  to be a "penny  stock,"  unless that  security  is: i)
registered  and  traded on a  national  securities  exchange  meeting  specified
Securities and Exchange Commission criteria; ii) authorized for quotation on the
National   Association  of  Securities   Dealers,   Inc.'s   (NASD")   automated
inter-dealer quotation system ("NASDAQ"); iii) issued by a registered investment
company;  iv)  excluded,  on the  basis of price or the  issuer's  net  tangible
assets,  from the definition of the term by Securities  and exchange  Commission
rule;  or v)  excluded  from  the  definition  by the  Securities  and  Exchange
Commission.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 20
<PAGE>

Pursuant to Section  3(a)(51)(B),  securities  that normally would be considered
penny  stocks  because  they are  registered  on an exchange or  authorized  for
quotation  on NASDAQ may be  designated  as penny stocks by the  Securities  and
Exchange  Commission  if the  securities  are  traded  off  the  exchange  or if
transactions  in the  securities  are  effected  by market  makers  that are not
entering quotations in NASDAQ.

Rule  3a51-1 was  adopted by the  Securities  and  Exchange  Commission  for the
purpose of  implementing  the  provisions  of  Section  3(a)(51).  Like  Section
3(a)(51),  it defines penny stocks by what they are not. Thus, the rule excludes
from the definition of penny stock any equity security that is: (1) a "reported"
security; (2) issued by an investment company registered under the 1940 Act; (3)
a put or call option issued by the Options Clearing  Corporation;  (4) priced at
five dollars or more;  (5) subject to last sale  reporting;  or (6) whose issuer
has assets above a specified amount. (Release No. 30608, Part III.A).

Rule 3a51-1(a)  excludes from the definition of penny stock any equity  security
that is a "reported security" as defined in Rule 11Aa3-1(a). A reported security
is any  exchange-listed  or NASDAQ  security for which  transaction  reports are
required to be made on a real-time  basis  pursuant to an effective  transaction
reporting plan.  Securities  listed on the New York Stock Exchange (the "NYSE"),
certain regional exchange-listed securities that meet NYSE or Amex criteria, and
NASDAQ  National  Market System  ("NMS")  securities  are not  considered  penny
stocks. (Release No. 30608, Part III.A.1).  Generally,  securities listed on the
American Stock Exchange (the "Amex")  pursuant to the Amex's original and junior
tier or its "Emerging Company Marketplace" listing criteria,  are not considered
penny stocks.  Securities listed on the Amex pursuant to its Emerging  Companies
Market ("ECM") criteria,  however, are considered to be "penny stock" solely for
purposes of Exchange Act 15(b)(6). (Release No. 30608, Part III.A.1).

Rule  3a51-1(d)  excludes  securities  that are priced at five  dollars or more.
Price, in most cases, will be the price at which a security is purchased or sold
in  a  particular  transaction,  excluding  any  broker  commission,  commission
equivalent,  mark-up, or mark-down.  In the absence of a particular transaction,
the five dollar price may be based on the inside bid  quotation for the security
as displayed on a Qualifying  Electronic  Quotation  System (i.e.,  an automated
inter-dealer  quotation system as set forth in Exchange Act Section  17B(b)(2)).
"Inside bid  quotation" is the highest bid quotation for the security  displayed
by a market  maker in the  security on such a system.  If there is no inside bid
quotation,  the average of at least three inter-dealer bid quotations  displayed
by three  or more  market  makers  in the  security  must  meet the five  dollar
requirement.  Broker-dealers  may not rely on  quotations  if they know that the
quotations have been entered for the purpose of circumventing the rule. (Release
No. 30608, Part III.A.3.b).  An inter-dealer quotation system is defined in Rule
15c2-7(c)(1)  as any system of general  circulation  to brokers and dealers that
regularly disseminates  quotations of identified brokers or dealers. In the case
of a unit composed of one or more securities, the price divided by the number of
shares  of the unit  that are not  warrants,  options,  or  rights  must be five
dollars or more.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 21
<PAGE>

Furthermore,  the exercise  price of any warrant,  option,  or right,  or of the
conversion price of any convertible security, included in the unit must meet the
five dollar  requirement.  For example: a unit composed of five shares of common
stock and five warrants would satisfy the  requirements  of the rule only if the
unit price was twenty-five  dollars or more, and the warrant  exercise price was
five dollars or more.  Once the components of the unit begin trading  separately
on the secondary market,  they must each be separately priced at five dollars or
more. (Release No. 30608, footnote 66).

Securities  that are  registered,  or approved for  registration  upon notice of
issuance,  on  a  national  securities  exchange  are  also  excluded  from  the
definition of penny stock (Rule  3a51-1(e)).  The exchange must make transaction
reports  available  pursuant to Rule  11Aa3-1  for the  exclusion  to work.  The
exclusion is further  conditioned  on the current  price and volume  information
with respect to  transactions  in that security  being reported on a current and
continuing  basis  and made  available  to  vendors  of market  information.  In
addition,  the exclusion is limited to exchange-listed  securities that actually
are purchased or sold through the  facilities  of the exchange,  or as part of a
distribution.  Exchange-listed  securities satisfying Rule 3a51-1(e),  but which
are not otherwise excluded under Rule 3a51-1(a)-(d), continue to be deemed penny
stocks for purposes of Exchange Action Section 15(b)(6).

Exchanges  that  qualified for this  exclusion as of April,  1992 were the NYSE,
Amex, Boston Stock Exchange,  Cincinnati Stock Exchange, Midwest Stock Exchange,
Pacific Stock exchange,  Philadelphia  Stock Exchange,  and the Chicago Board of
Options. (Release No. 30608, footnote 37).

Securities  that are  registered,  or approved for  registration  upon notice of
issuance,  on NASDAQ are  excluded  from the  definition  of penny  stock  (Rule
3a51-1(f)).  Similar to the exchange-registered exclusion of Rule 3a51-1(e), the
NASDAQ exclusion is conditioned on the current price and volume information with
respect  to  transactions  in that  security  being  reported  on a current  and
continuing basis and made available to vendors of market information pursuant to
the rules of NASD.  NASDAQ securities  satisfying Rule 3a51-1(e),  but which are
not otherwise  excluded  under Rule  3a51-1(a)-(d),  continue to be deemed penny
stocks for purposes of Exchange Act Section 15(b)(6).

An  exclusion  is  available  for the  securities  of issuers  that meet certain
financial  standards.  This exclusion pertains to: (1) issuers that have been in
continuous  operation  for at least three years  having net  tangible  assets in
excess  of $2  million  (Rule  3a51-1(g)(1);  ii)  issuers  that  have  been  in
continuous  operation  for less than three years having net  tangible  assets in
excess of $5  million  (Rule3a51-1(g)(1);  iii)  issuers  that  have an  average
revenue of at least $6 million for the last three years (Rule 3a51- 1(g)(2)). To
satisfy this requirement,  an issuer must have had total revenues of $18 million
by the end of a  three-year  period.  (Release No.  30608,  Part  III.A.4).  The
Registrant believes that its securities qualify under this exemption.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 22
<PAGE>

For domestic  issuers,  net tangible  assets or revenues must be demonstrated by
financial  statements  that are dated no less than  fifteen  months prior to the
date of the  related  transaction.  The  statements  must have been  audited and
reported on by an independent  accountant in accordance with Regulation S-X. For
foreign private issuers, net tangible assets or revenues must be demonstrated by
financial  statements  that are dated no less than  fifteen  months prior to the
date  of the  related  transaction.  The  statements  must  be  filed  with  the
Securities and Exchange Commission pursuant to Rule 12g3-2(b). If the issuer has
not been required to furnish  financial  statements  during the previous fifteen
months,  the statements may be prepared and audited in compliance with generally
accepted accounting principles of the country of incorporation.

Whether the issuer is domestic or foreign,  in all cases a broker or dealer must
review the financial  statements and have a reasonable  basis for believing that
they were  accurate  as of the date they were made (Rule  3a51-1(g)(3).  In most
cases a broker-dealer need not inquire about or independently verify information
contained in the  statements.  (Release No. 30608,  Part  III.A.4).  Brokers and
dealers  must  keep  copies  of  the  domestic  or  foreign  issuer's  financial
statements  for  at  least  three  years  following  the  date  of  the  related
transaction (Rule 3a51-1(g)(4).

Security Holders
----------------

As of December 31, 1997, the latest  practicable  date for which  information is
available,  the  Registrant's  management was of the opinion that the Registrant
had approximately 3,368 common stock holders.

Dividends
---------

There have been no cash  dividends  declared or paid since the  inception of the
Registrant  and no  dividends  are  contemplated  to be paid in the  foreseeable
future.

Description of Securities
-------------------------

General
-------

The  Registrant  is  authorized  to issue  50,000,000  shares of capital  stock,
40,000,000  shares of which are designated as common stock,  $.001 par value per
share, and the balance as preferred stock, $5.00 par value per share.

As of December  31,  1997,  5,345,439  shares of Common  Stock were  outstanding
(excluding the 2,500,000  shares held but not yet allocated by the  Registrant's
Employees'  Trust)  and  held of  record  by  approximately  3,368  persons.  In
addition,  1,668,000  shares of preferred  stock were  outstanding,  and held by
approximately five persons.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 23
<PAGE>

Corporate Stock Transfer,  370 17th Street,  Suite 2350;  Denver Colorado 80202,
acts as transfer agent and registrar for the  Registrant's  common and preferred
stock.


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

Introduction
------------

The  Registrant  is currently in the  development  stage of its business  cycle.
Since its inception,  the Registrant has actively pursued  licensing  agreements
designed to generate  royalty  income in exchange  for  providing  software  and
methods involving bingo game production. In the past, the registrant has entered
into various agreements covering  territories in Brazil,  Greece, Hong King, and
Indian  reservations,  military  bases,  and charity bingo parlors in the United
States.  Prior  emphasis on these type of licensing  agreements has proven to be
ineffective.  No licensee currently has bingo operations generating  significant
fees or royalties  for the  Registrant.  The  majority of its current  operating
income  is  provided  by  rental  income  generated  from the lease of its bingo
facility to  non-profit  charities in a facility  owned by the  Registrant.  The
majority of future revenues,  however, are not anticipated to occur in either of
these areas. The Registrant hopes to generate  significant  future revenues from
telecommunications  services involved in interactive bingo and television buying
shows by purchasing  large blocks of long distance  telephone time and reselling
such time to television audience users at a profit. Management of the Registrant
has made this area of business their first priority, and most of the other plans
for  the  future  are  based  on the  success  of the  telecommunications  area.
Management  would  like to  broadcast  the  bingo  show to as  many  viewers  as
possible,  and although there are no current  foreign  agreements,  management's
plans are not limited to the U.S.  Management  intends to pursue  contracts with
foreign  countries and do some  research  into bingo on the  Internet.  Overall,
management hopes to be able to generate k/net revenues over $10 million annually
from this area of business.  The registrant also has plans to expand  operations
through the  acquisition  of television  production  facilities  and rights to a
television  buying show.  This would allow the Registrant to produce their bingo
show in their own studio and  broadcast it over their own network.  It will also
give management freedom to use their experience in programming and production to
produce other forms of  interactive  entertainment,  such as the ideas of Public
Domain Broadcasting and The Life and Leisure Network mentioned elsewhere in this
offering  document.  Diligently being examined are the legal opinions  submitted
for imminent contractual arrangements between two companies with the Registrant,
a major international shop at home entity and a telecommunications company. Both
of these entities are NASDAQ listed. Management feels confident that a deal will
be consummated  by year end 1996 allowing the Registrant to commence  operations
on a full scale in the telecommunications business segment.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 24
<PAGE>

The Registrant is continuing to search for avenues to develop future revenue. In
light of the preliminary and conditional  nature of  negotiations,  no assurance
can be provided as to the  likelihood  that such proposed  projects will come to
fruition. A summary of projects currently being pursued is as follows:

Liquidity
---------

      The following table summarizes working capital and total assets:

                                  Fiscal Year Ended December 31,
                                    1997                  1996
                                    ----                  ----
Working Capital                  $  118,160            $  290,023
Total Assets                     $2,955,234            $7,441,024

December  31,  1995,  the  Registrant's  current  assets  exceeded  its  current
liabilities,  creating a working capital  surplus.  The surplus is primarily the
result of the issuance of preferred  convertible stock to liquidate  liabilities
owed to  shareholders,  and in income  provided  by the  Registrant's  operating
activities  relating to approximately  $100,000 in fees collected from charities
that sponsor bingo games at the Registrant's bingo hall.

At December  31,  1994,  the  Registrant  had current  liabilities  in excess of
current assets,  principally due to administrative  expenses incurred during the
development stage that have been funded by the majority  stockholder in the form
of advances due on demand.  The Registrant has had some success in issuing stock
for services,  and accordingly has kept the working capital deficit to a minimum
during these years.

The changes in total assets are attributable to the  Registrant's  purchase of a
building  (bingo hall) in 1994 through the  issuance of  preferred  stock.  As a
result,  income from bingo hall  operations has boosted  working  capital in the
calendar  year  ended  December  31,  1997.  In the  years  prior to  1996,  the
Registrant was primarily involved in securing licensing agreements for rights to
software and methods of operating bingo games it had developed.

As the Registrant  continues to operate in the development stage, no significant
cash flow is being  generated from operating  activities.  1997 was a relatively
dormant  year.  The  registrant  was able to generate  $12,000 in cash flow from
operations  principally from  management/services  of the bingo hall in the year
ended  1997.  Shareholders  also  advanced  net funds of $51,564 in 1996 and was
repaid in the year ended 1997,  allowing  the  registrant  to generate  positive
total cash flow of $56,607 for the year.  In 1996,  the  Registrant  became more
active in pursuing  ventures,  as well as managing the bingo hall for the entire
year.  For 1995,  the  charities  operating  the bingo hall  struggled,  and the
Registrant  collected less funds than were needed to operate the games,  as well
as to cover administrative costs and

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 25
<PAGE>

costs of the facility.  As a result,  the  Registrant  used $350,199 in net cash
flow for operations. The registrant also acquired various operating equipment at
a cost of $105,363.  To fund these cash flow needs,  the  Registrant was able to
obtain  $250,000  in  proceeds  from a loan to an  affiliate,  and  $165,000  in
proceeds  from  the sale of  common  stock.  Combined,  this  resulted  in a net
decrease in cash for the year of $47,339.

Capital Resources
-----------------

Since its inception,  the Registrant's only significant  sources of capital have
been from the sale of common stock and loans from shareholders. See a discussion
of these  transactions  under Item 7 Certain  Relationships  and  Related  Party
Transactions,  and in the Consolidated  Financial  Statements of the Registrant.
The  Registrant  has  also  acquired  significant  assets  through  the  sale of
convertible  preferred stock. The Registrant  anticipates continued expansion of
its business through  acquisitions  using Company stock.  Furthermore,  with the
bingo  hall  acquired  in 1994  now in  operation,  the  Registrant  anticipates
generation  of  revenues  from the lease of this  facility  sufficient  to cover
administrative costs still being incurred as the Registrant moves forward in its
development stage.

Results of Operations
---------------------

The following table sets forth the relative relationship to total revenue of the
revenue  categories  in the  Registrant's  statement  of income  and  percentage
changes (rounded to the nearest whole dollar).

                             Amount of Total Revenue

Fiscal Year Ended December 31,                            1997            1996
                                                          ----            ----
Revenues:
     Licenses & Royalties                                    -0-             -0-
     Bingo Hall Operations                              $411,033        $352,000
     Kitchen and gift shop revenues                      131,703          67,019
     Other Income                                          1,926           2,109
                                                        --------        --------

             Total Revenue                              $544,662        $421,128
                                                        ========        ========


In general,  the  Registrant  experienced  insignificant  revenues in 1997 as it
attempted to expand and develop its operations. Total revenues were $544,662 for
1997. The Registrant owns a bingo hall,  during 1997 was leases to charities who
sponsor bingo games. The Registrant also provides  management services to assist
the  charities in the  operations of the bingo games,  for which the  Registrant
charges a fee.  Net  revenues  related  to the bingo hall  operations  were only
$352,000 in

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 26
<PAGE>

1996,  but have grown to $411,033 for the calendar year ended December 31, 1997.
Total  revenues  for  calendar  year  ended  December  31,  1997 were  $544,662.
Accordingly,  except for the  operation  of the bingo  hall,  there are no other
significant  revenue  sources of the Registrant at this time. For 1996 and 1997,
the  Registrant  did not generated  revenue from the sale of  copyrighted  bingo
cards,  foreign  licensing  agreements,  sale of  computer  hardware or security
systems,  or other  various  areas of  business  opportunity  discussed  in this
offering document.

The Registrant's expenses can be summarized as follows:

                            Amount of Total Expenses

Fiscal Year Ended December 31,                              1997          1996
                                                            ----          ----

     Salaries and related expenses                        $157,649      $170,822
     Other general and administrative  expenses           $358,670      $488,545
     Depreciation and amortization                        $346,742      $544,752
     Interest expenses and finance charges                $ 82,637      $ 76,202

The most significant expense relates to the amortization of trademark, game show
and computer program assets the Registrant has developed. The expense is running
$ 265,960 per year.  Such assets will be fully amortized at the end of 1997. For
1997,  the  Registrant  also had  depreciation  on the  bingo  hall and  related
equipment,  which will  approximate  $367,202  per year.  These  expenses do not
require  the use of cash.  The low level of other  expenses  in 1994 is due to a
slow down in the general  activity of the Registrant as it explored  alternative
revenue  generating  ideas. With the addition of the bingo hall in late 1994, as
well as the pursuit of  television  production  and broadcast  possibilities  in
1996,  such expenses  have  decreased in 1997.  As the  Registrant  continues to
pursue television  production and broadcast  possibilities,  these expenses will
continue  to rise as a result  of  expanded  facility  space and  travel  costs.
Interest  and  finance  charge  expenses  increased  in 1996 due to  $200,000 in
finance charges incurred to obtain short-term  financing.  These finance charges
were paid for through the issuance of preferred stock.

Should the Registrant  successfully acquire production  facilities and broadcast
companies  under  consideration,   or  expand  operations  in  areas  previously
discussed  as  currently  under  consideration,  revenues  and  expenses  of the
Registrant  would change  significantly.  Management  is not able to predict the
impact of such changes on revenues or expenses at this time.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 27
<PAGE>

Statement Re Computation of Earnings Per Share
----------------------------------------------

See Notes To Consolidated Financial Statements included elsewhere in this filing
for a description of the Registrant's calculation of earnings per share.

Item 7. Financial Statement and Summary Financial Data
------------------------------------------------------

Financial Statements
--------------------

The unaudited  consolidated  balance sheet of the Registrant for its years ended
December  31,  1997  and  1996  and  the  related  consolidated   statements  of
operations, stockholder's equity and cash flows are submitted herewith.

Index to Financial Statements
-----------------------------

The audited  consolidated  balance sheet of the  Registrant  for its years ended
December 31, 1997 and 1996 and related consolidated statements of income (loss),
stockholder's  equity and cash flows therefor,  follow. The page numbers for the
financial statement categories are as follows:

Page Description
---- -----------
__   Report of Certified  Public  Accountants,  as to the  calendar  years ended
     December 31, 1997 and 1996.
__   Consolidated Balance Sheets - December 31, 1997 and December 31, 1996.
__   Consolidated  Statement  of Income  (Loss)  for the  calendar  years  ended
     December 31, 1997 and December 31, 1996 and from  inception  until December
     31, 1997.
__   Consolidated  Statement of Changes in  Stockholder's  Equity from Inception
     (January 10, 1986) through December 31, 1997.
__   Consolidated  Cash Flows for the calendar years ended December 31, 1995 and
     December 31, 1995 and from inception until December 31, 1997.
__   Notes to Consolidated Financial Statement Statements for the calendar years
     ended December 31, 1997 and December 31, 1996.


                            SBI COMMUNICATIONS, INC.
                            ------------------------
                                 AND SUBSIDIARY
                                 --------------

                        CONSOLIDATED FINANCIAL STATEMENTS
                        ---------------------------------

                           DECEMBER 31, 1997 AND 1996
                           --------------------------


       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 28
<PAGE>

                     SBI COMMUNICATIONS, INC. AND SUBSIDIARY
                     ---------------------------------------
                           CONSOLIDATED BALANCE SHEETS
                           ---------------------------
                                  DECEMBER 31,
                                  ------------
<TABLE>
<CAPTION>
                                                                          1997          1996
                                                                          ----          ----
                                                           ASSETS
                                                           ------
Current assets:
<S>                                                                    <C>             <C>        
       Cash                                                            $    22,228     $    42,327
       Accounts receivable, net of allowance for doubtful
            accounts of $-0- at December 31, 1997 and 1996 (Note 8)            250         120,306
       Accounts and notes receivable from affiliates (Note 2)                9,617           3,600
       Inventories                                                          86,065          24,391
                                                                       -----------     -----------
                                                                           118,160         190,624
Property and equipment, net of accumulated
       depreciation (Note 3)                                             2,752,900       7,026,112

Other assets:
       Accounts receivable - long-term, doubtful
           accounts of at December 31, 1996                                     --         100,000
       Organization costs, trademarks, shows, computer
           programs and game inventory, net (Note 4)                            --              --
       Deferred loan costs                                                  21,109          56,200
       Deposits                                                             63,065          68,088
                                                                       -----------     -----------
                                                                       $ 2,955,234     $ 7,441,024
                                                                       ===========     ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
Current liabilities:
       Note payable to trust managed by a shareholder (Note 2)         $   150,000     $   200,000
       Mortgage note payable-current portion (Note 5)                      239,701           5,873
       Capitalized leases-current portion (Note 5)                          17,491              --
       Accrued wages due to principal shareholder (Note 2)                 290,000         180,000
       Advances due to principal shareholder (Note 2)                           --          14,901
       Account payable and accrued expenses                                150,442          83,873
                                                                       -----------     -----------
                                                                           847,634         484,647
Mortgage payable, long-term portion (Note 5)                                    --         240,229
Capitalized leases, long-term portion (Note 5)                              62,216              --
Other notes payable (Note 5)                                                52,438              --
                                                                       -----------     -----------
Total liabilities                                                          962,288         724,876
                                                                       -----------     -----------
Stockholders' equity (Note 6):
       Preferred stock, par value $5.00; 10,000,000
           shares authorized; 1,673,000 and 1,693,000
           shares issued and outstanding at
           December 31, 1997 and 1996, respectively                      8,365,000       8,465,000
       Common stock, par value $.001; 40,000,000 shares authorized;
           5,345,439 shares issued and outstanding at December 31,
           1997 and 1996                                                     5,345           5,345
       Paid in capital                                                   3,567,343       3,467,343
       Accumulated deficit                                              (9,944,742)     (5,221,540)
                                                                       -----------     -----------
                                                                         1,992,946       6,716,148
                                                                       -----------     -----------
                                                                       $ 2,955,234     $ 7,441,024
                                                                       ===========     ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 29
<PAGE>

                     SBI COMMUNICATIONS, INC. AND SUBSIDIARY
                     ---------------------------------------
                         CONSOLIDATED STATEMENTS OF LOSS
                         -------------------------------
                        FOR THE YEARS ENDED DECEMBER 31,
                        --------------------------------
<TABLE>
<CAPTION>
                                                                    1997            1996
                                                                    ----            ----
Revenues (Note 8):
<S>                                                             <C>             <C>        
       Bingo hall rent                                          $   411,033     $   352,000
       Kitchen and gift shop revenues                               131,703          67,019
       Administrative fees                                               --              --
       Other income                                                   1,926           2,109
                                                                -----------     -----------
                                                                    544,662         421,128
                                                                -----------     -----------
Expenses:
       Cost of sales - kitchen and gift shop                        180,563          37,892
       Salaries and related expenses                                157,649         170,822
       Facility costs                                                49,518          80,605
       General and administrative                                   358,670         488,545
       Travel and production costs                                  102,762          72,029
       Depreciation and amortization                                306,742         544,752
       Interest and finance expenses                                 82,637          76,202
                                                                -----------     -----------
                                                                  1,238,541       1,470,847
                                                                -----------     -----------
Net loss from operations                                           (693,879)     (1,049,719)
Loss arising from impairment in value of long-lived
       assets - write-down of land and building to estimated
       realizable value (Note 8)                                 (4,029,323)             --
                                                                -----------     -----------

Net loss                                                        ($4,723,202)    ($1,049,719)
                                                                ===========     ===========
Net loss per share (Note 7)                                     ($     0.88)    ($     0.20)
                                                                ===========     ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 30
<PAGE>

                     SBI COMMUNICATIONS, INC. AND SUBSIDIARY
                     ---------------------------------------
                      CONSOLIDATED STATEMENTS OF CHANGES IN
                      -------------------------------------
                              SHAREHOLDERS' EQUITY
                              --------------------
                 FOR THE YEARS ENDING DECEMBER 31, 1996 AND 1997
                 -----------------------------------------------

<TABLE>
<CAPTION>
                                 Common Stock             Preferred Stock          Additional                         Total
                               Number                 Number                         Paid-in       Accumulated    Shareholders'
                             of shares    Amount    of shares         Amount         Capital         Deficit          Equity
                             ---------    ------    ----------     -----------     -----------     -----------     -----------


<S>                          <C>           <C>       <C>             <C>             <C>            <C>              <C>      
Balance December 31, 1995    5,345,439     5,345     1,668,000       8,340,000       3,572,343      (4,171,821)      7,745,867

Preferred stock
   issued in July, 1996
   to cover $20,000 in
   loan closing  costs,
   20,000 shares to be
   returned in 1997                 --        --        25,000         125,000        (105,000)             --          20,000

Net loss, January 1, 1996
  to December 31, 1996              --        --            --              --              --      (1,049,719)     (1,049,719)
                             ---------    ------    ----------     -----------     -----------     -----------     -----------

Balance December 31, 1996    5,345,439     5,345     1,693,000       8,465,000       3,467,343      (5,221,540)      6,716,148

Excess preferred stock
    issued in July, 1996
    to cover $20,000 in
    loan closing costs,
    20,000 shares were
    returned in 1997                --        --       (20,000)       (100,000)        100,000              --              --

Net loss, January 1, 1997
  to December 31, 1997              --        --            --              --              --      (4,723,202)     (4,723,202)
                             ---------    ------    ----------     -----------     -----------     -----------     -----------

Balance December 31, 1997    5,345,439    $5,345     1,673,000     $ 8,365,000     $ 3,567,343     ($9,944,742)    $ 1,992,946
                             =========    ======    ==========     ===========     ===========     ===========     ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 31
<PAGE>

                     SBI COMMUNICATIONS, INC. AND SUBSIDIARY
                     ---------------------------------------
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------
                         FOR THE YEAR ENDED DECEMBER 31,
                         -------------------------------
<TABLE>
<CAPTION>
                                                                 1997            1996
                                                                 ----            ----
Cash flows from operating activities:
<S>                                                          <C>             <C>         
   Net (loss)                                                ($4,723,202)    ($1,049,719)
   Adjustments to reconcile net loss to cash
       provided (used) by operating activities:
          Loss arising from write-down of land and
              building to estimated realizable value           4,029,323              --
          Depreciation and amortization                          341,833         569,552
          Services paid through reduction in amounts
              receivable from affiliates                              --          25,000
          Change in accounts receivable, trade                   128,234         279,558
          Change in inventories                                    8,148          36,297
          Change in accounts payable and accrued expenses        176,569          84,406
                                                             -----------     -----------
              Cash (used) by operating activities                (39,095)        (54,906)
                                                             -----------     -----------
Cash flows from investing activities:
   Purchase of property and equipment                            (40,853)        (51,603)
   Decrease (increase) in deposits                                 5,023          (5,000)
   Loans to affiliates                                            (6,017)         (3,600)
                                                             -----------     -----------
              Cash (used) by investing activities                (41,847)        (60,203)
                                                             -----------     -----------
Cash flows from financing activities:
   Loans received from (repaid to) affiliates                         --          10,745
   Repayments of affiliated loans                                (14,901)        (50,000)
   Borrowings on new loans and capital leases                    145,000         250,000
   Repayments on loans and capital leases                        (69,256)         (3,898)
   Deferred loan costs paid                                           --         (61,000)
   Proceeds from issuance of common stock                             --              --
                                                             -----------     -----------
              Cash flows provided by financing activities         60,843         145,847
                                                             -----------     -----------
Net increase (decrease) in cash                                  (20,009)         30,738

Cash at beginning of year                                         42,327          11,589
                                                             -----------     -----------
Cash at end of year                                          $    22,228     $    42,327
                                                             ===========     ===========

Supplemental information:
   Income taxes paid                                         $        --     $        --
                                                             ===========     ===========
   Interest paid                                             $    41,144     $    50,241
                                                             ===========     ===========
</TABLE>

Non-cash activities:
--------------------
During 1996,  $25,000 in services were paid for through the reduction of $25,000
in affiliated loans receivable,  and $20,000 in loan closing costs were paid for
through the issuance of 20,000 shares of preferred stock.  During 1997, $100,000
in trade receivables were settled for receipt of inventory valued at $69,822 and
furniture valued at $22,000.

          See accompanying notes to consolidated financial statements.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 32
<PAGE>

                     SBI COMMUNICATIONS, INC. AND SUBSIDIARY
                     ---------------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                           DECEMBER 31, 1997 AND 1996
                           --------------------------

Note 1 - Summary of significant accounting policies
---------------------------------------------------

The major accounting policies of SBI  Communications,  Inc. are summarized below
to assist the reader in reviewing the Company's financial statements.

Organization and operations
---------------------------

SBI Communications,  Inc. (the "Company"), was originally organized in the State
of Utah on  September  23, 1983,  under the  corporate  name of Alpine  Survival
Products, Inc. Its name was subsequently changed to Justin Land and Development,
Inc. during October,  1984, and then to Supermin,  Inc. on November 20, 1985. On
September 29, 1986,  Satellite Bingo, Inc. was the surviving corporate entity in
a statutory merger with Supermin,  Inc., a Utah corporation.  In connection with
the above merger,  the former  shareholders of Satellite  Bingo,  Inc.  acquired
control of the merged entity and changed the corporate name to Satellite  Bingo,
Inc. Through shareholder  approval dated March 10, 1988, the name was changed to
its current  name of SBI  Communications,  Inc. On January 1, 1993,  the Company
executed  a plan of merger  that  effectively  changed  the  Company's  state of
domicile  from Utah to  Delaware.  Although  the Company is currently a Delaware
corporation,  on January  31,  1997,  the  stockholders  and Board of  Directors
approved  a plan to change  the  Company's  corporate  domicile  to the State of
Nevada. Management anticipates executing the plan during 1998.

The Company  plans to lease or operate  bingo  halls and to provide  interactive
satellite  cable  bingo game shows and other  similar  telecommunication  gaming
products or services to television viewers throughout the United States.  During
1997, the Company's only  operations were the leasing of a bingo hall located in
Piedmont, Alabama, and the operation of the kitchen facilities therein. Under

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 33
<PAGE>

local  ordinances,  the hall must be leased  to a  charity,  which was the local
Jaycees.  As  described  in Note 8,  the  Company  is being  forced  to sell its
facility a cease bingo  operations  in Piedmont,  Alabama.  The Company plans to
continue to search for avenues to provide bingo over the Internet, as well as to
explore other revenue producing ventures.

Principles of consolidation
---------------------------

The consolidated  financial  statements  include the accounts of the Company and
its wholly-owned subsidiary, SBI Communications,  Inc. (an Alabama corporation).
Intercompany transactions and balances have been eliminated in consolidation.

Estimates and assumptions
-------------------------

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reporting  amount 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.

Property and equipment
----------------------

Property and  equipment are stated at cost.  Expenditures  for  maintenance  and
repairs  which do not  improve  or extend  the life of an asset are  charged  to
expense as incurred.  Major renewals and betterments are charged to the property
accounts.  Upon retirement or sale of an asset, its cost and related accumulated
depreciation or  amortization  are removed from the property  accounts,  and any
gain or loss is recorded as income or expense.  Depreciation  is provided  using
straight-line methods for financial reporting.

Trademarks, shows and computer programs
---------------------------------------

Trademarks,  shows and computer  programs are intangible assets acquired through
the issuance of stock. Such assets are being amortized on a straight-line  basis
over sixty (60) months.  The  five-year  life is a subjective  estimate that was
derived after considering such factors as consumer demand, competition, expected
actions of competitors, effect of obsolescence, etc.

Deferred loan costs
-------------------

Deferred loan costs  represent  costs incurred to obtain  existing debt, and are
being amortized over the life of the related loan using the interest method.

Income taxes
------------

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 34
<PAGE>

The Company  provides for income taxes in accordance with Statement of Financial
Accounting  Standards No. 109, which requires the use of the asset and liability
method and recognizes  deferred income taxes for the  consequences of "temporary
differences" by applying enacted  statutory tax rates applicable to future years
to  differences  between the financial  statement  carrying  amounts and the tax
bases of existing assets and liabilities.  The Company's "temporary differences"
relate to accrued  compensation to shareholders which is a deduction in the year
paid, and  differences  in book versus tax  depreciation  methods.  Deferred tax
assets also may be recorded  for the future  benefits  of  operating  loss carry
forwards if such  benefits are not deemed "more likely than not" to be realized.
The effect on deferred  taxes for a change in tax rates is  recognized in income
or expense in the period that includes the enactment date.

Rental and administrative fee income
------------------------------------

The Company  managed for various  charities a bingo hall in  Piedmont,  Alabama.
Rents and administrative fees charged to charities are unsecured,  and generally
are paid only as revenues  from the bingo  games  produce  sufficient  profit to
allow the charities to make  payments.  The lease in effect during 1997 required
minimum rent of $25,000 per month,  with  additional  contingent rent of $50,000
per month  depending  upon the success of the bingo  games.  Management  records
contingent rent revenue and administrative fee income only as it is collected.

Statements of cash flows
------------------------

For the purposes of the statements of cash flows, the Company considers cash and
highly liquid investments purchased with a remaining maturity of three months or
less at the date of purchase to be cash equivalents.

Note 2 - Related party transactions
-----------------------------------

From time to time,  the Company's  principal  shareholder  advances money to the
Company for operations.  All amounts owed to the  shareholder  are  non-interest
bearing  advances.  As of December  31,  1995,  the Company  owed $4,156 to this
shareholder.  During 1996,  the Company  borrowed (on a net basis) an additional
$10,745  from this  shareholder.  During  1997,  the Company  repaid all amounts
advanced, plus further advanced to the shareholder $9,617. The Company owed this
shareholder  $14, 901 at December 31, 1996, and had $9,617  receivable from this
shareholder at December 31, 1997. In addition to advances,  the Company  accrued
salaries payable to the Company's  principal  shareholder  totaling $110,000 and
$120,000  for the years  ended  December  31, 1997 and 1996,  respectively.  All
amounts owed to the shareholder are payable on demand.

In  October,  1995,  the Company  borrowed  $250,000  from a trust  managed by a
shareholder,  in the form of a mortgage  note.  The note was  payable in full on
October 15, 1996, with interest  payable  quarterly at prime plus 3%, secured by
all  corporate  property  up to  $1,000,000  in value.  $50,000 of this note was
repaid in 1996 when due, and an additional  $50,000 was repaid during 1997.  The
holder had the right to convert the mortgage  note to common stock at a price of
$3 per share.  This conversion  privilege expired on July 15, 1996. The note has
been extended on a quarter to quarter basis, with

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 35
<PAGE>

$150,000 remaining outstanding at December 31, 1997. Interest expense related to
this note totaled approximately $20,000 and $27,000 for the years ended December
31, 1997 and 1996, respectively.

In October,  1995,  the Company  advanced  $25,000 to a shareholder to be repaid
upon demand with interest at  prevailing  market rates.  This  shareholder  also
provides services to the Company relating to acquisition  candidates and capital
sources.  The above note was  applied as payment for such  services in 1996.  An
additional  $11, 700 was paid to this  shareholder  during 1996 for the services
described.

In 1996, the Company loaned $3,600 to a relative of a shareholder.  This loan is
non-interest bearing and is due upon demand.


Note 3 - Property and equipment

Property and equipment are summarized as follows at December 31:

                                    Estimated
                                    Useful Life        1997            1996
                                    -----------        ----            ----
       Land (see Note 8)                            $  250,000      $  250,000
       Building (see Note 8)                         1,750,000       6,250,000
       Vehicles                     5 years             10,920          10,920
       Furniture and equipment      5 to 7 years     1,109,182       1,024,296
                                                    ----------      ----------
                                                     3,120,102       7,535,216
       Less accumulated
          depreciation                                 367,202         282,085
                                                    ----------      ----------
                                                    $2,752,900      $7,253,131


Depreciation expense totaled  approximately  $306,000 and $279,000 for the years
ended December 31, 1997 and 1996, respectively.

Note 4 - Organization costs, trademarks, and similar assets
-----------------------------------------------------------

Organization  costs,  trademarks,  shows,  computer  programs and game inventory
represent  assets  acquired or  developed  in prior  years as the  Company  went
through its development stage, and are summarized as follows at December 31:

                                                          1997            1996
                                                          ----            ----
Trademarks:
       Original cost                                    $500,000        $500,000
       Less accumulated amortization                     500,000         500,000
                                                        --------        --------
                                                        $     --        $     --
                                                        ========        ========
Shows and computer programs:
       Original cost                                    $829,800        $829,800
       Less accumulated amortization                     829,800         829,800
                                                        --------        --------
                                                        $     --        $     --
                                                        ========        ========
Game inventory:
       Original cost                                    $ 75,400        $ 75,400
       Less amounts used in operations                    75,400          75,400
                                                        --------        --------
                                                        $     --        $     --
                                                        ========        ========
Organization costs:
       Original cost                                    $    758        $    758
       Less accumulated amortization                         758             758
                                                        --------        --------
                                                        $     --        $     --
                                                        ========        ========


       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 36
<PAGE>

Game  inventory  was  expensed  as used.  All other  assets  listed  above  were
amortized over sixty (60) months.  Amortization  expense on the above intangible
assets totaled approximately $266,000 for the year ended December 31, 1996.

Note 5 - Mortgage note payable
------------------------------

On April 1, 1996, the Company  borrowed  $250,000 from a mortgage  company.  The
note is payable in thirty (30) equal monthly  installments  of $3,330  including
interest at fourteen  percent (14%) per annum,  with a final balloon  payment of
any remaining unpaid  principal due October 1, 1998,  secured by a deed of trust
on the Company's real estate.  The balance on this note was $239,701 at December
31, 1997.  Due to events as described at Note 8, the entire  balance of the note
has been classified as current. The note includes pre-payment  penalties ranging
from 4% to 6% depending upon the timing of the prepayment.

In connection  with the above note, the lending  company was granted  options to
purchase  250,000  shares of common  stock for $0.50 per  share.  These  options
expire upon  repayment  of the loan.  In addition,  the Company  agreed to issue
5,000 shares of preferred  stock to the lender to cover  $20,000 in loan closing
costs. Upon issuance,  the Company inadvertently issued 25,000 shares instead of
$25,000 in value of preferred stock to the lender.  Such shares were outstanding
at December 31, 1996. In March,  1997, the lender  returned the  certificate for
the 25,000 shares to the Company, and a new certificate for 5,000 shares will be
issued.  The Company has recorded all 25,000 shares as  outstanding  at December
31, 1996, and reduced  paid-in capital for the value of the extra 20,000 shares.
The adjustment to paid-in  capital has been reversed in 1997 with the issuing of
the new certificate.

Note 6 - Common and preferred stock activity
--------------------------------------------

The Delaware  corporation  is  authorized  to issue up to  40,000,000  shares of
common  stock  with a par value of $.001 per  share,  and  10,000,000  shares of
preferred stock with a par value of $5.00 per share.  The preferred stock may be
issued  from time to time in one or more  series,  the shares of each  series to
have such voting powers, dividend rates,  designations,  preferences,  and other
characteristics as adopted

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 37
<PAGE>

by the Board of Directors. Preferred stock issued to date consists of one series
(Series  A),  having a  liquidation  preference  of $5.00 per  share,  paying no
dividend,  and convertible  into common stock upon demand,  at a conversion rate
that would  transfer  shares of common  stock  worth an amount  equal to the par
value of the preferred  stock based upon the market value of the common stock at
the date of conversion.

Over  the  history  of the  Company,  there  have  been  a  number  of  non-cash
transactions involving the issuance of common stock of the Company (with related
as well as unrelated  parties) recorded based on the estimated fair value of the
consideration  received (the asset  received or debt retired)  regardless of the
number of common shares issued in such transactions in that it is the opinion of
management that the Company's  common stock did not have a readily  determinable
market value at the time of the transactions.

The Board of Directors have approved fourteen (14) classes of preferred stock in
total.  No shares have been issued relating to any Series other than Series A as
described  above.  Series A  through G of  preferred  stock  have a  liquidation
preference of $5.00 per share,  pay no dividends,  and are convertible to common
stock upon demand at the following conversion rates:

Series         A  Sufficient  number of shares of common  stock  worth an amount
               equal to the par  value of the  preferred  stock  based  upon the
               market value of the common stock at the date of conversion.

Series B       5 shares  common for 1 share  preferred  
Series C       1 share  common for 1 share preferred 
Series D       2 shares common for 1 share preferred 
Series E       3 shares common for 1 share  preferred  
Series F       4 shares  common  for 1 share  preferred
Series G       10 shares common for 1 share preferred
Series H through N of preferred stock have a liquidation preference of $5.00 per
share, pay dividends at a rate not to exceed twelve percent (12%) annually,  and
are convertible to common stock upon demand at the following conversion rates:
Series H  Sufficient  number of shares of common  stock worth an amount equal to
the par value of the  preferred  stock based upon the market value of the common
stock at the date of conversion.
Series I       5 shares common for 1 share preferred
Series J       1 share common for  1 share preferred
Series K       2 shares common for 1 share preferred
Series L       3 shares common for 1 share preferred
Series M       4 shares common for 1 share preferred
Series N       10 shares common for 1 share preferred

The Company's  income (loss) per share was calculated  using 5,345,439  weighted
average  shares  outstanding  for each of the years ended  December 31, 1997 and
1996,  respectively.  Although  convertible  preferred  stock is a common  stock
equivalent, with a conversion rate of approximately 10

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 38
<PAGE>

shares of common stock (based upon an approximate  market price for common stock
of $0.50) for each share of preferred stock,  preferred stock conversion has not
been included in the calculation of earnings per share in that to do so would be
antidilutive.

Note 7 - Income taxes
---------------------

Deferred income tax assets and liabilities are summarized as follows at December
31:
                                                    1997               1996
                                                    ----               ----
Deferred tax assets
      attributable to operating
      loss carry forwards                        $ 3,500,000        $ 1,380,000
Valuation allowance due to
      uncertainty surrounding
      realization of operating
      loss carry forwards                         (3,500,000)        (1,380,000)
Deferred tax liabilities                                  --                 --
                                                 -----------        -----------
Total deferred taxes                             $        --        $        --
                                                 ===========        ===========

The Company has  available  at December 31, 1997,  unused  operating  loss carry
forwards,  which may be applied  against future taxable  income,  that expire as
follows:

               Amount of Unused Operating     Expiration During
                  Loss Carry forwards       Year Ended December 31,
                  -------------------       -----------------------
                       $  200,000                    2001
                          550,000                    2002
                        1,200,000                    2003
                          300,000                    2004
                          490,000                    2007
                          340,000                    2008
                          320,000                    2009
                          650,000                    2010
                        1,050,000                    2011
                        4,700,000                    2012
                       ----------
                       $9,800,000
                       ==========

Note 8 - Commitments, risks and contingencies
---------------------------------------------

The Company managed for various charities a bingo hall in Piedmont,  Alabama.  A
political  effort was mounted in 1998 to eliminate  public bingo  parlors in the
Piedmont  area. As of the date of these  financial  statements,  it appears that
management  will be forced to  liquidate  its bingo  facility  at a large  loss.
Management has estimated that under the current circumstances,  the facility can
be sold for only

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 39
<PAGE>

approximately  $2,000,000 (net of substantial legal and other settlement costs),
and  accordingly  has reduced the carrying  value of such assets to this amount.
Pending  sale,  the  facility  is  not  available  for  bingo  operations,   and
accordingly, the Company has no source of income at this time. Proceeds from the
sale  should be  sufficient  to allow the  Company  to settle all debts and fund
operations until new sources of revenue can be generated.

The Company is in the process of developing bingo productions to be broadcast by
satellite  and via the  Internet  into  homes of viewers  throughout  the United
States.  Should  local,  state,  or federal laws change  regarding  bingo,  such
changes  could have a material  impact on the ability of the Company to generate
future revenues.

The Company has a history of issuing  common  stock for  services  difficult  to
value or yet to be  provided.  Approximately  3,000,000  (or 57%) of the  common
stock  outstanding  at December 31,  1997,  is  restricted  in some fashion as a
result of the above  transactions.  Furthermore,  the Company has in prior years
canceled common stock  certificates due to  non-performance of the third parties
involved  in  certain  of the  above  transactions.  Although  no  party to such
transactions   has  yet   instigated   litigation   involving  the  Company  for
cancellation  or  restriction  of  related  shares,  due to the  volume  of such
transactions,  litigation  relating  to such  activity  remains  a  possibility.
Management feels all actions it has taken to cancel or restrict common stock are
with merit,  and does not  anticipate  any material  loss being  incurred by the
Company relating to future resolution of these matters.

The Company has an employment  agreement  with Mr. Ron Foster,  shareholder  and
president,  which expires on December 31, 2001. Under the agreement,  Mr. Foster
is entitled to $130,000 in minimum annual salary,  cash bonuses of the lesser of
10% of revenues or 5% of pre-tax profits, and stock bonuses equivalent to 10% of
pre-tax  profits before  depreciation.  To date, Mr. Foster has accepted no more
than $120,000 per year as adequate compensation under the contract.  There is no
guarantee  that Mr.  Foster  will  continue  to accept an amount  less than that
stipulated in the agreement.

The Company sold stock to a production  company in California several years ago.
As a result of the sale,  the  production  company was to provide  approximately
$400,000 of production  facility time and services at no additional  charge.  No
value has been  recorded for such  services  provided and to be provided in that
their market value is not subject to reasonable  estimation and that realization
of future services is not assured.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 40
<PAGE>

Summary Financial Data

Set forth below is selected  financial  information  of the  Registrant  and its
consolidated  subsidiaries  as derived  from the  audited  statements  of income
(loss) for the last two calendar years,  from the balance sheets for the periods
then ended.  The selected  financial  information  should be read in conjunction
with the financial  statements  (including  the notes  thereto)  filed with this
Registration  Statement  and  are  qualified  by  reference  to  such  financial
statements.
                                                December 31,        December 31,
                                                    1997                1996
                                                -----------         -----------
Statement of Operations Data
----------------------------
Gross Revenues                                      544,662             421,128
Income from Operations(Loss)                     (4,723,202)         (1,049,719)
Net Income (Loss) per share *                          (.88)               (.20)

Balance Sheet Data
------------------
Assets
------
Current Assets                                      118,160             190,624
Property & equipment, less
    accumulated depreciation                      2,752,900           7,026,112
Other Assets                                         84,174             224,288
                                                -----------         -----------
Total Assets                                      2,955,234           7,441,024

Liabilities
-----------
Current Liabilities                                 847,634             484,647
Long Term Liabilities                                   Nil             240,229
Total Liabilities                                   962,288             724,876
Total Stockholders' Equity                        1,992,946           6,716,148
--------------------------                      -----------         -----------
Total Liabilities and Equity                    $ 2,955,234         $ 7,441,024
----------------------------                    -----------         -----------
 
-----------------
*   See  above.  Per share data is  computed  based on the  weighted  average of
    common stock outstanding as of the report date.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 41
<PAGE>

Item 8. Charges in and Disagreements with Accountants on Accounting and
-----------------------------------------------------------------------
        Financial Disclosure
        --------------------

        None

Item 9. Directors, Executive Officers, Promoters and Control Persons
--------------------------------------------------------------------

DIRECTORS AND EXECUTIVE OFFICERS

The  following  table  sets  forth  the  names  and ages of the  members  of the
Registrant's board of directors and its executive  officers,  the positions with
the  Registrant  held by each,  and the period during which each such person has
held such position.

Name                 Age     Position                                    Since
----                 ---     --------                                    -----
Ronald Foster        56      President/Chairman of the Board             1986
William Beggs        54      Director                                    1998
Karien Anderson      47      Secretary/Treasurer/Director                1997
Claude Pichard       43      Director                                    1986
Mel Ray              58      Director                                    1997

                                     ------

     Messrs.  Fosters,  Mr. William Beggs, Mr. Prichard and Ms. Anderson are all
engaged with the Registrant's business on a full time basis.

All directors hold office until the next annual meeting of  stockholders  of the
Registrant  (currently  expected to be held  during  April 1999) and until their
successors  are  elected and  qualified.  Officers  hold office  until the first
meeting of directors  following  the annual  meeting of  stockholders  and until
their  successors are elected and qualified,  subject to earlier  removal by the
board of directors. There are currently no committees of the board of directors.

Biographies of the Registrant's Executive Officers and Directors
----------------------------------------------------------------

Ronald Foster
-------------

Mr. Foster, 56, is presently Chairman,  President,  Chief Executive Officer, and
Executive  Producer  for SBI  Communications,  Inc. He has been working with the
Registrant since its inception in 1984. His

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 42
<PAGE>

primary  responsibilities  include finance,  marketing and technical  review. In
addition to his  responsibilities  with the  Registrant,  Mr.  Foster has held a
number of other management  positions over the years.  From 1984 to 1986, he was
executive  vice  president and producer of Pioneer  Games of American  Satellite
Bingo,  in Albany,  Georgia.  Mr.  Foster was also owner and  operator of Artist
Management & Promotions  where he was  responsible for  coordinating  television
entertainers,   sports  figures  and  other  celebrities  for  department  store
promotions.  Since 1987,  Mr.  Foster has served as  president  and  director of
Ed-Phills, Inc., a Nevada corporation and is now an executive vice president and
member of the  board of  directors  of Golden  American  Network,  a  California
corporation.  Since 1984,  he has also been the  president  and chief  executive
officer of ROPA  Communications,  Inc.,  which owns and operates  WTAU-TV-19  in
Albany, Georgia. He created and produced "Stock Outlook 87, 88, and 89," a video
presentation  of public  companies  through  Financial  News  Network  (FNN),  a
national cable network. Mr. Foster also has experience as technical director and
associate producer for numerous national live sports broadcasts produced by ABC,
CBS  and  WTBS.  Mr.  Foster  is   Driector/Producer/Writer  of  the  Registrant
Interactive Broadcast Programs.

Karien Anderson
---------------

Ms. Anderson is 47 years old and resides in Piedmont,  Alabama. Ms. Anderson has
extensive experience in executive secretarial business, including government and
private  sectors.  She has  extensive  background  in the field of  advertising,
marketing, special event promotions,  contract management,  personnel management
and real  estate.  Ms.  Anderson  currently  holds a real  estate  licence.  Ms.
Anderson has been involve as coordinator for non-profit association for the last
eighteen years. She is currently  employed as Secretary and property manager for
SBI Communications, Inc.

Claude Pichard
--------------

Mr.  Pichard,  44, has been a Vice  President and a director for the  Registrant
since 1986. His primary  responsibilities  include  directing and developing the
interactive  Bingo and auction  programs.  Mr.  Pichard has over twenty years of
television  experience as a producer,  director and  scriptwriter.  He served as
creative services director at WCTV in Tallahassee,  Florida,  where he headed an
award-winni ng team of directors, writers and artists for the number one station
in its market. He has also worked with numerous  Hollywood-based  game shows and
was the director  for the Bolivian  National  Lottery  game.  In addition to his
responsibilities with the Registrant,  Mr. Pichard also serves as a research and
training  specialist  with the Florida  Department of Law  Enforcement  where he
supervises the production of training tapes,  public service  announcements  and
media related  courses.  Mr.  Pichard holds a bachelor of science degree in mass
communications from Florida State University.

Mel Ray
-------

Mr.  Ray is 58 years old and  resides  in Tampa,  Florida.  Mr.  Ray has been an
executive in the bottled and natural gas industries for more than 30 years,  and
currently  manages six gas  companies in the state of Florida,  ranging from the
west  coast  Tampa  area all the way to the east  coast of  Florida.  Mr.  Ray's
extensive  experience in utility  companies gives him a great  understanding  of
local and federal government regulations. Due to the nature of his business, Mr.
Ray also possesses knowledge concerning hazardous materials transportation, bulk
purchasing, retail sales, management, marketing, acquisition, and personnel. Mr.
Ray has 20 years of experience operating some of the most profitable

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 43
<PAGE>

divisions of  Tropi-Gas,  Petrolane,  and Star Gas as an  executive  both in its
international  and domestic  markets.  Mr. Ray is an officer and director of the
company.

Williams Beggs
--------------

Mr. Beggs is 54 years old and resides in Fort Lauderdale, Florida. Mr. Beggs has
been a member,  in good  standing,  of The  Florida Bar since  1973.  Mr.  Beggs
practices real estate and corporate law in the Fort Lauderdale area.


Item 10 Executive Compensation
------------------------------

The Summary  Compensation  Table below sets forth all  compensation  paid to the
Officers and  Directors of the  Registrant  during the  Registrant's  year ended
December 31, 1996 and 1997. Prior to June of 1992, the date on which a change in
control of the  Registrant was effected and current  management  took over their
respective   positions,   previous   management   conducted  no  business,   the
Registrant's was inactive and no compensation was paid or deferred to and of the
Registrant's officers or directors.

                         1996 Summary Compensation Table
                         -------------------------------
<TABLE>
<CAPTION>
Name                 Annual Compensation                Long Term Compensation
and                                           Awards       Awards      LTIP        All
Principal                                   Restricted   Restricted    Pay-       Other
Position            Salary  Bonus    Other    Stock        Options     outs    Compensation
--------            ------  -----    -----    -----        -------     -----   ------------
<S>                   <C>     <C>      <C>      <C>           <C>        <C>       <C>
Ronald Foster **      5       *        *        *             *          *         *
Claude Pichard +      *       *        *        *             *          *         *
Mel Ray (2)           *       *        *        *             *          *         *
Thomas Barrett(4)     7       *        *        *             *          *         *

<CAPTION>
                         1997 Summary Compensation Table
                         -------------------------------

Name                 Annual Compensation                Long Term Compensation
and                                           Awards       Awards      LTIP        All
Principal                                   Restricted   Restricted    Pay-       Other
Position            Salary  Bonus    Other    Stock        Options     outs    Compensation
--------            ------  -----    -----    -----        -------     -----   ------------
<S>                   <C>     <C>      <C>      <C>           <C>        <C>       <C>
Ronald Foster **     (5)      *        *        *             *           *        *
Claude Pichard +      *       *        *        *             *           *        *
Mel Ray (2)           *       *        *        *             *           *        *
Karien Anderson(1)   (6)      *        *        *             *           *        *
Thomas Barrett (4)   (8)      *        *        *             *           *        *
---------------
</TABLE>

*   None.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 44
<PAGE>

**   President, Chairman and Chief Executive Officer.
***  Former Secretary, Treasurer and Chief Financial Officer.
 +   Vice President.
(1)  Secretary and Treasurer.
(2)  Director.
(3)  Director.
(4)  Vice President.
(5)  $130,000.
(6)  $ 30,000.
(7)  $  1,500.
(8)  $ 30,000.
(9)  No person listed has any options to acquire securities of the kind required
     to be disclosed pursuant to instruction 1 of Item 403 of Regulation SB.

Employment Agreements
---------------------

The Registrant is a party to an employment  agreement with Ronald Foster, a copy
of which is filed as an exhibit to this  registration  statement.  The following
summary thereof is qualified in its entirety by reference to such exhibit.

On January 1, 1992, Mr. Foster entered into a ten year employment agreement with
the Registrant, renewable thereafter for continuing one year terms unless one of
the parties provides the other with written intention not to renew, on or before
the  180th  day prior to  expiration  of the then  current  term.  Although  the
agreement can be terminated by the  Registrant  for cause,  or the  Registrant's
stockholders  can refuse to comply with its terms by not  re-electing Mr. Foster
as a director,  such events accelerate Mr. Foster's rights to compensation under
the Agreement.

The Agreement provides the Registrant with an obligation to defend and indemnify
Mr. Foster to the fullest extent legally permitted,  and calls for the following
compensation:

(a) Mr.  Foster  is  entitled  to an  annual  bonus  payable  in  shares  of the
    Registrant's  common stock,  determined by dividing 10% of the  Registrant's
    pre-tax profits  (excluding  depreciation)  for the subject calendar year by
    the average bid price for the Registrant's common stock during the last five
    trading  days  prior to the end of the last day of each  year and the  first
    five days of the new year, provided,  however, that the agreement shall have
    been in effect for at least one business day during the subject year.

(b) Mr.  Foster is  entitled to an annual cash bonus in a sum equal to 5% of the
    Registrant's  gross  annual  income or 10% of the  Registrant's  net pre-tax
    profit (excluding depreciation), whichever is less.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 45
<PAGE>

(c) Mr.  Foster is entitled  to a salary  starting at  $2,500.00  per Week,  but
    subject to review on a quarterly basis, with the expectation that it will be
    substantially  increased as increased  profits and cash flow from operations
    permit.

(d) In addition to the  foregoing,  Mr. Foster is entitled to a benefit  package
    equal to the most favorable  benefit  package  provided by the Registrant or
    its subsidiaries to any of their employees, officers, directors, consultants
    or agents.

All  required  payments  are  accruing  until  such time as the  Registrant  has
adequate funds to meet its operating expenses and commitments.

Item 11. Security Ownership of Certain Beneficial Owners & Management
---------------------------------------------------------------------

The following table sets forth, as of the date of this  Registration  Statement,
the  number  and  percentage  of  shares  of common  stock  owned of record  and
beneficially  by any group (as that term is  defined  for  purposes  of  Section
13(d)(3) of the Exchange  Act),  person or firm that owns more than five percent
(5%) of the Registrant's  outstanding  common stock (the Registrant's only class
of voting securities).

Name and Address of                 Amount of         Nature of       Percent of
Beneficial Owner *                  Shares            Ownership       Class
------------------                  ------            ---------       -----
Ronald Foster                       1,632,089         Record &        32%
103 Firetower Road                                    Beneficial
Leesburg, Georgia, 31763

Larry Cahill                        1,000,000         Record &        19%
3330 Southgate Court                                  Beneficial
Cedar Rapids, Iowa 52404

Michael Graham                        500,000         Record &        10%
1804 Cherry Lane                                      Beneficial
Bluefield, West Virginia 24701
---------------
*        Includes all stock held either personally or by affiliates.

(b) Security Ownership of Management
------------------------------------

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 46
<PAGE>

     The  following  table  sets  forth,  as of the  date of  this  Registration
Statement, the number and percentage of the equity securities of the Registrant,
its parent or  subsidiaries,  ,owned of record or  beneficially by each officer,
director  and  person  nominated  to hold such  office and by all  officers  and
directors as a group.

Title of   Name of                        Amount          Nature of   Percent of
Class      Beneficial Owner               Shares          Ownership   Class
-----      ----------------               ------          ---------   -----
Common     Ronald Foster                  1,632,089       **          32.00%
Common     Karien Anderson                0               ***         00.00%
Common     Claude Pichard                 10,000          **          00.07%
Common     Betty Rodgers                  5,000           ***         00.035%
Common     Williams Beggs                 0               ***         00.00%
Common     All officers and directors
           as a group (5 people)          1,647,089       **          33.05%
---------------
*        Includes all stock held either personally or by affiliates.
**       Record & Beneficial.
***      Not Applicable.

To the best knowledge and belief of the Registrant,  there are no  arrangements,
understandings,  or agreements  relative to the disposition of the  Registrant's
securities, the operation of which would at a subsequent date result in a change
in control of the Registrant.

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

There are no family relationships among directors, executive officers or persons
chosen by the  Registrant  to be  nominated  as a director  or  appointed  as an
executive officer of the Registrant of any of its affiliated subsidiaries.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 47
<PAGE>

                                     PART IV
                                     -------

Item 13.  Index to Exhibits
---------------------------
          Description of Exhibits
          -----------------------
          Page or
Exhibit   Source of
Number    Incorporation     Description
------    -------------     -----------

2.   .1   ***               Plan of Reorganization: Agreement and Plan of Merger
                            [sic] by and among Satellite Bingo, Inc., a Georgia
                            corporation, and Supermin, Inc. dated September 2,
                            1986.

     .2   ***               Re-incorporation in Delaware Instruments.

3.                          Constituent Documents:
                            ----------------------
     .1   ***               Articles of Incorporation, as amended

     .2   ***               Bylaws, as amended

10.                         Material Contracts:
                            -------------------
     .1   ***               Agreements for Purchase of Piedmont Bingo Hall
                            (Frontier Palace).

     .2   ***               Employment Agreement between Registrant and 
                            Ronald Foster.

     .3                     Joint Venture Agreements:
                            -------------------------
          ***    .1         Joint Venture Agreement with VPACS Limited (a New
                            York corporation)
          ***    .2         Cahill Agreement
          ***    .3         La Yate Company Limited (Hong Kong)
          ***    .4         PandaAmerica/Glendale Studios

     .4                     Bingo Hall Agreements:
                            ----------------------
          ***    .1         Chief Strikeaxe Trading Post (Oklahoma)
          ***    .2         DCA Services Division, Fort Benning, Georgia
     .5   ***               Lease and Service Provider Agreements with Piedmont
                            Jaycees.

     .6                     Program & Production Agreements:
                            --------------------------------
          ***    .1         Glendale Studios Production Agreements
          ***    .2         Las Vegas Television Network, Inc.

     .7   ***               Lease Agreement dated January 17, 1996, with
                            Integrated Telephony Products, Inc.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 48
<PAGE>

          Page or
Exhibit   Source of
Number    Incorporation     Description
------    -------------     -----------

     .8                     Agreements with Bradley M. (Brad) Tate:
                            ---------------------------------------
          ***   .1          Memorandum of Service Agreement
          ***   .2          Consulting Agreement
     .9   ***               Alamo Leasing Agreement

     .10                    Letters of Intent:
                            ------------------
          ***   .1          Glendale Studios, Inc.
          ***   .2          Cherokee Indians of Georgia, Inc.
          ***   .3          Promotions International Corporation.

     .11                    Licensing Agreements:
                            ----------------------
          ***   .1          Fertina-C, LTD, March 25, 1992 (Greece)
          ***   .2          Satellite Bingo, Inc. and Luis Manuel Da Costa
                            Matias, January 18,
                                    1991(Brazil)
          ***   .3          I.O. Report, C.A., March 23, 1993, (Venezuela)

     .12                    LACOA Agreements:
          ***   .1          Lobbyist Engagement Agreement
          ***   .2          Management Agreement

11.       *                 Statement re computation of per share earnings.

21.       **                Subsidiaries of the Registrant.

99.                         Additional Exhibits:
                            --------------------
          ***   .1          Letter from Fletcher, Heald & Hidreth to Ron Foster,
                            dated April 10, 1992, referencing communications
                            with Cynthia Young, Assistant Chief, Support of
                            Litigation, rganized Crime and Racketeering Section
                            of the Criminal Division, United States Department
                            of Justice.

          ***   .2          Letter from Fletcher, Heald & Hidreth to Ron Foster,
                            dated March 19, 1992, referencing the legality under
                            federal law of SBI Communications, Inc.'s programs
                            and planned subscription network.

          ***   .3          Correspondence between the Federal Communications
                            Commission and Putbrese, Hunsaker & Ruddy, dated
                            September 14, 1990 through February 11, 1991,
                            requesting a request for declaratory ruling the
                            legality of advertising interactive Bingo games on
                            cable systems.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 49
<PAGE>

          Page or
Exhibit   Source of
Number    Incorporation     Description
------    -------------     -----------

          ***   .4          Correspondence between Sutherland, Asbill & Brennan
                            and the Federal Communications Commission, from July
                            28, 1986, until some undetermined time in 1987.

          ***   .5          Opinion letters to Ron Foster from Sutherland,
                            Asbill & Brennan dated July 11 and 15, 1986.

          ***   .6          Letter involving the game C-Note, dated June 18,
                            1993, referencing a prohibition under Section
                            9-701(1(a) to the offer of games of Bingo and keno
                            in Nebraska, but noting that such statute would not
                            appear to prohibit the broadcast of the games into
                            Nebraska, or, the location in Nebraska of telephone
                            banks involving offers of the games outside of
                            Nebraska.

          ***   .7          Opinion Letter dated November 16, 1995, from Wiley,
                            Rein & Fielding (Washington, D.C.), re Pay-per-view
                            Bingo.

          ***   .8          Ordinance Number 429 (Bingo) dated June 13, 1994,
                            City Clerk of Piedmont, Alabama.

          ***   .9          Alabama Constitution, Amendment Number 508, Bingo
                            Games in Calhoun County.

          ***   .10         Limited Appraisal of Frontier Palace, dated May 1,
                            1995, prepared by Phillip C. Ledbetter.

                                    ---------
o    Incorporated  by reference  from the  disclosure  thereof in the  financial
     statements filed herewith.

**   Incorporated  by reference  from the  disclosure  thereof at Part I, Item I
     (Description  of  Business),   located  at  page  3  of  this  registration
     statement.

***  Provided in the original filing and/or first amendmentfo the 10-SB.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 50
<PAGE>

                             Additional Information
                             ----------------------

                                  Headquarters
                                  ------------
                            SBI Communications, Inc.
                        P.O. Box 729 - 103 Firetower Road
                               Leesburg, GA 31763.

                                  Subsidiaries
                                  ------------

                 SBI Communications, Inc., a Nevada Corporation
            955 South Virginia Street; Suite 116; Reno, Nevada 89502

                  Satellite Bingo, Inc., a Georgia Corporation
           103 Firetower Road - P. O. Box 729, Leesburg, Georgia 31763

                              Officers & Directors
                              --------------------
    Ronald Foster: President, Chairman of the Board, Chief Executive Officer
                  Karien Anderson: Secretary/Treasurer/Director
                     Claude Pichard: Vice President/Director
                                Mel Ray: Director
                            Williams Beggs : Director

                                    Auditors
                                    --------
                                  John Ratliff
                  Daniels and Ratliff Professional Group, Inc.
     301 South McDowell Street; Suite 1014; Charlotte, North Carolina 28204

                                 Transfer Agent
                                 --------------
                            Corporate Stock Transfer
               370 17th Street; Suite 2550; Denver, Colorado 80202

Exhibits to this Form 10-KSB will be provided, subject to payment of actual copy
costs,  to  shareholders  of the Registrant  upon written  request  addressed to
Karien  Anderson,  Secretary,  SBI  Communications,  Inc.,  at the  Registrant's
headquarters listed above.

       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 40
<PAGE>

                                   Signatures
                                   ----------

     Pursuant to the  requirements of Section 12 of the Securities  Exchange Act
of  1934,  as  amended,  the  Registrant  has duly  caused  this  First  Amended
Registration  Statement to be signed on its behalf by the undersigned,  hereunto
duly authorized.


                            SBI Communications, Inc.

Dated: April 30, 1998
                               /s/Ronald Foster/s/
                                  Ronald Foster
                      Chairman, President & Chief Executive

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

    Signature                       Title                              Date
    ---------                       -----                              ----

/s/ Ronald Foster          Chairman, President &                  April 30, 1998
-----------------          Chief Financial Officer
Ronald Foster

/s/ Karien Anderson        Director, Secretary, Treasurer         April 30, 1998
-------------------
Karien Anderson

/s/ Claude Pichard         Director, Vice President               April 30, 1998
------------------
Claude Pichard

/s/ Mel Ray                Director                               April 30, 1998
------------------
Mel Ray

/s/ Williams Beggs         Director                               April 30, 1998
------------------
Williams Beggs


       Form 10-KSB for the Calendar Year Ended December 31, 1997, Page 41
<PAGE>

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

                                    FORM 8-K
                                 CURRENT REPORT
     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
                          Date of Report April 30, 1998

                             SBI Communications, Inc
             (Exact name of registrant as specified in its charter)
   ...........................................................................

                           Delaware 0-28416 58-1700840
             (State or other jurisdiction (Commission (IRS Employer
                 of incorporation) File Number) Identification)

           103 Firetower Road - P.O. Box 729 - Leesburg, Georgia 31763
               (Address of principal executive offices) (Zip Code)

      ........................(912) 759-0701...............................
               Registrant's telephone number, including area code

       A change of address for the Company to be effective April 30, 1998
                    The new address: SBI Communications, Inc
                                  P. O. Box 729
                               103 Firetower Road
                             Leesburg, Georgia 31763


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