SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 [Fee Required]

                   For the fiscal year ended October 31, 1997

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]

For the transition period from                          to

Commission file number 0-21270

                      LAS VEGAS ENTERTAINMENT NETWORK, INC.
              (Exact name of small business issuer in its charter)

             DELAWARE                                      94-3123854
------------------------------------           -----------------------------
(State or other jurisdiction                (I.R.S. Employer Identification No.)
of incorporation or organization)              

                       1801 Century Park East, 23rd Floor
                          Los Angeles, California 90067
               (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (310) 551-0011

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g)
 of the Act:  Common Stock, $.001 par value

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

           Check if there is no disclosure  of delinquent  filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained,  to the best of  registrant's  knowledge,  in definitive  proxy or
information statements incorporated by reference in part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X ]

           State issuer's revenues for its most recent fiscal year:  -0-

           The aggregate market value of the voting stock held by non-affiliates
of the registrant  was  $6,164,702  computed on the basis of the average bid and
asked  prices of the Common  Stock of $0.18 per share as  reported  by NASDAQ on
January 16, 1998.

          Number of common shares  outstanding of the issuer's classes of Common
     Stock as of January 16, 1998: 34,898,349

DOCUMENTS INCORPORATED BY REFERENCE:  NONE


                                                       

<PAGE>



                                                      PART I


Item 1.   DESCRIPTION OF BUSINESS

General

Background and Business and Basis of Presentation

          Las Vegas  Entertainment  Network,  Inc. ("LVEN" or the "Company") was
incorporated  in October  1990,  and is engaged in the  business  of  acquiring,
developing and operating media and gaming facilities and businesses. The Company
is  also  developing  technology  for  the  delivery  of  television  and  video
programming,  Internet  access,  and  telephony  to be  owned  by the  Company's
majority  owned  subsidiary,  Electric  Media  Company  Inc. The Company is also
investigating  other potential  businesses for acquisition in the entertainment,
gaming, lodging, and communications industries.

          The Company initially developed,  produced and distributed  television
programming  featuring  entertainment in Las Vegas,  Nevada. The Company changed
its focus to the gaming  industry in 1993 with the  acquisition of the El Rancho
Hotel and Casino in Las Vegas,  Nevada (the "El Rancho" or the  "Property")  for
$36,500,000.  However,  on January 22,  1996,  the Company sold the El Rancho to
International Thoroughbred Breeders, Inc. ("ITB") for $43,500,000, consisting of
cash,  notes  and  assumption  of debt.  As part of the  January  22,  1996 sale
agreement with ITB (the "ITB Sales Agreement"),  as subsequently  amended,  once
the  Property is opened and invested  amounts have been  recouped by ITB and the
Company, which the Company can provide no assurance can be achieved, the Company
will  receive  as  additional  consideration  for  entering  into  the ITB  Sale
Agreement a fifty percent (50%)  interest in the adjusted  cumulative  cash flow
(as defined)  from the operation of the Property as so developed for a period of
six (6) years  following  the opening of the  Property and the  commencement  of
operations, and thereafter a twenty-five percent (25%) interest in adjusted cash
flow from  operations  until such time as it has  received an  aggregate  of One
Hundred Sixty Million Dollars ($160,000,000), but only after ITB and the Company
first  receive  100% of the adjusted  cash flow until all invested  amounts have
been recouped. In addition, commencing with the development of the Property, the
Company's Las Vegas Communications  Corporation  subsidiary ("LVCC") was granted
an exclusive  contract for up to twenty (20) years to provide  entertainment  at
the  Property,  which if  implemented,  will provide for minimum  annual fees of
$800,000 plus additional commissions.

                   On May 22, 1997, LVEN converted the $10.5 Million  receivable
remaining from the sale of the El Rancho together with accrued  interest thereon
of $1.1 Million into 2,093,868 shares of restricted ITB common Stock. On May 22,
1997,  LVEN and ITB also agreed,  subject to approval of the Boards of Directors
of both  companies,  that  as soon as  practicable,  ITB  would  acquire  LVEN's
continuing  interest in the adjusted cumulative cash flow (as defined) of the El
Rancho (the "El Rancho Cash Flow Interest"), in consideration of which ITB would
issue to LVEN that  number of shares of ITB common  stock  equal to (i) the fair
market value of the El Rancho Cash Flow  Interest,  as  determined in a fairness
opinion to be obtained  from a nationally  recognized  investment  banking firm,
divided by (ii) the average bid price for ITB Stock  during the 20 trading  days
prior to the closing  date.  The shares are subject to certain  restrictions  as
described  below  (see  "Casino  Operations,  Investment  in ITB").  On or about
September 10, 1997,  certain former or current  directors of ITB filed an action
against ITB and its other  directors,  the Company,  the Company's  Chairman and
certain other  individuals  in the Delaware Court of Chancery,  alleging,  among
other  things,  that the Company acted  improperly  in  connection  with various
transactions  with ITB. The  plaintiffs  are seeking,  among other  things,  the
recision of the issuance of the 2,093,068  shares of ITB common stock to LVEN on
May 22,  1997,  and further  seek to block the  issuance  to LVEN of  additional
shares of ITB stock in  exchange  for LVEN's El Rancho Cash Flow  Interest  (See
Legal Proceedings).

          The  Company's  current  activities  as  discussed  below  include the
development of certain casino and gaming  operations  and  investments,  and the
development of certain media and entertainment technologies and properties.

                                                         2

<PAGE>



Casino and Gaming Operations

The  casino  and  gaming  activities  of the  Company  include  (i)ownership  of
2,093,868  shares of common stock of ITB received in exchange for the  Company's
$10.5  Million note due from ITB,  (ii)  managing the El Rancho site,  including
assisting  ITB in  developing  construction  and  architectural  plans  for  the
renovation  and expansion of the hotel and  arranging  for potential  financing,
equity or joint  ventures  to  develop  and  renovate  the  Property,  and (iii)
ownership of an option to purchase an 80% interest in Nordic Gaming Corporation,
a Canadian  corporation  ("Nordic"),  that owns the Fort Erie  Racetrack in Fort
Erie, Ontario, Canada, and provision of a $1.3 Million line of credit to Nordic.

          Investment in ITB . On November 24, 1993, the Company  acquired the El
Rancho Hotel and Casino property in Las Vegas,  Nevada.  The Property was closed
prior to its  acquisition  by the  Company  and has never been  operated  by the
Company. On January 22, 1996, the Company sold the assets and liabilities of the
El Rancho to ITB for consideration of $43,500,000, consisting of (i) $12,500,000
paid at closing in cash; (ii) the issuance of an 8% unsecured promissory note in
the principal amount of $6,500,000 (the " A-Note") which A-Note was paid in full
on March 15, 1996;  (iii) the issuance of an 8% promissory note in the principal
amount of $10,500,000  (the "B-Note") and (iv)  assumption of existing  mortgage
indebtedness and accrued interest of $14,000,000. In addition, once the Property
was developed,  the Company was entitled to share in a percentage of the ongoing
adjusted  cumulative  cash  flow  from  the  operation  of  the  Property  up to
$160,000,000, as provided in the ITB Sale Agreement.

          On May 22, 1997, LVEN converted the $10.5 Million receivable evidenced
by the B-Note,  together with accrued  interest  thereon of $1.1  Million,  into
2,093,868 restricted shares ITB common stock (the "Conversion  Shares").  On May
22,  1997,  LVEN and ITB also  agreed,  subject to approval of their  respective
Boards of Directors,  that as soon as  practicable,  ITB would acquire LVEN's El
Rancho Cash Flow Interest. In order to effect such transaction,  ITB is required
to issue to LVEN that  number of shares of ITB common  stock  (the  "Acquisition
Shares") equal to (i) the fair market value of the El Rancho Cash Flow Interest,
as determined in a fairness opinion to be obtained from a nationally  recognized
investment  banking  firm,  divided by (ii) the  average bid price for ITB Stock
during the 20 trading days prior to the closing.  Both the Conversion shares and
the Acquisition  shares are subject to certain  restrictions as described below.
Management  in the future may  consider  distributing  all or a portion of these
shares to the shareholders of the Company as a dividend. On or about October 10,
1997, certain former or current directors of ITB filed an action against ITB and
its other  directors,  the Company,  the  Company's  Chairman and certain  other
individuals  in the Delaware  Court of Chancery,  alleging,  among other things,
that the Company acted improperly in connection with various  transactions  with
ITB.  The  plaintiffs  are  seeking,  among other  things,  the  recision of the
issuance of the  2,093,068  shares of ITB common  stock to LVEN on May 22, 1997,
and further seek to block the issuance to LVEN of additional shares of ITB stock
in exchange for LVEN's El Rancho Cash Flow Interest (See Legal Proceedings).  In
addition,  no person may hold or  acquire,  directly or  indirectly,  beneficial
ownership of more than 5% of the voting  securities  of ITB without the approval
of the New Jersey Racing  Commission.  LVEN is in the process of obtaining  this
approval (See "Government Regulation").

                  ITB has also agreed that the $55 Million of financing provided
to it by Credit Suisse First Boston Mortgage Capital L.L.C.  ("CSFB") on May 22,
1997 the ("CSFB Loan") was arranged by LVEN's subsidiary,  CasinoCo Corporation,
as the "Alternative Financing" contemplated by, pursuant to, and in satisfactory
of, the provisions of ITB Sale  Agreement.  ITB has informed the Company that it
will begin the  renovation  and  redevelopment  of the El Rancho  Property  as a
country-western  themed  destination  resort  to be  known  as  "CountryLand.  "
However,  it is not  expected  that  funds  from  the  CSFB  financing  will  be
sufficient to begin the  construction  and the  renovation of the Property,  and
additional  funding  will be  required.  Any such  additional  funding  would be
subject to the  execution of a  definitive  loan  agreement  between ITB and any
potential lenders, which the Company can give no assurance will occur.

                   Prior to the funding of the CSFB Loan, ITB had announced that
they had received a $100 Million funding proposal, the proceeds of which were to
be used, in part, for the renovation and opening of the El Rancho. This proposed
funding  was not  implemented.  Prior to  funding  the  CFSB  Loan,  ITB,  under
management of a different Board of Directors,  had announced that it intended to
develop the El Rancho as a multi-casino project with as many as six partners and
a total cost of $1 Billion.  ITB did not engage any partners  for its  "Starship
Orion"  theme  development,  and has now  announced  it may develop the Property
under the more modest "CountryLand" theme.

                                                         3

<PAGE>




                   As a condition  precedent to the issuance of the  Acquisition
Shares for LVEN's Cash Flow  Interest,  LVEN is required to have received one or
more valuation  opinions from one or more investment  banking firms satisfactory
to LVEN respecting the fair market value of the El Rancho Cash Flow Interest. If
LVEN is  unsatisfied  with the highest  fair market  value of the El Rancho Cash
Flow Interest as established by the valuation  opinions,  then it shall have the
right,  within 180 days of the date thereof,  to make a secured  first  mortgage
loan to ITB, and ITB must then repay the CSFB Loan in full. If LVEN were to make
such a loan to ITB,  the loan  would  mature  on the date  that the CSFB Loan is
scheduled to mature and would bear interest at the rate applicable to CSFB Loan,
and LVEN would have the right to develop the property.

                  The Company has  executed an  irrevocable  proxy in respect of
the Conversion  Shares,  and has agreed to execute such an instrument in respect
of the  Acquisition  Shares,  in each case in favor of Mr.  Nunzio P.  DeSantis,
Chairman  of the Board of ITB,  which  proxies  shall be  irrevocable  until the
earlier of (I) the date on which the CSFB Loan and all of the other  obligations
of ITB owing to CSFB under the CFSB Loan have been repaid in full, (ii) the date
on which LVEN distributes the Acquisition Shares to its shareholders  generally,
(iii) the date on which LVEN sells the Conversion  Shares or Acquisition  Shares
to, or LVEN is acquired  by, or merged with or into,  a person or entity that is
not  affiliated  with LVEN or Mr.  Joseph A.  Corazzi,  Chairman of the Board of
LVEN,  and  (iv)  the  date on  which  Mr.  DeSantis  dies or  becomes  mentally
incompetent.  LVEN  and ITB have  agreed  to enter  into a  registration  rights
agreement  respecting  the  Conversion  Shares  and the  Acquisition  Shares and
providing for demand rights,  unlimited  piggyback  rights,  and other customary
provisions.

                  As provided in the ITB Sale Agreement,  if by October 25, 1996
(i) ITB had not closed on or  received  permanent  financing  and  obtained  the
required lease  commitments  to develop the Property under the "Starship  Orion"
theme,  and (ii) had not closed or received a firm  commitment  for  alternative
financing  to develop the  Property,  and if the Company  had  arranged  for the
refinancing and also placed into an escrow account  amounts  sufficient to cover
the financing and carrying  costs of the Property for either a six month or year
period  (the  "Option  Period"),  LVEN may either (i)  appoint  and  authorize a
reputable commercial real estate broker to sell the Property at an amount, after
expenses,  in excess of the underlying mortgage and invested amounts of both ITB
and LVEN,  or (ii)  arrange  on behalf of ITB,  in  conformity  with  prevailing
financing  terms and  conditions  for a major Las  Vegas  hotel/casino  project,
alternative financing of not less than fifty-five million dollars ($55,000,000).
On October 25,  1996,  LVEN advised that it was  asserting  its rights  afforded
during the Option Period by  establishing  the  referenced  escrow  account.  On
October 28, 1996, ITB announced that LVEN had forfeited its rights under the ITB
Sale Agreement  because of the alleged  failure to satisfy  certain  contractual
preconditions  and  LVEN  advised  ITB  that  it  strongly  disputed  and  would
vigorously  contest ITB's stated position.  On February 2, 1997, the Company and
ITB announced that they had settled their disagreement.  As described above, and
with  the  assistance  of the  Company,  ITB has  announced  its  plans  for the
development  of  the  Property  as  "CountryLand".  If  the  Property  is not so
developed,  or if the additional funding is not completed,  the Company believes
that it retains its rights as described above.

          Nordic Gaming (Fort Erie Racing Operations)

          During  1997,  the Company  was granted an option to acquire  from Mr.
Nunzio P. DeSantis, the Chief Operating Officer of ITB, his eighty percent (80%)
of the  voting  equity of Nordic  Gaming  Corporation,  a  Canadian  corporation
("Nordic").  The Company's  Chairman of the Board,  Mr. Joseph A. Corazzi,  as a
bonus for services  rendered in  negotiating  the potential  acquisition  of the
operations  of Nordic,  may be allocated a portion of the ownership as agreed to
by Mr.  DeSantis and LVEN's Board of  Directors.  The remaining 20% of Nordic is
owned by Canadian citizens not affiliated with the Company.  On August 23, 1997,
Nordic  acquired  certain  real  property  and  assets  known as the "Fort  Erie
Racetrack"  which is situated on 143 acres in Fort Erie,  Ontario,  Canada.  The
Fort Eric Racetrack  currently  offers live, as well as simulcast,  thoroughbred
horse  racing.  Additionally,  the  racetrack  has been  notified by the Ontario
Lottery  Corporation that it is eligible to receive 621 video lottery  terminals
("VLTs") and may receive an additional 130 VLTs or more based upon  performance.
However, before any of these VLTs are received, the racetrack and the Provincial
Government of Ontario,  Canada have to come to an agreement as to the percentage
of the  net  revenues  from  the  VLTs  that  can be  kept  by the  race  track.
Furthermore,  the Company and Nordic would have to obtain the  necessary  gaming
licenses.

                                                         4

<PAGE>



          In consideration for receiving the option, which expires June 1, 1998,
the Company;  (i) paid to Nordic  $182,000 that was used as the advance  deposit
used to acquire the racetrack,  (ii) agreed to provide Nordic a working  capital
line of credit as  described  below,  and (iii)  agreed to the  issuance  to Mr.
Nunzio P.  DeSantis of 1,000,000  shares of a new Series A Preferred  Stock that
entitles Mr.  DeSantis to certain  voting rights in a ratio of 20 votes for each
share of preferred stock on matters of stock splits and certain other matters to
be designated by the Board of Directors.  In addition to the deposit above,  the
Company has expended  $134,548 for financing and legal costs in connection  with
the proposed acquisition.

          The exercise  price of the option,  subject to further  evaluation and
appraisal,  is (i)  payable  $1,000,000  cash at  closing,  and (ii)  $2,600,000
payable in equal monthly installments of $100,000 commencing on the last date of
the month on which the  closing  occurs,  and (iii)  upon  exercise,  the entire
issuance of the Series A Preferred  Stock shall be converted into that number of
restricted  shares of LVEN  common  stock equal to (i) the  positive  difference
between (a) eighty percent (80%) of the fair value of the Fort Erie Racetrack as
set forth in a fairness opinion  prepared by an investment  banking firm and (b)
$3,600,000 divided by (c) the average closing price of LVEN Common Stock for the
twenty trading days preceding the giving of the notice of exercise.  However, it
is the  intention  of  LVEN to only  exercise  its  option  based  upon  its due
diligence,  a valuation of the ongoing operations of the property, the valuation
of  potential  revenue  from the  addition  of  VLTs,  and the  availability  of
financing.  If the Company does  exercise its option to acquire the 80% interest
in Nordic,  of which  there can be no  assurance,  and if it decides to maintain
full racing  operations,  it would be responsible for maintaining  operations at
the track through the end of the 1998 racing season which is currently projected
at a cash flow deficit of approximately $2,000,000 for a seventy five day racing
schedule,  excluding  any  additional  revenues  that  may be  generated  by the
introduction of the VLTs.

          As of October 31, 1997, the Company had advanced $1,046,548, to Nordic
pursuant to a Line of Credit  Agreement  dated as of August 27, 1997,  providing
for advances of up to $1,300,000.  Such  advances,  which are due and payable on
August 27,  1998,  bear  interest  at a rate of 10% per annum,  are secured by a
first mortgage lien on and a security interest in the real and personal property
assets  comprising the Fort Erie Racetrack.  Subsequent to October 31, 1997, the
Company advanced an additional $200,000 to Nordic. The Company will use its best
efforts to engage an investment  banking firm to raise up to $35 Million  (which
the Company can give no  assurance  will be  achieved),  in order to develop the
Fort  Erie  Racetrack   property  over  a  twenty-four   month  period  into  an
entertainment  destination  that  would  supplement  any  introduction  of video
lottery or other gaming activities. The Company has subsequently notified Nordic
that it will not furnish additional advances under the line.

                  Other - The Company is actively seeking other  investments and
acquisitions in the communications, gaming and lodging industries, and currently
has several projects under consideration,  subject to further  due-diligence and
analysis.  These  investments may include  acquiring  interests in communication
companies, casinos, hotels or other ancillary businesses in the gaming industry.
The Company can give no assurance  that any of these  contemplated  transactions
will  close  or  occur  as the  successful  closing  of any of the  contemplated
transactions is subject to many variable factors,  a significant number of which
are outside the control of the Company.

Governmental Regulation
-----------------------

                  The  ownership  and  operation  of race track  operations  and
casino gaming facilities in Nevada, New Jersey and Ontario Canada are subject to
the laws of each State or Province and the  regulations  promulgated  thereunder
and to licensing and regulatory  control by the respective  gaming  authorities.
The laws,  regulations and supervisory  procedures of the gaming authorities are
based upon  declarations of public policy which are concerned with,  among other
things,  (i) the character of persons having any direct or indirect  involvement
with  gaming,   (ii)  application  of  appropriate   accounting   practices  and
procedures,  (iii) maintenance of effective control over the financial practices
and financial stability of licensees,  including  procedures for internal fiscal
affairs and the  safeguarding  of assets and revenues,  (iv) record  keeping and
reporting to the gaming  authorities,  (v) fair operation of games, and (vi) the
raising of revenues  through  taxation and licensing  fees.  Pursuant to various
inquiries the Company and certain officers have provided  information to various
states  and to Canada in  connection  with  their  inquiry  into the  financing,
business transactions and financial reporting.



                                                         5

<PAGE>



                  ITB's operations through certain of its subsidiaries at Garden
State Park and Freehold  Raceway in New Jersey are subject to  regulation by the
New Jersey Racing Commission (the "Racing  Commission" ) under the Racing Act of
1940,  as  amended  and  supplemented  (the  "Racing  Act")  and the  rules  and
regulations  of the  Racing  Commission,  and by the New Jersey  Casino  Control
Commission  (the  "CCC").  Under the Racing  Act, no person may hold or acquire,
directly  or  indirectly,  beneficial  ownership  of more than 5% of the  voting
securities of ITB without the approval of the Racing Commission. The issuance by
ITB to the Company of 2,093,868  shares of ITB's Common  Stock  required  Racing
Commission  approval  as it exceeded  the 5%  threshold ( See "Casino and Gaming
Operations,  ITB" for a  description  of such stock  issuance  transaction).  In
reliance  on prior  management  of ITB,  neither  ITB nor LVEN  sought the prior
approval  of the Racing  Commission  for the  issuance of the shares to LVEN and
accordingly, both are in violation of the Racing Act.

          Because ITB simulcasts certain  thoroughbred racing events to Atlantic
City casinos,  ITB, among other things,  is required to be approved and licensed
by the CCC as a non-gaming  related  casino service  industry.  Certain of ITB's
employees and its directors and  significant  stockholders,  including LVEN, are
also  required to be approved  by the CCC. 

          The  Company,  or its  subsidiaries,  and ITB  intend to apply for the
     necessary  governmental  licenses,  permits and approvals for the ownership
     and operation of a casino and race track facilities.  However, there can be
     no assurances that any licenses,  permits or approvals that may be required
     will be given or that once received, they will not be suspended or revoked.

Media,  Entertainment and Communications

                  The  Company  is active in the  development  of media  related
opportunities,  and is developing  technology for the delivery of television and
video  programming,  Internet access, and telephony to be owned by the Company's
majority  owned  subsidiary,  Electric  Media  Company  Inc.  It is the  current
intention of the Company to develop programming and technology that will respond
to the new  business  opportunities  resulting  from the  current  evolution  of
electronic program delivery systems.  The Company has also obtained a management
contract to manage all aspects of the  entertainment  activities at the proposed
"CountryLand" Hotel and Casino, and will seek to manage entertainment activities
at other Las Vegas hotels, casinos, and venues.

Television and Video Programming

                  Revolutionary  changes in program  delivery,  including  fiber
optic  cabling  which will  enable  telephone  and utility  companies  to become
television  programming  providers,  direct broadcast  satellite  services,  the
Internet and world wide web, and the  expansion of foreign  television  channels
and markets have created an unprecedented  demand for  programming.  The Company
intends specifically to act upon this increased need for programming by creating
and packaging new program services and developing  distribution strategies based
upon current industry dynamics and trends.  To accomplish these objectives,  the
Company has  assembled a group of  executives  with vast  experience  in program
origination, production, and distribution operation and technologies.





                                                         6

<PAGE>



                  It  is  the   Company's   intention  to  develop  and  provide
programing to a targeted group of these  emerging  electronic  delivery  systems
that will be unique in its scope and  content.  The  majority  of the  Company's
proposed program channels may be dedicated to pay-per-view programming featuring
primarily  new video  movie  releases.  The  Company  intends to design a unique
scheduling and channel design for pay-per-view service that may approach desired
"video on demand" ("VOD") status for the most popular movie titles.  The ability
to offer a  selection  of top  video  titles  on almost a VOD basis is a feature
greatly  valued in the  electronic  delivery  industry due to  resulting  higher
buy-rates  which  translate  directly into  increased  revenues.  In addition to
developing its near-VOD  pay-per-view  program service,  the Company may package
existing  program  channels and  distribution,  currently in the early stages of
development,   together  with  channels  it  may  create   independently  or  in
partnership with others.

                  The  Company  has  not  signed  any  formal   agreements  with
television  stations for  broadcast  time and the Company does not expect to air
programming  until at least three months after the  completion of an offering to
raise the needed capital. The Company also has not signed any agreements for the
acquisition of any film rights.  Inasmuch as the Company intends to increase its
level of activities it television and video  production,  it will be required to
make significant  expenditures in connection with production and distribution of
its programming.  The Company  anticipates that it will need additional funds to
commence  production  of its  programming  and that losses will occur until such
time,  if ever,  as revenues  generated  are  sufficient to offset the Company's
operating  costs.  There can be no  assurance  that the Company  will be able to
raise  additional funds and/or produce and distribute its programming or achieve
significant levels of revenue or profitable  operations or that the Company will
be able to achieve any of its goals.

                  The primary sources of revenue are expected to be from service
subscription  fees and  advertisements  on and  commercial  sponsorships  of the
intended television programming, or from the sale and licensing to third parties
of any  television or video  programming  developed.  To date, no advertising or
sponsorship commitments,  or film distribution contracts, have been obtained and
no assurances can be given that such commitments will be obtained in the future.

Live Entertainment Management

                  In  connection  with the sale of the El  Rancho,  and once the
project has been developed,  completed and opened either under the "CountryLand"
theme or another theme, the Company's LVCC subsidiary has the exclusive right to
manage  all  aspects of the El  Rancho's  entertainment  activities.  This would
include;  (i)  responsibility  for management and oversight of booking all acts,
performers,  entertainers,  movies,  virtual reality rides and other  non-gaming
attractions  of any kind or nature at the  property  site,  (ii)  arranging  all
advertising for all of the Property's  advertising needs, and (iii) managing all
other entertainment venues at the Property. The term of the agreement is for ten
(10) years commencing on the date which is six (6) months prior to the projected
opening  date of the  property,  and LVCC  shall  have the  option  to renew the
agreement  for  two  (2)  consecutive  five  year  terms.   The  agreement,   if
implemented,  which the Company can give no assurance  will occur,  provides the
Company with an annual fee of $800,000  subject to annual  increases.  LVCC will
also  receive an  additional  (i)  twenty-five  percent  (25%) of  profits  from
entertainment activities,  (ii) ten percent (10%) of the cost of all advertising
placed,  and (iii) booking fee equal to ten percent (10%) of gross  compensation
paid to talent.

Electronic Media Delivery

                  The  Company  has  formed  a new  subsidiary,  Electric  Media
Company Inc. ("EMC"),  which is developing  technology,  that if successful,  of
which the  Company can give no  assurance  , will allow  delivery of video voice
and/or  data  communications  over  electric  power  lines  or  other  forms  of
transmission including cable,  telephone and microwave.  EMC is 75% owned by the
Company and 25% owned by Mr. Nunzio DeSantis, Chairman of the Board of ITB.

                  EMC has entered into two  agreements  for the  development  of
this technology with two joint venture  partners/developers.  The agreements are
for a term of 25 years,  and can be extended to successive  25-year terms at the
election of EMC. The first agreement  calls for the development of video,  voice
and  data  communication  over  existing  power  lines.  Field  testing  of this
technology  will occur  during 1997.  Upon  successful  completion  of all field
tests, EMC will begin worldwide marketing of this technology, including the sale
and distribution of addressable receiver boxes that are necessary to receive the
data communication. LVEN will receive, in perpetuity, a $25 per unit royalty for
each receiver box sold, if any. In accordance with the joint venture  agreement,
EMC is committed to deliver to the

                                                         7

<PAGE>



joint venture  partner/developer;  (i) 500,000  restricted shares of LVEN common
stock upon successful completion of the field test, (ii) monthly renumeration of
$25,000 upon successful completion of the field test (iii) an additional 500,000
restricted  shares  of LVEN  common  stock  each  time the  sale of these  units
generates  $10,000,000  of net after tax  profits  to LVEN,  up to a maximum  of
2,500,000 shares,  and (iv) 20% of the net profits once EMC has recouped all its
costs, plus a return of 6% thereon.

The second  agreement calls for the development of a  communications  network in
Guatemala  and Central  America for the  provision of  telephone,  video,  voice
and/or data  communications.  Field testing of this technology will occur during
1998. In accordance with the joint venture agreement,  if EMC proceeds,  it will
deliver to the joint venture  partner/developer;  (i) up to $500,000 for general
start up and market costs,  (ii) 500,000  restricted shares of LVEN common stock
upon successful  completion of the field test and  demonstration of its economic
viability,  (iii) monthly renumeration of $15,000 upon successful  completion of
the field test and demonstration of its economic  viability,  (iv) an additional
500,000  restricted  shares of LVEN  common  stock for each  150,000  telephones
installed,  up to a maximum of 2,500,000 shares,  and (v) 20% of the net profits
once EMC has  recouped all its costs,  plus a return of 6% thereon.  The Company
intends to engage an investment banking firm to raise $15 million,  for which it
can give no  assurance  can be  achieved,  for the full  implementation  of this
project.

To date, the company has expended $1,031,247 in developing this technology. Such
amounts have been  reflected as research  and  development  costs for year ended
October 31, 1997.

Competition.
------------
                  Competition  in the areas of television  programming  and live
entertainment  is intense and the Company will face intense  competition  in all
areas of its  media  and  entertainment  operations.  The  Company's  television
programming  will  compete  not  only  against  other  television  entertainment
sources,  such as existing  cable  channels,  but also against other  television
programming  in general and other forms of leisure time  entertainment,  such as
videocassette, radio and live entertainment. The Company will compete with major
companies in the television  industry as well as with numerous smaller companies
for the  services  of  performing  artists  and  other  creative  and  technical
personnel and creative  material.  The Company's  programming  will compete with
other  first run  programming,  network  reruns and  programs  produced by local
television stations.  The Company will face competition from companies that have
been acquiring,  producing and distributing programs for several years, and many
of these companies have greater financial resources than those of the Company.

                  The  Company  will  also  face  intense   competition  in  the
development of live Las Vegas  entertainment.  The Company will face  completion
from long established hotel casinos such as Caesars,  The Mirage,  Bally's,  and
The MGM Grand who have been staging  headline Las Vegas shows for years, as well
as newer  casinos such as New York,  New York,  the Luxor and  Treasure  Island.
These casinos are large, well financed, known to the public as providing quality
headline  acts,  and have large  venues.  The Company will be competing  against
these casinos not only for customers,  but for headline talent,  producers,  and
directors necessary to make a successful show.

Employees
---------
                  The Company  currently  has 2 officers  and 5 other  full-time
secretarial and administrative  employees involved in corporate  administration,
accounting  and  marketing  and  development.  The Company also employs  various
employees and consultants for gaming, communications,  financing,  architectural
and  security  and  maintenance  matters  who are  engaged  to work on  either a
consulting  or  part-time   basis.  If  the  Company   develops  its  television
programming and live  entertainment  as described  above, it intends to employ 5
additional  full-time  employees,  and up to seven persons on a part time basis.
Additional  personnel will be hired as needed, or on a project by project basis.
If the  Company  exercises  its  option  to  acquire  Nordic  Gaming,  it  would
additionally employ approximately 15 full employees, and 100 part time employees
that  are  employed  over  the  racing  season.  None of the  Company's  current
employees are represented by unions,  and the Company believes that its employee
relations are good.



                                                         8

<PAGE>



Item 2.   DESCRIPTION OF PROPERTY

                  The  Company's  headquarters  are located at 1801 Century Park
East,  Suite 2300,  Los Angeles,  California  90067 and consists of 7,000 square
feet of  office  space,  which  it  leases  on a  month-to-month  basis  from an
unaffiliated  party  for  $8,500  per  month.  The  Company  also  leases,  on a
month-to-month  basis,  certain  other  office  and  storage  facilities  at  an
aggregate rental of $4,500 per month.

Item 3.   LEGAL PROCEEDINGS

                  On or about  September 10, 1997, two actions were filed in the
Delaware Court of Chancery,  each of which named the Company and its Chairman as
a defendant.  The first such action,  captioned Robert J. Quigley,  Frank A. Leo
and The  Family  Investment  Trust  (Henry  Brennan  as  Trustee)  v.  Nunzio P.
DeSantis,  Michael Abraham,  Anthony Coelho,  Kenneth W. Scholl, Joseph Zapalla,
Joseph A.  Corazzi,  Las Vegas  Entertainment  Network,  Inc. and  International
thoroughbred Breeders, Inc., C.A. No. 15919-NC, ("Quigley") is a derivative suit
brought by two former  directors of ITB and an investment  trust which  alleges,
among other things,  that certain ITB directors  have breached  their  fiduciary
duties to ITB. The Quigley complaint seeks: (i) a declaratory  judgment that (a)
the  share  of  ITB's  common  stock  held  by  NPD  may  not  be  voted  at any
stockholders'  meeting;  (b) all actions  taken by the current  board of ITB are
null and void; and (c) certain purported  "super-majority"  voting provisions in
ITB's By-laws  remain in full force and effect,  and (ii)  rescission of certain
actions taken by ITB's Board,  including but not limited to certain  contractual
rights or entitlements that involve the Company.

                  Specifically,   with  respect  to  the  Company,  the  Quigley
Complaint  alleges  that the Company and its  Chairman  were part of a concerted
effort to divert the stock and assets of ITB to the  Company,  its  Chairman and
Messrs.  DeSantis and Coelho, and seeks to (i) rescind the issuance of 2,093,868
shares of ITB stock to the Company,  (ii)  invalidate  certain rights  presently
existing in favor of the Company  relative to the El Rancho Cash Flow  Interest,
and (iii) rescind certain  agreements entered into between or among the Company,
ITB and/or CSFB in connection with CSFB's refinancing of the El Rancho project.

                  On  November  7,  1997,  the  Company  filed an  Answer to the
Quigley  Complaint,  in which the Company denied the substantive claims asserted
against or with  respect to the  Company.  Discovery  in the  Quigley  action is
ongoing.  The Company  believes that the claims against it are without merit and
is vigorously defending itself in this action.

     The second action,  captioned James Rekulak v. Nunzio P. DeSantis,  Michael
Abraham,   Anthony  Coelho,   Kenneth  W.  Scholl,  Joseph  Zappala,  Las  Vegas
Entertainment  Network,  Inc., Joseph A. Corazzi and International  Thoroughbred
Breeders, Inc., C.A. No. 15920-NC ("Rekulak") is a derivative suit which repeats
the  allegations  in the  Quigley  Complaint  verbatim  and seeks the  identical
relief.  The Company is taking the same  positions  with  regards to the Rekulak
action as it is taking with respect to the Quigley action.

                  The Company and its  Chairman  are named as  defendants  in an
action  filed  on  November  30,  1997 by  Robert  William  Green  ("Green"),  a
stockholder of ITB,  captioned Robert William Green v. Nunzio  DeSantis,  Joseph
Corazzi,  Anthony Coelho, Las Vegas Entertainment  Network,  Inc. and NPD, Inc.,
C.A.  97-5359(JHR)  ("Green"),  in the  United  States  District  Court  for the
District of New Jersey.  The Green complaint alleges,  among other things,  that
the defendants have usurped certain  corporate  opportunities  at the expense of
ITB,  have  diluted  Green's  interest in ITB through the  issuance of shares of
stock and have  conspired  to  deprive  him of  certain  rights  under an option
granted to him by NPD, which, subject to regulatory  approval,  grants Green the
right to purchase  approximately 50% of the shares of ITB's common stock held by
NPD.  The Company  believes  that the claims  against it are  without  merit and
intends to vigorously defend itself.

                   In all of the above  actions,  the  Company is  contemplating
several alternatives to settling all outstanding litigation as it relates to the
transactions with ITB.





                                                         9

<PAGE>



          On October 18,  1996,  an  unaffiliated  third party filed a complaint
against the company in California Superior Court, County of Los Angeles, seeking
damages of $1,800,000,  plus attorney  fees,  for breach of contract,  breach of
implied  contract,  and certain damages the individual  claims are due him under
terms of a 1992 retainer  agreement.  This case was settled for $100,000  during
fiscal 1997.  Additionally,  the Company has commenced action against the owners
of Patmor  Broadcasting  relating to an option to acquire a radio station in Las
Vegas, and intends to aggressively  pursue the Company's  position that it still
has a valid option to purchase the radio station.

           The  Company is not  involved  in, or a party to, any other  material
legal  proceedings  at  this  time.  At  various  times,  the  Company  and  its
subsidiaries  are involved in various matters of litigation,  including  matters
involving settlement of fees and outstanding invoices,  and consider these legal
proceedings not to be material and in the ordinary course of business.


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

          No matters  were  submitted to a vote of security  holders  during the
last quarter of the year ended October 31, 1997.

                                                        10

<PAGE>




                                                      PART II


Item 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
          MATTERS

         The Company's Common Stock has been traded on NASDAQ Stock Market since
February 20, 1992 under the symbol LVEN. The following  table shows the range of
high and low bid  quotations  reported  by NASDAQ in each  fiscal  quarter  from
November 1, 1995 to October 31, 1997.

                                        High       Low
                                        ----       ---
Fiscal 1996
Quarter ended January 31, 1996         $1.25       $0.50
Quarter ended April 30, 1996           $0.84       $0.46
Quarter ended July 31, 1996            $0.75       $0.37
Quarter ended October 31, 1996         $0.43       $0.21

Fiscal 1996
Quarter ended January 31, 1997         $0.56       $0.18
Quarter ended April 30, 1997           $0.81       $0.37
Quarter ended July 31, 1997            $0.59       $0.25
Quarter ended October 31, 1997         $0.40       $0.21

         The number of record holders of Common Stock as of January 16, 1998 was
approximately  795. On January 16,  1998,  the high and low bid asked prices for
the Common Stock were $0.18 and $0.18 respectively.

         Holders of Common  Stock are  entitled to receive  dividends  as may be
declared by the Company's Board of Directors. No contractual  restrictions exist
on the payment of dividends.  No dividends on the Common Stock have been paid by
the Company,  nor does the Company anticipate that dividends will be paid in the
foreseeable  future.  Further,  there  can be no  assurance  that  the  proposed
operations  of the Company  will  generate  the revenues and cash flow needed to
declare a cash dividend or that the Company will have legally available funds to
pay dividends.

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

             Important  Factors  Relating to Forward  Looking  Statements.  - In
connection  with  certain  forward-  looking  statements  contained in this Form
10-KSB and those  that may be made in the future by or on behalf of the  Company
which are  identified  as  forward-looking,  the  Company  notes  that there are
various factors that could cause actual results to differ  materially form those
set forth in any such forward-looking statements. The forward-looking statements
contained in this Form 10-KSB were prepared by management  and are qualified by,
and subject to,  significant  business,  economic,  competitive,  regulatory and
other uncertainties and contingencies,  all of which are difficult or impossible
to predict and many of which are beyond the control of the Company. Accordingly,
there can be no assurance that the forward-looking  statements contained in this
Form 10-KSB will be realized  or the actual  results  will not be  significantly
higher or lower.  These  forward  looking  statements  have not been audited by,
examined by,  compiled by or subjected to agreed-upon  procedures by independent
accountants,  and no  third-party  has  independently  verified or reviewed such
statements.  Readers  of  this  Form  10-KSB  should  consider  these  facts  in
evaluating  the  information  contained  herein.  In addition,  the business and
operations of the Company are subject to  substantial  risks which  increase the
uncertainty  inherent in the forward-looking  statements  contained in this Form
10-KSB. The inclusion for the forward-looking  statements contained in this Form
10-KSB  should not be regarded as a  representation  by the Company or any other
person that the forward-looking statements contained in this Form 10-KSB will be
achieved.  In light of the foregoing,  readers of this Form 10-KSB are cautioned
not to place undue reliance on the forward-looking statements contained herein.

                                                        11

<PAGE>



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

Year Ended October 31, 1997 Compared to Year Ended October 31, 1996

         Revenues for the year ended  October 31, 1996  consisted of $225,000 of
fees earned under an interim  entertainment  management  agreement  with ITB and
$66,200 earned in connection with renting out the parking  facilities  while the
Company owned the El Rancho.  The Company did not recognize any revenues  during
the year ended October 31, 1997. The Company had previously reported revenues of
$225,000 for the nine months  ended July 31, 1997  relating to fees earned under
the interim management  agreement with ITB, but ITB has disputed that these fees
are due. As a result, the Company provided a reserve for the previously recorded
amount as of October 31, 1997.

         Programming  costs,  which relate to write-downs  made to the Company's
television  programming  library to  reflect  management's  estimate  of its net
realizable value,  decreased  $625,061 to $180,000 during the year ended October
31, 1997 as compared to $805,061 in the corresponding period in 1996.

         Research and  Development  expenses relate to the development of voice,
video and data  communication  technology by the Company's EMC  subsidiary,  and
were  $1,031,247  for the year ended October 31, 1997.  There were no such costs
incurred in the corresponding period in 1996.

         Loss on Investments  for the year ended October 31, 1997 consists of; a
$167,800  charge to reflect the estimated  carrying value of the note receivable
from Tee One Up; a $805,061  charge to reflect the estimated  carrying  value of
the Lake  Tropicanna  notes  receivable,  and a $417,356  charge to reflect  the
estimated  carrying  value  of the  note  receivable  from  Malbec  (See  "Notes
Receivable").

         General and  Administrative  expenses  increased $816,476 to $4,019,368
during  the year  ended  October  31,  1997 as  compared  to  $3,202,893  in the
corresponding  period in 1996. The increase relates to an increase of; (i) legal
and  professional  fees of $168,000 to $798,000  for the year ended  October 31,
1997 as compared to $629,000 for the corresponding period in 1996, which related
mostly to the  payment  of a  $150,000  investment  banking  fee,  and;  (ii) an
increase in travel and  entertainment  costs of $800,000 to  $1,046,000  for the
year ended October 31, 1997 as compared to $246,000 for the corresponding period
in 1996.  The majority of the increase  related to costs incurred by the Company
for the use of charter  aircraft.  Certain of these aircraft costs were incurred
in connection with developing its EMC project which did not exist in 1996. These
increases  were  offset by a decrease  in wages and salary  costs of $304,000 to
$1,396,000  for the year ended  October 31, 1997 as compared to $246,000 for the
corresponding  period in 1996.  Significant general and administrative  expenses
are expected to continue while the Company seeks new acquisitions and projects.

         Other Income and Charges for the year ended  October 31, 1997  consists
of a $165,000  charge to  reflect  the value of  options  granted to Mr.  Nunzio
DeSantis, now the Chief Operating Officer of ITB, to acquire 1,500,000 shares of
the Company's Common Stock at an exercise price of $1 per share, which expire in
December  1999,  as part of  consideration  for  providing a $6,000,000  standby
funding  commitment;  $100,000  settlement  agreement  entered into with a third
party (See "Legal  Proceedings");  $75,000 reserve for management fees earned in
prior years under the Company's management agreement with ITB, and; $45,784 loss
on the sale and disposal of certain fixed assets.

         Interest  Income and Expense.  Interest  income earned on cash balances
and  marketable  securities  decreased  $67,297 to  $428,053  for the year ended
October 31, 1997 as compared to $495,350 for the  corresponding  period in 1996.
The decrease is consistent  with the decrease in the average cash and marketable
securities outstanding during the year ended October 31, 1997 as compared to the
corresponding  period in 1996.  Interest  expense  and finance  costs  decreased
$347,573 to $189,508 for the year ended October 31, 1997 as compared to $537,081
for the  corresponding  period in 1996.  Finance costs,  which consisted of loan
fees and stand-by  financing fees,  decreased  $221,729 to $110,000 for the year
ended October 31, 1997 as compared to $331,729 the corresponding period in 1996.
Interest  expense  decreased  $125,844 to $79,508 for the year ended October 31,
1997 as compared to $205,352 for the corresponding  period in 1996. The decrease
in interest expense is consistent with the decrease in the average  indebtedness
outstanding  during  the  year  ended  October  31,  1997  as  compared  to  the
corresponding period in 1996.

                                                        12

<PAGE>




Year Ended October 31, 1996 Compared to Year Ended October 31, 1995

         Revenues  for the year ended  October 31, 1996  increased by $85,228 to
$291,200 as compared to $205,972 for the corresponding  period in 1995. Revenues
for the year ended  October 31, 1996  consisted of $225,000 of fees earned under
an interim  entertainment  management agreement with ITB (such agreement did not
exist in 1995),  and $66,000  earned in connection  with renting out the parking
facilities  while the Company  owned the El Rancho  property.  Revenues for year
ended October 31, 1995 consisted of $151,000  earned in connection  with renting
out  the  parking   facilities  at  the  El  Rancho  Hotel   property  site  and
approximately $54,000 in fees earned from miscellaneous program sources.

         Programming  costs,  which relate to write-downs  made to the Company's
television  programming  library to  reflect  management's  estimate  of its net
realizable  value,  increased  $82,561 to $805,061 during the year ended October
31, 1996 as compared to $722,500 in the corresponding period in 1995.

         Loss on Investments for the year ending October 31, 1996 is a valuation
allowance of $450,000 relating to advances made to Malbec,  Inc. an unaffiliated
third party, in connection  with the development of certain hotel  properties in
Miami Beach, Fla.

         General and Administrative  expenses decreased $3,642,581 to $3,202,893
during  the year  ended  October  31,  1996 as  compared  to  $6,774,448  in the
corresponding  period in 1995.  The majority of the decrease  relates in part to
legal,  accounting and professional fees previously  incurred in connection with
investigating and negotiating  various  alternatives to developing the El Rancho
and various other business opportunities during the year ended October 31, 1995.
In connection  therewith,  professional and consulting fees decreased $2,378,000
to $570,000 during the year ended October 31, 1996 as compared to $2,948,000 for
the corresponding period in 1995.  Professional  advisory and investment banking
fees also  decreased  $970,000 to $59,000 during the year ended October 31, 1996
as compared to $1,029,000 in the  corresponding  period in 1995. The majority of
the decrease  relates to 1995 fees that were incurred in  preparation of certain
intended underwritings, a proposed spin-off of the Company's LVCC subsidiary and
public  registration of its shares,  and a potential spin-off of the CountryLand
USA subsidiary.  These offerings were terminated  during 1996 and 1995 given the
sale of the El Rancho.  General  and  administrative  costs  relating  to the El
Rancho  decreased by $251,000 for the year ended October 31, 1996 as compared to
1995 due to the  cessation  of  operating  costs when the  Property  was sold on
January 22, 1996.

         Interest  Income and Expense.  Interest  income  increased  $374,183 to
$495,350  for the year ended  October  31,  1996 as  compared  to  $121,167  for
corresponding  period in 1995.  The majority of the  increase  relates to (I) an
increase in interest earned on cash balances of $335,00 to $420,000 for the year
ended October 31, 1996 as compared to $85,000 in the comparable  period in 1995,
and.(ii) interest of $75,000 earned on the Company's  receivables due from Orion
during  the year  ended  October  31,  1996,  for  which  there  was none in the
comparable  period in 1995. The increase in interest  income is consistent  with
the increase in the average cash  outstanding  during the year ended October 31,
1996 as  compared  to the  corresponding  period in 1995.  Interest  expense and
finance costs decreased $144,504 to $537,081 for the year ended October 31, 1996
as compared to $681,585 for the  corresponding  period in 1995.  The majority of
decrease related to a $137,000  decrease in interest expense to $205,000 for the
year ended October 31, 1996 as compared to $343,000 for the comparable period in
1995.  The decrease in interest  expense is consistent  with the decrease in the
average  indebtedness  outstanding  during the year ended  October  31,  1996 as
compared to the corresponding  period in 1995.  Finance costs,  which consist of
loan fees and  stand-by  financing  fees,  approximated  $335,000 in each of the
years ended October 31, 1996 and 1995.

         Other  Income and  Charges  for the year  ending  October  31, 1996 is;
$625,000 which represents cash and the value of 800,000 restricted shares of the
Company's Common Stock and 167,000 shares of Common Stock of Satellite  Networks
Inc. paid in connection  with settling  claims  arising from  arranging  certain
financing in connection  with the initial  acquisition of the El Rancho Property
site;  $295,000  related to an adjustment to reflect the value of certain shares
of  common  stock  previously  issued  for  services  and;  $150,000  issued  in
settlement of an outstanding loan and stock purchase agreement.

                                                        13

<PAGE>



         Reserve on  disposal  of El Rancho  Hotel and  Casino.  On January 22 ,
1996,  the Company sold the assets and certain  liabilities  of the El Rancho to
Orion Casino  Corporation for  consideration  of $43,500,000 of cash,  notes and
assumption  of existing  indebtedness.  The  Company  previously  reflected  the
effects of the above  transaction  and provided an allowance of $9,000,000 as of
October 31, 1995.  This allowance was reduced by $576,677  during the year ended
October 31,  1996 to reflect  the actual  settlement  of all  charges,  relating
mainly to $611,000 of escrow funds that were  returned to the Company upon ITB's
settlement of the certain refinance obligations.

Liquidity and Capital Resources

         The Company has experienced  operating losses since its inception.  For
the fiscal years ended October 31, 1997 and 1996,  the Company  experienced  net
losses of $6,752,405 and $4,740,459,  respectively. The Company anticipates that
it will continue to experience losses as it continues working on its development
plans,  including the development of a technology for the delivery of television
and video programming,  Internet access, and telephony. Even after the Company's
development plans are completed, there can be no assurance that the Company will
be  profitable.  The Company's cash  requirements  to date have been funded from
proceeds  received in  connection  with the sale of shares of its common  stock,
warrants and short-term borrowings.

          Cash   Requirements  The  Company's  current  monthly  operating  cash
requirements are approximately $250,000,  composed of general and administrative
expenses, salary and consulting fees, legal and professional fees, marketing and
travel  costs.  The  Company is also  responsible  for  managing  and paying the
operating costs of the Property, but is reimbursed by ITB on a monthly basis for
these costs in amounts  sufficient  to cover the  company's  cash outlay,  which
currently approximates $30,000 per month but may increase to a greater amount if
renovation of this property begins. In addition to the above, (i) the Company is
evaluating funding $500,000 of general start up costs for its EMC projects,  and
may be required to fund additional  amounts if the field tests prove successful,
and (ii) if the Company  elects to exercise its option to acquire  Nordic Gaming
and elects to maintain current track operations the at Fort Erie Racetrack,  the
track would  operate at a projected  annual cash flow  deficit of  approximately
$2,000,000,  excluding any cost saving  measures that maybe  implemented  by the
Company.  As of October 31, 1997, the Company had advanced  $1,046,548 to Nordic
pursuant to a Line of Credit  Agreement  dated as of August 27, 1997,  providing
for advances of up to $1,300,000.  Such  advances,  which are due and payable on
August 27,  1998,  bear  interest  at a rate of 10% per annum,  are secured by a
first mortgage lien on and a security interest in the real and personal property
assets  comprising the Fort Erie Racetrack.  Subsequent to October 31, 1997, the
Company made $200,000 of additional advances under this credit facility.  If the
Company exercises its option, the Company will use its best efforts to engage an
investment  banking firm to raise up to $35 Million  (which the Company can give
no  assurance  will be  achieved)  in order to develop  the Fort Erie  Racetrack
property over a twenty-four month period into an entertainment  destination that
would supplement any introduction of video lottery or other gaming activities.

         As of January 16, 1998,  the Company had  approximately  $2,300,000  in
cash  and  marketable   securities  and  believes  that  its  current  cash  and
receivables,  including  the expected  repayment of all advances  made to Nordic
Gaming by August 1998, will be sufficient to meet its cash  requirements for the
next 12 months, as well as the repayment of existing debt of $781,248 at January
16, 1998. However,  Nordic currently does not have the current source of cash to
repay its  obligations  to LVEN, and any repayment of this advance would have to
come from future operations, or from additional financing Nordic may obtain. The
Company may, if necessary to meet its cash requirements over the next 12 months,
liquidate certain of its investments, including its current and potential future
holdings of shares of ITB common  stock.  The  Company  may  require  additional
capital to acquire the 80% interest in Nordic Gaming  Corporation and to develop
the technology to be owned by the Company's majority owned subsidiary,  Electric
Media Company Inc. There can be no assurance that  additional  financing will be
available  to the  Company on  acceptable  terms,  or at all. In  addition,  the
Company does not currently meet the new listing standards for maintenance of the
Company's  securities on Nasdaq's  SmallCap  Market,  which new standards become
effective in late February 1998.  Although the Company intends to seek to comply
with the new maintenance  criteria for continued listing,  if the Company should
be unable to meet these  criteria,  it is possible that its securities  could be
de-listed  from the Nasdaq  SmallCap  Market,  which might result in the Company
having difficulty in placing its securities with prospective investors.



                                                        14

<PAGE>



Notes  Receivable.  As of  October  31,  1997,  the  Company  has the  following
outstanding notes receivable;

         As of October 31, 1997, the Company had advanced  $1,0460,548 to Nordic
Gaming Corporation pursuant to a Line of Credit Agreement dated as of August 27,
1997, providing for advances of up to $1,300,000.  Such advances,  which are due
and payable on August 27, 1998,  bear  interest at a rate of 10% per annum,  are
secured  by a first  mortgage  lien on and a security  interest  in the real and
personal  property  assets  comprising  the Fort Erie  Racetrack.  Subsequent to
October 31, 1997, the Company has made an additional  $200,000 of advances under
this credit facility.

         As of October  31,  1997,  the Company  has  provided to Nordic  Gaming
Corporation a $600,000  certificate  of deposit as collateral for an irrevocable
letter of credit in favor of an aircraft  leasing  company.  The  certificate of
deposit shall be returned to the Company upon the earlier of; (i) receipt of any
permanent financing relating to the Fort Erie Racetrack,  (ii) any other capital
infusion of  $1,000,000  or more,  or (iii) at the  expiration  of the  aircraft
leasing  agreement  which expires in September  2004. In the event of default or
other  foreclosure,  the entire amount of the cash collateral shall be deemed to
have been loaned to Nordic Gaming upon the terms and  conditions of the existing
credit facility with them, and secured by the assets of the Fort Erie Racetrack.

         As of October 31, 1997,  the Company  provided a certificate of deposit
of $778,000 as  security  for a letter of credit  issued on behalf of Stan Irwin
Enterprises,  Inc. that was used to acquire a 12 1/2%  undivided  interest in an
aircraft.  The Company  provided  the  certificate  of deposit on behalf of Stan
Irwin  Enterprises to enable Mr. Joseph Corazzi,  the Company's  Chairman of the
Board,  the personal use of up to fifty hours of private air travel service at a
cost to Mr. Corazzi of  approximately  $1,200 per hour. The Company may also use
the plane up to twenty five hours per year.  The  certificate  of deposit at all
times  remains the property of the Company and will earn interest to the benefit
of the Company.  At the end of two years from the date of  purchase,  Stan Irwin
Enterprises, Inc. has the obligation of returning the aircraft to the seller and
receive the fair market value price.  It is anticipated  that the certificate of
deposit and all accrued interest  ($11,894 at October 31, 1997) will be returned
to the Company at that time.

     The Company loaned  $300,000 to Tee One Up, Inc., an  unaffiliated  company
developing  television  footage of actual golf "hole in ones" at  selected  golf
courses.  The  loan was  secured  by the  assets  of Tee One Up.  Principal  and
interest  at a rate of 17% per annum are  payable  in  monthly  installments  of
$14,832  until  maturity,  November 1, 1998.  In March  1997,  Tee One Up became
delinquent in making its monthly payments.  As of October 31, 1997 the principal
balance due under this note  receivable was $267,000,  for which the Company has
fully reserved.

         As of October 31, 1997,  the Company has  outstanding  two (2) separate
notes  receivable of $1,868,000  ($3,736,000 in total) from MPTV,  Inc.  arising
from the sale of the Company's Lake Tropicana  investment.  The first note bears
interest  at a rate of 8% per  annum,  is payable  monthly,  and is secured by a
fifth  position in a deed of trust on the  underlying  time-share  project.  The
first interest payment is due one month after the borrower has completed certain
refinancing  currently in process. The second note is unsecured and non-interest
bearing.  Principal  payments for both notes will be at a rate of $205 ($410 for
both notes) as each  time-share  interval is sold until August 1, 1998, when any
remaining   outstanding   principal  is  due  in  full.   The  notes  contain  a
cross-default  provision so that a default under one note shall also be deemed a
default on the other.  The joint venture had  previously  announced  that it had
reorganized its debt position, and with such financing,  was anticipated to have
the funds to commence development and sale of the time share units.  However, as
of October 31, 1997, as there has been no  significant  development  of the time
share project the Company  provided an  additional  reserve of $806,489 to fully
reserve the remaining receivable from MPTV.

         On  January  15,  1997,  the  Company  made a  90-day  secured  loan of
$2,900,000 to NPD, Inc, ("NPD"), in order to enable NPD to close the acquisition
from Robert  Brennan of 2,904,016  shares of the common  stock of  International
Thoroughbred   Breeders,   At  the  closing  of  such  purchase  and  sale,  the
shareholders of NPD, Nunzio DeSantis and Anthony Coelho,  became the Chairman of
the Board and Chief Executive Officer, respectively, of ITB. The loan to NPD and
all accrued interest due, was repaid to the Company on June 22, 1997.




                                                        15

<PAGE>



         As of October 31, 1997,  the Company has made  accumulated  advances to
Malbec, Inc., an unaffiliated company, of $912,606 for the purpose of developing
and operating a hotel project in Miami Beach,  Florida.  As of October 31, 1997,
$46,678 of such advances have been returned to the Company The advances  accrued
interest  at the rate of 8% per  annum,  and were  due  July  31,  1997.  Due to
difficulties  in  finalizing  a  purchase  agreement,  and on  going  litigation
involving the hotel property,  the Company and Malbec Inc. have discontinued any
attempt at further  development  of this property.  The Company's  advances were
secured by an interest in a escrow  account  (which was a balance of $300,000 as
of October 31,  1997) and a $600,000  lien  against the  subject  property.  The
Company expects the escrow account to be liquidated with the net amounts,  after
payment of all  expenses,  to be returned to the  Company.  The Company has also
been  informed  that the owners of the property  have a tentative  buyer for the
hotel property, which would require the Company's lien be paid off before such a
sale could be consummated.  During the year, the Company has provided a $812,606
allowance  against this advance,  for a net investment of $100,000 as of October
31, 1997.


Item 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

            The consolidated  financial statements of the Company required to be
            included  in  Item  7 are  set  forth  in  the  Index  to  Financial
            Statements..

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

            Not Applicable.

                                                        16

<PAGE>



                                                     PART III

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

            The members of the Board of Directors of the Company serve until the
next  annual  meeting  of  stockholders,  or until  their  successors  have been
elected.  The  officers  serve at the  pleasure of the Board of  Directors.  The
directors  and  executive  officers  of the  Company  are set forth in the table
below.

 Name                 Age                             Position

 Joseph A. Corazzi    48       Chairman of the Board, President,Chief Executive 
                               Officer and Director of the Company
 Carl A. Sambus       47       Chief Financial Officer, Chief Operating Officer 
                               Secretary, Treasurer and Director of the Company
 Paul Whitford        56       Director of the Company.

         Joseph A.  Corazzi has been an  executive  officer and  director of the
Company  since  October  1990  and of LVCC  since  May  1994.  He has  extensive
experience  in shaping and  translating  media and  entertainment  into business
opportunities, In 1974, he founded a communications company, which became one of
the first suppliers of hotel/motel  satellite video entertainment,  using master
antenna TV systems and satellite earth station technology. Mr. Corazzi pioneered
the first installation of 24 hour satellite  television  entertainment for hotel
customers.  Mr.  Corazzi  also  owned  and  operated  cable  television  and pay
television  systems  throughout  the southwest.  In 1985,  Mr.  Corazzi  created
Country  Music  Television  ("CMT"),  the  first  all-country,  all-music  video
programming service. Mr. Corazzi graduated from the University of New Mexico and
completed  course  work  for  his  master's  degree  in  communications  at  the
University of Wisconsin, Madison. Mr. Corazzi is also President of Communication
Associates,  a wholly-owned company by Mr. Corazzi that provides services to
the Company and various other entertainment, communication and gaming companies.

         Carl A.  Sambus  has been an  executive  officer of the  Company  since
October 1990, and of the Company's  CountryLand  subsidiary  since November 1993
and of LVCC since May 1994. Mr. Sambus has spent most of his professional career
in the cable industry,  pay-per-view, pay television and satellite entertainment
industries in the United  States.  One year after joining  Viacom  International
("Viacom") in 1972, Mr. Sambus was placed in charge of Suffolk  Cablevision,  in
which  capacity he conducted a test for the nation's  first one-way  addressable
pay-per-view system. In late 1977, Mr. Sambus was one of the five originators of
Viacom's  adaption  of its  private  pay  television  network  into  ShowtimeTM,
pioneering the cable delivery of movie entertainment on pay television.  In that
capacity, he also helped negotiate  Showtime'sTM merger with The Movie ChannelTM
to form the  nation's  second  largest  satellite  pay  television  service.  As
Showtime/The Movie Channel's Vice President of Business Development from 1977 to
1986, Mr. Sambus was in charge of finance and planning and supervising  Viacom's
entrance into a host of ancillary  markets,  including  SMATV,  hotel and motel,
private cable and direct broadcast satellite markets. Since 1986, Mr. Sambus has
been an active  partner in CLR  Associates,  a family  investment and consulting
partnership  specializing in logistical  management and marketing services.  CLR
Associates  maintains an equity interest in various business'  interests and its
partners serve as officers and directors of several  private  corporations.  Mr.
Sambus is a graduate of Marietta College with a BA in Finance and Accounting.

  
     Paul Whitford has been a director of the Company  since March 1, 1996.  Mr.
Whitford is in private legal practice, concentrating in entertainment,  taxation
and  bankruptcy  law. He has been a member of the Bar of the State of California
since 1978. Mr. Whitford received his Bachelor of Business Administration degree
from the University of North Texas and his Juris Doctor from San Fernando Valley
College  of Law (now  University  of La  Verne).  Mr.  Whitford  has also been a
Certified Public Accountant since 1968, and is currently licensed in Texas.


Compliance with Section 16(a)

         There were no corresponding transactions.










                                                        18

<PAGE>



Item 10. EXECUTIVE COMPENSATION

         The  following  table  sets  forth  the cash  compensation  paid by the
Company to present executive  officers and as to all persons as a group who were
executive  officers of the Company at any time during the year ended October 31,
1996. No director receives any compensation for acting as such.


<TABLE>
<CAPTION>



                                            SUMMARY COMPENSATION TABLE

                       ANNUAL COMPENSATION                                       LONG TERM COMPENSATION(2)
    Name and                                             Other Annual             Awards       Payouts   All
    Principal Position      Year    Salary(1)    Bonus  Compensation                                    Other
    ------------------      ----    ---------    -----  ------------                                    -----
                                                                      Restricted  Optional      LTIP       (3)
                                                                       Stock      ($SARs(#)    Payouts ($)
                                                                       -----      ---------    -----------

<S>                            <C>    <C>         <C>      <C>       <C>             <C>       <C>      <C>

Joseph A. Corazzi, CEO       1997   $550,000     -0-       -0-       $520,000    4,000,000       -    $124,000
President and Chairman(5)
                             1996   $550,000     -0-       -0-          -0-        -0-          -0-   $124,000

                             1995   $500,000     -0-       -0-          -0-        -0-          -0-   $115,000



Carl A. Sambus, CEO,         1997  $101,000     -0-        -0-            -0-      -0-         -0-       -0-
 Chief Financial Officer
 and Secretary               1996   $96,667      -0-       -0-            -0-      -0-         -0-        -0-

                             1995   $80,000      -0-       -0-            -0-      -0-         -0-        -0-



Ken Scholl, (6)              1997   $120,000     -0-      -0-            -0-      -0-         -0-        -0-
 President, Casino-Co
                             1996   $120,000     -0-      -0-            -0-      -0-         -0-        -0-

                             1995   $120,000      0-      -0-            -0-      -0-         -0-        -0-


All executive officers
 as a group (3 Persons)      1997    $770,0000   -0-      -0-         $520,000    4,000,000    -0-     $124,000

                             1996    $766,667    -0-      -0-           -0-        -0-         -0-     $124,000

                             1995    $700,000    -0-      -0-           -0-        -0-         -0-     $115,000

</TABLE>
    The Company paid to Mr. Paul Whitford,  director fees of $36,500 and $13,500
during the years  ended  October 31,  1997 and 1996,  respectively.  The company
issued 200,000 shares of its Common Stock, valued at $125,000, to James Sargent,
a former director of its CountryLand Properties Inc. subsidiary,  for consulting
fees during the year ended October 31, 1996.  There were no other directors fees
paid during the years ended October 31, 1997 or 1996.

    (1)  The amounts shown do not include the value of certain personal benefits
         received in addition to cash compensation.  The aggregate value of such
         personal benefits received was less than ten percent (10%) of the total
         cash compensation payable.

     (2)  The officers and directors have not participated in the Company's 1992
          Stock  Option  Plan  and  have no stock  options  or  other  long-term
          compensation except as stated below.

    (3)  Represents  amount  accrued  on Mr.  Corazzi's  retirement  plan  which
         entitles him to an annual retirement benefit starting with the calendar
         month after his  retirement or  termination,  equal to fifty percent of
         his average annual Company salary and bonus received in the twenty-four
         (24) month period prior to his termination (the retirement plan becomes
         effective  once Mr.  Corazzi has been employed 10 years,  including any
         time pre-dating these agreements.

     (4)  Does not include options to purchase  1,500,000 shares,  which options
          were canceled in fiscal 1995.

     (5)  Whereas Mr. Corazzi is non-exclusive to the Company, some renumeration
          was paid to Mr. Corazzi's wholly -owned corporation in return for that
          corporation providing Mr. Corazzi's services to the Company.

      (6) Mr. Scholl resigned as President of Casino-Co effective May, 1997.

<PAGE>



    The  following  table  contains  information  concerning  the grant of stock
options and employment related warrants to the named executive officers:

                                      Percentage of
                                      Total Options
                                      Granted to
                         Options      Employees in  Exercise       Expiration
Name                     Granted      Fiscal Year   Price          Date

Options Granted in Fiscal 1997

Joseph Corazzi           4,000,000*      100%    $1 per share   Sept. 30, 2002



Options Granted in Fiscal 1996
None

* These options are not part of the Company's stock option plan

    The following  table contains  information  concerning the exercise of stock
options and employment  related  options and  information  in unexercised  stock
options held as of October 31, 1997 by the named executive officers:

Options Exercises and Year-end Value Table

<TABLE>
<CAPTION>



                                                           Value of Unexercised
                                  Number of Unexercised    In-the-Money Options
              Shares               Options & Warrants       at October 31, 1997
              Acquired          ----------------------------  ----------------
                On      Value    Exercisable   Non-exercisable   Exercisable(2)
Name          Exercise  Realized(1)
<S>              <C>     <C>     <C>                <C>                 <C>  

Joseph Corazzi    -0-    -0-      4,130,000       -0 -               - 0-
Carl Sambus       -0-    -0-        250,000       -0 -                -0-
--------------------------------------------------------
(1) Market Value at time of exercise less exercise price.
</TABLE>

(2) The average of the closing bid and ask prices of the Common Stock at October
    31,  1997 was $.23 Value  equals the  difference  between  market  value and
    exercise price.

    On March 1, 1995, the Company and its LVCC  subsidiary  entered into two (2)
separate five-year  employment  agreements with Joseph Corazzi,  the Chairman of
the Board of the  Company,  which  provided  for an annual  aggregate  salary of
$550,000. During 1995, Mr. Corazzi assigned these agreements to his wholly-owned
corporation.  During 1996, Mr. Corazzi was paid at various times for his accrued
compensation  and furnished  with a form 1099.  During  calender year 1997,  Mr.
Corazzi's current compensation was reported on a form W-2. On October
1, 1997, the Company and Mr. Corazzi  terminated  these  agreements and replaced
them with (2) separate  non-exclusive  agreements  with Mr.  Corazzi  which also
provide for an annual  aggregate  salary of $550,000.  The term of the agreement
ends on September  30, 2002,  provided,  however,  that if the Company  fails to
notify  Mr.  Corazzi  in  writing  by October 1, 2001 if its desire to have this
agreement   expire  at  the  end  of  its  initial  term,  the  agreement  shall
automatically  extend for another  term ending on the sixth  anniversary  of the
date upon which Mr.  Corazzi  received  written  notification  of the  Company's
election to terminate the agreement.  The  employment  agreements are subject to
annual  increases and bonuses at the  discretion of the Board of Directors.  The
agreements also entitle Mr. Corazzi to participate in any employee benefit plans
which may be offered in the future, such as group life, health,  hospitalization
and life insurance.  Under the agreements,  Mr. Corazzi's employment  terminates
upon death or disability and may be terminated by the Company for "cause," which
is defined as the willful failure to perform duties, malfeasance,  commission of
a felony, gross negligence,  or breach of the employee's covenant not to compete
or maintain confidential certain information. Termination by the Company for any
other reason  entitles the employee to receive his salary for the remaining term
of the agreements.


                                                        20

<PAGE>



    The employment  agreements  with Mr. Corazzi also provide for the following;
(i) a lump sum  payment of  $2,000,000  upon the  consummation  of a  definitive
agreement by the Company and any potential  purchaser  providing for a change of
control,  (ii), an annual  retirement  benefit  starting with the calender month
after his  retirement  or  termination,  equal to fifty  percent of his  average
annual LVEN salary and bonus received in the twenty-four (24) month period prior
to his termination (plan becomes effective once Mr. Corazzi has been employed 10
years,  including any time pre-dating the agreements),  and (iii) an annual lump
sum cash payment equal to 5% of earnings before income taxes,  depreciation  and
amortization of the LVCC subsidiary.

    The  Company  has an  employment  agreement  with Mr.  Sambus  that  expires
providing  for an annual salary of $125,000.  The agreement  with Mr. Sambus was
renewed until  February 8, 1998,  and may be renewed by mutual  agreement of the
parties for successive terms of one year.

    The Company has no pension or other plans pursuant to which cash or non-cash
compensation  was paid or distributed  during the fiscal years ended October 31,
1997 or 1996 other than as described above for Mr. Corazzi.

     On March 1, 1995,  Mr.  Corazzi was issued  options to  purchase  4,000,000
shares of common stock of CountryLand Properties Inc. which are transferrable to
any new subsidiary formed to operate the gaming assets of the Company, including
Casino-Co.   The  4,000,000  CountryLand  Properties  Inc.  warrants  are  fully
transferable and convertible into options to purchase LVEN Common Stock at $1.00
per share.  On October 1, 1997 the Company  canceled  this option and granted to
Mr.  Corazzi  an option to  purchase  up to  4,000,000  shares of the  presently
authorized but unissued shares of the Company's common stock at $1.00 per share,
subject  to  adjustment  that may  result in  future  changes  in the  Company's
outstanding  common  or other  stock,  that will  preserve  the  benefit  to Mr.
Corazzi.  These shares are not issuable in connection with the Stock Option Plan
described  below.  These shares are not issuable in  connection  with the "Stock
Option Plan" described below.

    On December 11, 1996, Mr. Nunzio DeSantis,  now the Chief Operating  Officer
of ITB, was granted  1,500,000 options to acquire shares of the Company's Common
Stock at an exercise  price of $1 per share.  The options were issued as part of
the  consideration  for providing a $6,000,000  standby  funding  commitment for
replacement  financing on the El Rancho  Property  Site (See "Item 1, Casino and
Gaming Operations").  These shares are not issuable in connection with the Stock
Option Plan described below.

    The  Delaware  General  Corporation  Law  permits  a  corporation,   in  its
Certificate of Incorporation, to exonerate its directors from personal liability
to the corporation or its  stockholders  for monetary  damages for breach of the
duty of care as a director,  with certain  exceptions.  The  exceptions  include
breach of the director's duty of loyalty, acts or omissions not in good faith or
which  involve  intentional  misconduct or knowing  violations of law,  improper
declarations of dividends,  and transactions from which the directors derived an
improper personal benefit. The Company's Certificate of Incorporation exonerates
its directors, acting in such capacity, from monetary liability to the extent so
permitted. This limitation of liability does not eliminate a stockholder's right
to seek  non-monetary,  equitable  remedies such as an injunction or recision to
redress an action taken by directors.  However, as a practical matter, equitable
remedies may not be available in all  situations,  and there may be instances in
which no effective remedy is available.

Stock Option Plan

    The Company  adopted the 1993 Stock Option Plan in February  1993. The Stock
Option Plan enables the Company to offer an incentive based compensation  system
to key employees, officers, directors, consultants and to employees of companies
who do business with the Company.  In the discretion of a committee comprised of
non-employee directors (the "Committee"),  directors, officers and key employees
of the Company and its  Subsidiaries  or employees  of companies  with which the
Company  does  business  become  participants  in the  Stock  Option  Plan  upon
receiving  grants  of stock  options  or  awards  of  restricted  stock or stock
appreciation rights.





                                                        21

<PAGE>



    A total of 1,000,000 shares are reserved for issuance under the Stock Option
Plan,  of which  150,000  shares  are  issuable  under an option  which has been
granted to an employee  at $1.50 per share,  and 770,000  shares  under  options
granted to officers and directors (see "Item 10 - Executive Compensation"),  all
with an exercise  price of $1.00 per share.  The Company may increase the number
of shares  reserved for  issuance  under the Stock Option Plan or may make other
material  modifications to the Stock Option Plan without  shareholder  approval.
However,  no  amendment  may change the  existing  rights of any option or award
holder.  Any shares  which are subject to an option but are not used because the
terms and  conditions of the option are not met, or any shares which are used by
participants  to pay all or part of the purchase price of any option,  may again
be used for options or awards under the Stock Option Plan. However,  shares with
respect to which a stock  appreciation right has been exercised may not again be
made subject to an option or award.

    Stock  options may be granted as  non-qualified  stock  options or incentive
stock  options,  but incentive  stock options may not be granted at a price less
than 100% of the fair market value of the stock as of the date of grant (110% as
to any 10% shareholder at the time of grant) and non-qualified stock options may
not be granted at a price less than 85% of fair market  value of the stock as of
the date of grant.  Restricted  stock may not be awarded  under the Stock Option
Plan in connection  with incentive  stock options.  Incentive  stock options may
only be issued to  directors,  officers  and  employees  of the  Company.  Stock
options may be exercised  during a period of time fixed by the Committee  except
that no stock  option  may be  exercised  more than ten years  after the date of
grant or three years after death or disability of the option  holder,  whichever
is later. In the discretion of the Committee,  payment of the purchase price for
the stock  acquired  through the exercise of a stock option may be made in cash,
shares of Common Stock or delivery of recourse promissory notes or a combination
thereof.

    Stock  options  granted under the Stock Option Plan may include the right to
acquire an Accelerated Ownership Non-Qualified Stock Option ("AO"). If an option
grant  contains  the AO  feature  and if a  participant  pays all or part of the
purchase  price of the option with stock,  then upon  exercise of the option the
participant  is granted an AO to  purchase,  at the fair market  value as of the
date of the AO grant,  the  number  of  shares of stock  equal to the sum of the
number of whole shares used by the  participant in payment of the purchase price
and the number of whole shares,  if any,  withheld by the Company as payment for
withholding taxes. An AO may be exercised between the date of grant and the date
of expiration, which will be the same as the date of expiration of the option to
which the AO is related.  All of the 880,000 stock options  granted to date have
included the AO feature.

    Except as described above, stock appreciation rights and/or restricted stock
may be awarded in  conjunction  with, or may be unrelated to, stock  options.  A
stock appreciation right entitles a participant to receive a payment, in cash or
stock or a  combination  thereof,  in an amount  equal to the excess of the fair
market value of the stock at the time of exercise  over the fair market value as
of the date of grant. Stock appreciation rights may be exercised during a period
of time fixed by the  Committee  not to exceed ten years after the date of grant
or three years after  death or  disability  of the award  holder,  whichever  is
later.  Restricted  stock  requires  the  recipient to continue in service as an
officer,  director,  employee  or  consultant  for a fixed  period  of time  for
ownership  of the shares to vest.  If  restricted  shares or stock  appreciation
rights  are  issued  in  tandem  with  options,  the  restricted  stock or stock
appreciation  right is canceled  upon exercise of the option and the option will
likewise terminate upon vesting of the restricted shares.


                                                        22

<PAGE>



Item 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The following  table sets forth, as of January 31, 1997, the stock ownership
of all persons known to own  beneficially  five percent or more of the Company's
Common  Stock  and  all  directors  and  executive   officers  of  the  Company,
individually  and as a group.  Each person has sole voting and investment  power
over the shares indicated, except as noted.

                                        Number of Shares
                                         of Common Stock
                                          Beneficially
Names and Addresses                          Owned           Percent

Joseph A. Corazzi(1)                       4,795,872         12.3.%
505 Marquette
Albuquerque, New Mexico  87102

Carl A. Sambus(2)                            292,500              *
88 10th Street
Garden City, NY 11530

Ken Scholl                                    12,500              *
2805 Ashworth Circle
Las Vegas, Nevada 89107

Paul Whitford
1208 Cochise Drive
Arlington, Texas 76012                             -              *

All Directors and Executive Officers       5,100,872          13.0%
as a Group (4 persons)(3)

* Less than 1%

     (1)  Includes 665,872 shares owned by Mr. Corazzi;  130,000 shares issuable
          pursuant to an option granted to Mr. Corazzi under the Company's Stock
          Option Plan, and 4,000,000  shares  issuable under options not granted
          under the Stock Option Plan. See "Certain Transactions."

     (2)  Includes options to purchase 250,000 shares of Common Stock granted to
          Mr. Sambus.

     (3)  Includes options to purchase 250,000 shares of Common Stock granted to
          Mr. Sambus,  and options to purchase  4,130,000  shares granted to Mr.
          Corazzi.

         By virtue of their share ownership and/or management positions, Messrs.
Sambus and Corazzi may be deemed  "promoters"  and  "parents"  of the Company as
those terms are defined in the rules and regulations under the Securities Act.


                                                        23

<PAGE>



Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On March 2, 1994, Messrs.  Lasky,  Corazzi and Sambus surrendered their
rights to receive  20,000  Escrow Shares each in exchange for (i) an increase in
the annual salaries payable to them under their employment  agreements described
above,  (ii) five-year  options under the Stock Option Plan to purchase  250,000
shares of Common  Stock  granted  to each of  Messrs.  Lasky and  Sambus  and to
purchase 130,000 shares granted to Mr. Corazzi and (iii) a five-year option (not
under the  Stock  Option  Plan) to  purchase  1,500,000  shares  granted  to Mr.
Corazzi. On March 1, 1995, the Company canceled the five year option Mr. Corazzi
had to acquire the 1,500,000  shares and instead  granted Mr. Corazzi  4,000,000
options to purchase Common Stock of CountryLand Properties Inc. (transferable to
any new  subsidiary  that may be  formed to  operate  the  gaming  assets of the
Company,  including  Casino-Co.).  The  4,000,000  CountryLand  Properties  Inc.
warrants are fully  transferable  and convertible  into options to purchase LVEN
Common Stock at $1.00 per share.  These  shares are not  issuable in  connection
with the Company's Stock Option Plan. All such options are fully vested and have
an exercise price of $1.00.

          Compensation due Joseph A. Corazzi amounting to $ 518,134 and $406,222
has been accrued as of October 31, 1997 and 1996, respectively.  The Company has
also  accrued  $363,000  and  $239,000  for  amounts due Mr.  Corazzi  under his
retirement  plan which is reflected as accrued  officers  benefits as of October
31, 1997 and 1996.  The Company paid and  reimbursed  Mr.  Corazzi  $438,488 and
$730,177 for accrued and current Compensation during the years ended October 31,
1997 and 1996,  respectively.  Such sums were due Mr.  Corazzi from inception of
the Company to October 31, 1997. Subsequent to year end, the Company paid to Mr.
Corazzi $432,000 of the remaining amounts due him.

         Ken Scholl, former President of the Company's Casino-Co subsidiary, was
named a director of ITB on January 15, 1997.

         The Company  paid to Mr. Paul  Whitford,  director  fees of $36,500 and
$13,500  during the years ended October 31, 1997 and 1996,  respectively.  . The
company issued 200,000 shares of its Common Stock, valued at $125,000,  to James
Sargent, a former director of its CountryLand  Properties Inc.  subsidiary,  for
consulting  fees  during the year ended  October 31,  1996.  There were no other
directors fees paid during the years ended October 31, 1997 or 1996.

         Mr. Joseph Zapalla,  currently a director of ITB, was paid a consulting
fee by the  Company  of  $100,000  during the year ended  October  31,  1997 for
services  rendered in  connection  with the  development  of the  Company's  EMC
Project.

         The Company  provided a certificate  of deposit of $778,000 as security
for a letter of credit issued on behalf of Stan Irwin Enterprises, Inc. that was
used to  acquire  a 12 1/2%  undivided  interest  in an  aircraft.  The  Company
provided  the  certificate  of deposit on behalf of Stan  Irwin  Enterprises  to
enable Mr. Joseph Corazzi, the Company's Chairman of the Board, the personal use
of up to fifty hours of private air travel  service at a cost to Mr.  Corazzi of
approximately  $1,200 per hour.  Stan  Irwin  Enterprises  is owned by Mr.  Stan
Irwin,  a  former  director  of the  Company's  LVCC  subsidiary,  an a  current
consultant to the Company.

         The Company entered into a series of  transactions,  at a price no more
favorable than any other arms length  transactions,  with several companies that
were directly owned or controlled by Mr. Nunzio  DeSantis or his family members.
Mr. Nunzio DeSantis is the chairman of the Board of  International  Thoroughbred
Breeders Inc. Those transactions included;

         On December 11,1996, Mr. Nunzio DeSantis, was granted 1,500,000 options
to acquire  shares of the Company's  Common Stock at an exercise price of $1 per
share.  The options  were issued as part of the  consideration  for  providing a
$6,000,000 standby funding commitment for replacement financing on the El Rancho
Property.


                                                      24

<PAGE>




         On January 15, 1997,  the Company,  through  it's  wholly-owned  Nevada
subsidiary Casino-Co, made a secured loan of $2,900,000 to NPD, Inc, ("NPD"), in
order to enable NPD to close the  acquisition  from Robert  Brennan of 2,904,016
shares of common  stock ITB.  At the  closing  of such  purchase  and sale,  the
shareholders of NPD, Nunzio DeSantis and Anthony Coelho,  became the Chairman of
the Board and Chief Executive Officer, respectively, of ITB. The loan to NPD and
all accrued interest due, was repaid to the Company on June 22, 1997.

         On May 22, 1997,  LVEN  converted  the $10.5  Million  note  receivable
evidenced by the B-Note, together with accrued interest thereon of $1.1 Million,
into 2,093,868 restricted shares ITB common stock (the "Conversion  Shares"). On
May 22, 1997, LVEN and ITB also agreed,  subject to approval of their respective
Boards of Directors,  that as soon as  practicable,  ITB would acquire LVEN's El
Rancho Cash Flow Interest. In order to effect such transaction,  ITB is required
to issue to LVEN that  number of shares of ITB common  stock  (the  "Acquisition
Shares") equal to (i) the fair market value of the El Rancho Cash Flow Interest,
as determined in a fairness opinion to be obtained from a nationally  recognized
investment  banking  firm,  divided by (ii) the  average bid price for ITB Stock
during the 20 trading  days prior to the  closing.  The Company has  executed an
irrevocable proxy in respect of the Conversion Shares, and has agreed to execute
such an instrument in respect of the Acquisition  Shares,  in each case in favor
of Mr. Nunzio P. DeSantis,  Chairman of the Board of ITB, which proxies shall be
irrevocable  until the earlier of (i) the date on which the CSFB Loan and all of
the other  obligations of ITB owing to CSFB under the CFSB Loan have been repaid
in full, (ii) the date on which LVEN  distributes the Acquisition  Shares to its
shareholders generally, (iii) the date on which LVEN sells the Conversion Shares
or  Acquisition  Shares to, or LVEN is acquired  by, or merged  with or into,  a
person or entity  that is not  affiliated  with LVEN or Mr.  Joseph A.  Corazzi,
Chairman of the Board of LVEN,  and (iv) the date on which Mr.  DeSantis dies or
becomes mentally incompetent.

         On June 30, 1997, the Company was granted an option to acquire from Mr.
Nunzio P. DeSantis, the Chief Operating Officer of ITB, his Eighty percent (80%)
of the  voting  equity of Nordic  Gaming  Corporation,  a  Canadian  corporation
("Nordic").  The Company's  Chairman of the Board,  Mr. Joseph A. Corazzi,  as a
bonus for services  rendered in  negotiating  the potential  acquisition  of the
operations of Nordic may be allocated a portion of the ownership as agreed to by
Mr. DeSantis and LVEN's Board of Directors. The remaining 20% of Nordic is owned
by Canadian  citizens not  affiliated  with the Company.  In  consideration  for
receiving  the option,  which  expires June 1, 1998,  the  Company;  (i) paid to
Nordic  $182,000  that was  used as the  advance  deposit  used to  acquire  the
racetrack,  (ii) agreed to provide Nordic a working  capital line of credit (see
below) and (iii) agreed to the issuance to Mr.  Nunzio P.  DeSantis of 1,000,000
shares of a new Series A Preferred  Stock that entitles Mr.  DeSantis to certain
voting rights in a ratio of 20 votes for each share of stock on matters of stock
splits and certain other  matters as  designated by the Board of Directors.  The
exercise  price of the option,  subject to further  evaluation  and appraisal is
payable (I) $1,000,000 cash at closing, (ii) $2,600,000 payable in equal monthly
installments  of $100,000  commencing on the last date of the month on which the
closing  occurs,  and (iii) the entire  issuance of the Series A Preferred Stock
shall be converted  into that number of  restricted  shares of LVEN common stock
equal to (i) the positive  difference  between (a) eighty  percent  (80%) of the
fair  value of the Fort  Erie  Racetrack  as set  forth  in a  fairness  opinion
prepared by an investment  banking firm and (b)  $3,600,000  divided by (ii) the
average  closing  price  of LVEN  Common  Stock  for  the  twenty  trading  days
proceeding the giving of the notice of exercise.

         As of October 31, 1997,  the Company had advanced  $1,046,548 to Nordic
pursuant to a Line of Credit  Agreement  dated as of August 27, 1997,  providing
for advances of up to $1,300,000.  Such  advances,  which are due and payable on
August 27,  1998,  bear  interest  at a rate of 10% per annum,  are secured by a
first mortgage lien on and a security interest in the real and personal property
assets  comprising the Fort Erie Racetrack.  Subsequent to October 31, 1997, the
Company has made an additional  $200,000 of advances under this credit facility.
In addition to the line of credit,  the Company has also  provided a certificate
of deposit as security for a certain aircraft leasing arrangement.




                                                      25

<PAGE>



         Mr.  Joseph  A.  Corazzi  and Mr.  Nunzio  P.  DeSantis  are  the  sole
stockholders  of D&C Gaming  Corporation.  On July 1,  1997,  ITB  purchased  an
exclusive  option to acquire  certain  leasehold  interests  relating to two New
Mexico  racetracks,  the Downs at Albuquerque and Farmington  Racetrack from D&C
for a  non-refundable  deposit of $600,000  which is to be credited  towards the
purchase price.  In the event that ITB exercises its option,  the purchase price
would be determined by an independent appraiser.

         During the year ended  October 31,  1997,  the  Company;  (i)  advanced
$931,247 to its 75% owned EMC subsidiary in developing this project.  Mr. Nunzio
DeSantis  owns 25% of the stock of EMC (ii)  paid Mr.  Nunzio  DeSantis,  or his
designated companies,  $110,000 in standby loan fees, and (iii) paid $351,000 to
companies  owned or controlled by Mr.  DeSantis or his family members for actual
charter aircraft costs.

     During the year ended  October 31,  1997,  ITB  reimbursed  Autolend  Group
Inc.(a  company  whose  Chairman,  CEO,  and  principal  shareholder  is  Nunzio
DeSantis) for $150,000 it paid to  Communication  Associates Inc. for investment
banking  services in connection with the location a potential  financing  source
for ITB (Communication  Associates Inc. is a wholly-owned  company of Mr. Joseph
A. Corazzi)


                                                      26

<PAGE>



                                                    PART IV


Item 13.     EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits. The following exhibits of the Company are included herein.

     2.   Plan  of  acquisition,  reorganization,  arrangement,  liquidation  or
          succession
             2.1  Agreement of Purchase and Sale by and between BRT,  Inc. and
                    the Company for the El Rancho Hotel & Casino(9)
             2.3  Letter  Agreement,  dated as of January 22, 1996,  between the
                  Company,    CountryLand   Properties,    Inc.,   International
                  Thoroughbred  Breeders,  Inc.,  and Orion Casino  Corporation,
                  with respect to sale of El Rancho Hotel & Casino (10)

        3.   Certificate of Incorporation and Bylaws

             3.1  Certificate of Incorporation(1)
             3.2  Bylaws(1)
             3.3  Amendment to Certificate of Incorporation(5)
             3.4  Adopted Amendment to Certificate of Incorporation  regarding
                    preferred stock(9)
             3.5  Designation Statement-Series A Preferred-Filed
                   as Exhibit 10.38

        4.   Instruments Defining the Rights of Security Holders

             4.1  Form of Amended Warrant Agreement(5)
             4.2  Form of Amended Unit Purchase Option(5)
             4.3  Form of Amended Stock Escrow Agreement(2)

        10.  Material Contracts

             10.1       Compensatory Plan for Directors and Officers, with
                         schedule of details(1)
             10.2       Employment Agreement with Stan Irwin(1)
             10.4       Employment Agreement with Carl A. Sambus(1)
             10.11      1993 Stock Option Plan(7)
             10.12      Stock Compensation Plan(7)
             10.13      Employment Agreement with Joseph A. Corazzi(7)
             10.15      Form of Mergers and Acquisitions Agreement with D.H.
                        Blair Investment Banking Corp.
                        (formerly Exhibit 4.4)(1)
             10.16      Finders Agreement with Anker Bank(9)
             10.17      Joint Venture Agreement between the Registrant, through
                        Pacific DNS, Inc. and
                        Consolidated Resort Enterprises, Inc.(9)
             10.18      Form of Mergers and Acquisitions Agreement with D.H. 
                        Blair Investment Banking Corp.
                        (formerly Exhibit 4.4)(1)
             10.19       Settlement  Agreement with Winner's  Entertainment,  
                         Inc.(9)
             10.20       Loan Agreements between the Company and  BP  Group,
                         Ltd.--$375,000  loan(9)    
             10.21       Loan  Agreements  between the Company and  BP  Group,  
                         Ltd.--$1,150,000  loan(9)  
             10.22       Loan  Agreements between LVEN and Duneden, Ltd.(9) 
             10.23       Agreement  for Purchase and Sale of Joint  Venture \
                         between  Pacific DNS,  Inc. (a wholly owned subsidiary 
                         of the Company), MPTV, Inc. and Consolidated Resort 
                         Enterprises,
                        Inc.(9)
             10.24      Securities Purchase Agreement dated as of January 22, 
                         1996 between the Company,CountryLand Properties, Inc. 
                         and SunAmerica Life Insurance Co, with exhibits(10)
             10.25      Subordination Agreement dated as of January 22, 1996
                          between the Company, CountryLand Properties, 
                         International Thoroughbred Breeders, Inc., Orion Casino

                                                      27

<PAGE>



                        Corporation and SunAmerica Life Insurance Company(10)
             10.26      Assignment and Assumption Agreement between CountryLand
                        Properties, Inc. and Orion Casino Corporation and
                        acknowledged and agreed to by SunAmerica Life Insurance
                        Company(10)
             10.27      Loan  Agreement  between NPD and  Casino-Co  Corporation
                        dated January 15, 1997 with related  Secured  Promissory
                        Note, and Security Agreement, and Pledge Agreement.(11)
             10.28      Guaranty of Nunzio DeSantis in favor of Casino-Co.(11)
             10.29      Option of NPD, in favor of Casino-Co Corporation.(11)
             10.30      Loan Agreement between LVEN and Malbec Inc. dated
                          March 20, 1996 with related Secured Promissory Note 
                          and Security Agreement. (12)
             10.31      Loan Agreement between Pacific DNS and Tee One Up Inc. 
                         dated September 4, 1996 with related Secured 
                         Promissory Note and Security Agreement. (12)
             10.32      Joint Venture Agreement between Electronic Media Inc., 
                         Texas Information Development
                        Commission and William Luke Stewart. (12)
             10.33      Nordic Gaming Option Agreement dated June 30, 1997. (13)
             10.34      Loan Agreement between Nordic Gaming and LVEN dated   
                         August 27, 1997 with related Secured Promissory Note, 
                         and Security Agreement, and Pledge Agreement. (13)
             10.35      Employment Agreements between LVEN and LVCC with 
                         Joseph A. Corazzi.(13)
             10.36      Joint Venture Agreement dated June 6, 1997 between
                         Electronic Media Company-Nevada and Russ Gerstein. (13)
             10.37      Joint Venture Agreement dated June 6, 1997 between 
                         Electronic Media Company-Nevada,
                        Russ Gerstein, Carlos Lima and Juan Martinez. (13)
             10.38      Certificate of Designation of Preferred Stock. (13)
             10.39      Tri-Party Agreement dated May 23, 1997 between LVEN and
                          International Thoroughbred Breeders Inc. and Credit
                         Suisse First Boston Mortgage Capital.(13)
             10.40      Bi-Party Agreement dated May 23, 1997 between LVEN and
                          International Thoroughbred Breeders Inc.(13)
             10.41      Option Agreement between LVEN and Nunzio DeSantis for
                          1,500,000 shares of LVEN common stock.(13)
             10.42      Option Agreement between LVEN and Joseph A. Corazzi  
                         for 4,000,000 shares of LVEN common stock .(13)
             10.43       Financial Statements of Fort Erie Racetrack(13)  

        21.  Subsidiaries(10)


(1)     Filed with original filing of the Registration Statement on 
          Form S-1, File No. 33-39047 (the "1992 S-1)
(2)     Filed with Amendment No. 3 to the 1992 S-1
(3)     Filed with Amendment No. 4 to the 1992 S-1
(4)     Filed with amendment No. 5 to the 1992 S-1
(5)     Filed with Amendment No. 6 to the 1992 S-1
(6)     Incorporated by reference to the Company's annual Report on Form 10-KSB 
          for the year ended October 31, 1992
(7)     Filed with Post Effective Amendment No. 1 to the 1992 S-1, filed on 
          Form SB-2
(8)     Filed with Registration Statement on Form S-1, File No. 33-72980, 
          filed on December 15, 1993
(9)     Incorporated by reference to the Company's Annual Report on Form 10-KS
           for the year ended October 31, 1994
(10)    Incorporated by reference to the Company's Annual Report on Form 10-KSB 
          for the year ended October 31, 1995.
(11)    Incorporated by reference to the Company's Current Report on Form 8-K
           dated January 15, 1997.
(12)    Incorporated by reference to the Company's Annual Report on Form 10-KSB
          for the year ended October 31, 1996
(13)    Filed herewith

                                                      28

<PAGE>


                                                  SIGNATURES


      Pursuant  to the  requirements  of Section 13 or 15 (d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on February 12, 1997.


                     LAS VEGAS ENTERTAINMENT NETWORK, INC.




                              \s\ Joseph A. Corazzi
                                Joseph A. Corazzi
                                    Chairman


   Pursuant to the  requirements  of the Securities Act of 1934, this report has
been signed below by the following  persons on behalf of the  registrant  and in
the capacities indicated on February 6, 1998.


Signature


\s\ Joseph A. Corazzi                   Chairman of the Board, President, Chief
Joseph A. Corazzi           Executive Officer and Director (principal executive
                                                      officer)



\s\ Carl A. Sambus          Executive Vice President, Chief Financial Officer,
Carl A. Sambus                 Secretary and Director (principal accounting and
                                                 financial officer)




                                                      29

<PAGE>


















                                           INDEX TO FINANCIAL STATEMENTS




Report of Independent Auditors............................................F-1


Consolidated Balance Sheets as of October 31, 1997 and
     October 31, 1996 ....................................................F-2

Consolidated Statements of Operations for the
     Years  Ended October 31, 1997 and 1996 ..............................F-3

Consolidated Statement of Stockholders' Equity for the Years Ended
     October 31, 1997 and 1996............................................F-4


Consolidated Statements of Cash Flows for the
     Years Ended October 31, 1997 and 1996 ...............................F-5


Notes to Consolidated Financial Statements................................F-6













                                                      
<PAGE>
















                         REPORT OF INDEPENDENT AUDITORS




To the Board of Directors and Stockholders
Las Vegas Entertainment Network, Inc.

We have  audited  the  accompanying  consolidated  balance  sheets  of Las Vegas
Entertainment  Network,  Inc. and  Subsidiaries as of October 31, 1997 and 1996
and the related consolidated statements of operations,  stockholders' equity and
cash  flows  for the  years  then  ended.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  consolidated  financial  position  of  Las  Vegas
Entertainment Network, Inc. and Subsidiaries as of October 31, 1997 and 1996 and
the consolidated results of its operations,  stockholders' equity and cash flows
for the years then ended,  in  conformity  with  generally  accepted  accounting
principles.




                            HOLLANDER, GILBERT & CO.



Los Angeles, California
January 14, 1998

                                                        F-1

<PAGE>

<TABLE>
<CAPTION>


                LAS VEGAS ENTERTAINMENT NETWORK AND SUSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                      YEARS ENDED OCTOBER 31, 1997 AND 1996



                                                       1997           1996
                                                       ----           ----
                                                       

                                     ASSETS
<S>                                                <C>                  <C> 
 CURRENT ASSETS
   CASH AND CASH EQUIVALENTS                     $  2,399,491    $ 10,385,292
   TRADING SECURITIES                               1,087,890
                                                 ------------    ------------
                                                 
       TOTAL CURRENT ASSETS                         3,487,381      10,385,292

  INVESTMENT IN & ADVANCES TO INTERNATIONAL
   THOROUGHBRED BREEDERS INC. - Note 2              3,604,564       6,161,706

  INVESTMENT IN AND ADVANCES TO NORDIC 
     GAMING - Note 3                                1,047,548

  OTHER INVESTMENTS & ADVANCES - Note 4               100,000         762,606

  NOTES RECEIVABLE, LAKE TROPICANA - Note 5             --            806,489

  PROGRAMMING AND FILM COSTS,  Net of 
     Amortization                                       --            180,000

   PROPERTY AND EQUIPMENT
      net of accumulated depreciation
      of $192,509 (1997) and $180,981 (1996)         141,536          171,397

    DEPOSITS AND OTHER - Note 6                    1,389,893           10,770
                                                 ------------    ------------
                                                
                                                 $  9,770,922    $ 18,478,260
                                                 ============    ============
                                                 



                      LIABILITIES AND STOCKHOLDERS' EQUITY

  CURRENT LIABILITIES
    ACCOUNTS PAYABLE AND ACCRUED EXPENSES        $    452,138       $ 144,650
    NOTES PAYABLE - Note 7                            775,753       1,056,444
    ACCRUED INTEREST PAYABLE                          154,354         102,346
    ACCRUED OFFICER'S SALARY - Note 12                482,884         406,622
                                                 ------------    ------------
                                              
       TOTAL CURRENT LIABILITIES                    1,865,129       1,710,062

   ACCRUED OFFICER'S BENEFITS - Note 12               363,000         239,000

 COMMITMENTS AND CONTINGENCIES - Note 12

  STOCKHOLDERS' EQUITY - Note 8
    PREFERRED STOCK - SERIES A, AUTHORIZED
     30,000,000 SHARES, $.001 PAR VALUE; 
     ISSUED AND OUTSTANDING -  1,000,000
     SHARES (1997) AND NONE (1996)                      1,000
    COMMON STOCK - AUTHORIZED 50,000,000
     SHARES,  $.001 PAR VALUE; ISSUED AND
     OUTSTANDING - 34,898,349 SHARES                   34,895         34,895
    ADDITIONAL PAID-IN CAPITAL                     47,445,080     47,280,080
    LONG TERM INVESTMENT RESERVE                   (2,400,000)
    DEFICIT                                       (37,538,182)   (30,785,777)
                                                 ------------   ------------
                                              
     TOTAL STOCKHOLDERS' EQUITY                     7,542,793      16,529,198
                                                 ------------    ------------
    
                                                  $ 9,770,922    $ 18,478,260
                                                 ============    ============
                                                  
</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.


<PAGE>


                                                                             

             LAS VEGAS ENTERTAINMENT NETWORK INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                     YEARS ENDED OCTOBER 31, 1997 AND 1996



                               
                                              1997           1996
                                              ----           ----

 REVENUES                                 $        -      $   291,200
                                         ------------    -------------
                                         
 COSTS AND EXPENSES
     Research & Development - Note 9       1,031,246                -
     Loss on Investments - Note 10         1,390,217          450,000
     Programming                             180,000          805,061
     General & Administrative              4,019,368        3,202,893
                                         ------------    -------------
                                         
   TOTAL COSTS AND EXPENSES                6,620,831        4,457,954
                                         ------------    -------------
                                         
  LOSS BEFORE OTHER
        INCOME AND (CHARGES)              (6,620,831)      (4,166,754)

 OTHER INCOME AND (CHARGES):
        Interest Income                      428,053          495,350
        Gain on Trading Securities            15,666                -
        Other Charges - Note 11             (385,785)      (1,108,651)
        Interest and Finance Costs          (189,508)        (537,081)
                                         ------------    -------------
                                         
 TOTAL OTHER INCOME AND (CHARGES)           (131,574)      (1,150,382)
                                         ------------    -------------
  LOSS BEFORE GAIN ON
    ASSETS HELD FOR SALE                  (6,752,405)      (5,317,136)

  GAIN ON DISPOSAL OF ASSETS HELD
   FOR SALE                                        -          576,677
                                         ------------    -------------
                                         

 NET LOSS                                $(6,752,405)     $(4,740,459)
                                         ============    =============
                                         


 WEIGHTED AVERAGE NUMBER OF SHARES
 OF COMMON STOCK OUTSTANDING              34,898,349       33,238,660
                                         ============    =============
                                        
 LOSS PER SHARE OF COMMON STOCK              $ (0.19)         $ (0.14)
                                         ============    =============




              The accompanying notes are an integral part of these
                       consolidated financial statements.



<PAGE>

                     LAS VEGAS ENTERTAINMENT NETWORKS INC.

                  STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY

                      YEARS ENDED OCTOBER 31, 1997 AND 1996




<TABLE>
<CAPTION>


                                              
                                              
                                                                                                 Unrealized  
                                          PREFERRED SHARES     COMMON SHARES                     Loss
                                          ----------------     -------------       Additional     On 
                                          Number              Number                Paid-in    Long-Term
                                        Of Shares    Amount  of Shares    Amount    Capital    Investment     Deficit     Total
                                        ---------    ------  ---------    ------    -------    ----------     -------     -----
<S>                                  <C>          <C>        <C>       <C>       <C>            <C>         <C>           <C>


BALANCE - NOVEMBER 1, 1995                       $        28,506,816  $  28,503 $44,166,137             $ (26,045,318)  $18,149,322

Issuance of Common Stock for Services                      2,752,588      2,753   1,366,382                               1,369,135
Sales of Common Stock                                      3,034,294      3,034   1,239,466                               1,242,500
Conversion of Debt                                           604,651        605     251,895                                 252,500
Issuance of Warrants                                                                256,200                                 256,200
Net Loss, Year Ended October 31, 1996                                                                      (4,740,459)   (4,740,459)
                                      ---------  -----    ----------     ------  ---------- -----------   ------------  ------------
 

BALANCE - October 31, 1996                                34,898,349     34,895  47,280,080               (30,785,777)   16,529,198

Issuance of Options- Note 8                                                        165,000                                  165,000
Issuance of Preferred Stock - Note 8  1,000,000   1,000                                                                       1,000
Market value adjustment to ITB Stock                                                         (2,400,000)                 (2,400,000)
Net Loss, Year Ended October 31, 1997                                                                      (6,752,405)   (6,752,405)
                                      ---------  -----    ----------     ------  ---------- -----------   ------------  ------------

BALANCE - October 31, 1997            1,000,000  $1,000   34,898,349  $  34,895  $47,445,080 $(2,400,000) $(37,538,182)  $7,542,793
                                      =========  =======  ==========  =========  ===========   =========   ============  ===========

</TABLE>






 The accompanying notes are an integral part of these consolidated financial
                                  statements.


<PAGE>
<TABLE>
<CAPTION>

             LAS VEGAS ENTERTAINMENT NETWORK INC. AND SUBSIDIARIES

                            STATEMENT OF CASH FLOWS

                     YEARS ENDED OCTOBER 31, 1997 AND 1996


                                                        1997               1996
                                                        ----               ----
<S>                                                <C>               <C>

CASH FLOWS FROM OPERATING ACTIVITIES:             
Net Loss                                           $(6,752,404)     $(4,740,459)
Gain from Assets Held for Sale                                         (576,677)
Gain from Marketable Securities                        (87,890)
Loss on Investments                                  1,390,216
Depreciation                                            73,887          102,611
Issuance of Options and Warrants                       165,000          256,200
Amortization of Program Inventory                      180,000          805,061
Adjustments to reconcile net loss to net
 cash used in operating activities:
   (Increase) Decrease in;
     Program Inventory                                       -        (180,000)
     Other Assets                                       10,770
    Increase (Decrease)in;
     Accounts Payable                                  307,486        (493,979)
     Interest Payable                                   52,008        (200,489)
     Accrued Officer's Salaries                         76,262         (56,117)
     Accrued Officer's Benefits                        124,000
                                                    ----------     -----------  
CASH USED IN OPERATING ACTIVITIES                   (4,460,665)     (5,083,849)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Trading Securities                                (1,000,000)
  Advances to Nordic Gaming                         (1,046,548)
  Advances from ITB                                    157,142        (261,706)
  Investments & Advances - Other                        78,879        (719,606)
  Advances for Airplane Deposits                    (1,389,893)
  Acquisition of Property and  Equipment               (44,025)        (13,588)
  Sale of El Rancho and Capitalized Costs                           35,371,987
  Issuance of Notes and Loans Receivable                           (12,400,000)
  Collections on Notes and Loans Receivable                          6,500,000
                                                    ----------     -----------
                                                                                
CASH  PROVIDED BY (USED IN) INVESTING ACTIVITIES    (3,244,445)     28,477,087

CASH FLOWS FROM FINANCING ACTIVITIES:

  Issuance of Notes Payable                                            850,000
  Repayment of  Notes Payable                         (280,691)     (3,156,524)
  Issuance and Sales of Common Stock                                 2,604,135
  Repayment of Loans and Interest Payable - 
     El Rancho                                                     (14,094,895)
                                                     ----------     -----------
                                                                              
 CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES      (280,691)    (13,797,284)

INCREASE (DECREASE) IN CASH                         (7,985,801)      9,595,954

CASH BALANCE - BEGINNING                            10,385,292         789,338
                                                    ----------     -----------
                                                                               
CASH BALANCE - ENDING                              $ 2,399,491    $ 10,385,292
                                                    ==========      ===========  
                                                  

NON-CASH TRANSACTIONS
 Conversion of Note Receivable to          
  Investment in Common Stock of ITB                 $5,900,000
 Valuation reserve on ITB Stock                     $2,400,000
 Issuance of Preferred Stock for Option 
  to acquire Nordic Gaming                             $ 1,000
 Conversion of Notes Payable and Accrued 
  Interest to Equity                                                 $260,000
 Accrued Interest and Fees - El Rancho                               $695,832

CASH PAID FOR
 Interest                                                            $405,847 

           The accompanying notes are an integral part of these
                       consolidated financial statements.


</TABLE>
<PAGE>

                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

         Background  and  Business  and  Basis  of   Presentation  -  Las  Vegas
         Entertainment  Network, Inc. ("LVEN" or "the Company") was incorporated
         in  October  1990,  and  is  engaged  in  the  business  of  acquiring,
         developing and operating  media and gaming  facilities and  businesses.
         The  Company  is  also  developing   technology  for  the  delivery  of
         television and video programming,  Internet access, and telephony to be
         owned  by the  Company's  majority  owned  subsidiary,  Electric  Media
         Company  Inc.  The  Company  is  also  investigating   other  potential
         businesses for acquisition in the entertainment,  gaming,  lodging, and
         communications industries.

         Significant  Operating  Losses - The Company has experienced  operating
         losses since its inception. For the fiscal years ended October 31, 1997
         and  1996,  the  Company  experienced  net  losses  of  $6,752,405  and
         $4,740,459, respectively. The Company anticipates that it will continue
         to experience losses as it continues working on its development  plans,
         including  the   development  of  a  technology  for  the  delivery  of
         television and video programming,  Internet access, and telephony. Even
         after the Company's  development  plans are completed,  there can be no
         assurance that the Company will be profitable.

         Significant Capital  Requirements - The Company's capital  requirements
         have been and will continue to be significant. At October 31, 1997, the
         Company had cash and cash  equivalents of  $3,487,381.  The Company may
         require additional capital to acquire the 80% interest in Nordic Gaming
         Corporation  and to develop the technology to be owned by the Company's
         majority owned subsidiary,  Electric Media Company Inc. There can be no
         assurance that additional financing will be available to the Company on
         acceptable  terms,  or at  all.  In  addition,  the  Company  does  not
         currently  meet  the  new  listing  standards  for  maintenance  of the
         Company's  securities on Nasdaq's SmallCap Market,  which new standards
         become effective in late February 1998. Although the Company intends to
         seek to comply with the new maintenance criteria for continued listing,
         if the Company should be unable to meet these criteria,  it is possible
         that its securities could be de-listed from the Nasdaq SmallCap Market,
         which might  result in the  Company  having  difficulty  in placing its
         securities with prospective investors.

          Principles of Consolidation  -The  accompanying  financial  statements
          include the accounts of Las Vegas  Entertainment  Network Inc. (LVEN),
          and its  wholly-owned  subsidiaries;  Las Vegas  Communications  Corp.
          ("LVCC"), Casino-Co Inc., CountryLand Properties Inc. and Pacific DNS,
          Inc; and its majority owned subsidiaries;  Satellite Networks Inc. and
          Electric  Media  Company  Inc.  (EMC).  All  significant  intercompany
          transactions and balances have been eliminated.

         Marketable  Securities - Marketable securities that are bought and held
         principally  for the  purpose  of  selling  them in the  near-term  are
         classified  as trading  securities  and  reported at fair  value,  with
         unrealized gains and losses included in earnings. Marketable securities
         classified  as  available  for  sale,  which  consists  mostly  of  the
         Company's investment in the common stock of International  Thoroughbred
         Breeders Inc. (see Note 2) are reported at fair value,  with unrealized
         gains and losses  excluded  from  earnings,  and reported as a separate
         component of stockholder's equity. A decline in the market value of the
         security  below  cost  that is  deemed to be other  than  temporary  is
         charged to earnings  resulting in the establishment of a new cost basis
         for the security.

         Programming and film costs-  Programming and film costs include all the
         acquisition,   production  and  exploitation   costs  incurred  in  the
         development of the Company's television and video programming,  and are
         stated at the lower of  unamortized  cost or estimated  net  realizable
         value.  Such  costs  are  amortized  in  the  proportion  that  revenue
         recognized  during the year for each program or film bears to estimated
         total revenue to be received  from all sources in  accordance  with the
         individual film forecast method. Estimated total revenues and costs are
         reviewed on a periodic basis and, when necessary,  unamortized  program
         and film costs are written down to net realizable value based upon this
         assessment.

                                                        F-6

<PAGE>


                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         Property  and  Equipment - Property and  equipment  are stated at cost.
         Depreciation  is provided  primarily on a straight  line basis over the
         estimated  useful lives of the related  assets.  Property and equipment
         are reviewed for impairment  whenever events or circumstances  indicate
         that the asset's un- discounted  expected cash flows are not sufficient
         to recover its  carrying  amount.  The Company  measures an  impairment
         loss,  if any, by comparing the fair value of the asset to its carrying
         amount.  Fair value of an asset is  calculated  as the present value of
         expected cash flows.

         Revenues - Revenues are  recognized  when  earned,  and consist of fees
         earned under the Company's interim entertainment  management agreement,
         and fees earned  from  renting  out the  parking  facilities  at the El
         Rancho Property site that was formerly owned by the Company.

         Earnings  (Loss) Per Share - Earnings  (loss) per common share is based
         upon the weighted average number of common and common equivalent shares
         outstanding  during  the  period.   For  all  periods  presented,   all
         outstanding  warrants,  options and other common stock equivalents were
         anti-dilutive,  and  accordingly,  were not  included  in the per share
         calculation.

         Use  of  Estimates  -  The  preparation  of  financial   statements  in
         conformity  with  generally  accepted  accounting  principles  requires
         management  to make  estimates  and  assumptions  that  affect  certain
         reported  amounts and  disclosures.  Accordingly,  actual results could
         differ from those estimates.

         Cash and Cash  Equivalents  - The Company  considers  all highly liquid
         investments purchased with an original maturity date of three months or
         less to be cash equivalents.

         Concentrations  of Credit  Risk - As of  October  31,  1997,  financial
         instruments which potentially  subject the Company to concentrations of
         credit risk are cash and cash  equivalents,  which are mostly comprised
         of over night repurchase  agreements with high credit quality financial
         institutions,  and marketable securities,  which consist of mutual fund
         investments with major financial  institutions.  The amount of cash and
         cash  equivalents  on  deposit  in any  one  institution  that  exceeds
         federally  insured  limits is subject to credit  risk.  At October  31,
         1997,  the  Company  had  approximately  $3,540,000  on  deposit in two
         institutions  that was subject to such risk.  The Company has also made
         certain  advances  to  Companies  where  the  company  believes  it has
         obtained sufficient underlying collateral.

         Fair Value of Financial  Instruments  - The fair value of the Company's
         cash and cash equivalents,  marketable securities, accounts payable and
         accrued expenses  approximate  their carrying value due to the relative
         short  maturities  of  these   instruments.   The  fair  value  of  the
         investments and advances made by the Company approximate the fair value
         due to the stated  interest  rate and the  collateral  supporting  such
         advances.  The fair  value of the notes  payable  approximate  the fair
         value  of the  instruments  due to the  stated  interest  rates on such
         notes.

         Accounting  for Stock Based  Compensation  - Prior to November 1, 1996,
         the Company  accounted for  stock-based  awards to employees  under the
         intrinsic value method in accordance with Accounting  Principles  Board
         Opinion No. 25  "Accounting  for Stock Issued to  Employees."  As such,
         compensation expense would be recorded on the date of grant only if the
         current  market  price of the  underlying  stock  exceeded the exercise
         price.  On November 1, 1996, the Financial  Accounting  Standards Board
         issued SFAS No. 123,  "Accounting for Stock Based  Compensation"  which
         permits  entities to recognize  as expense over the vesting  period the
         fair   value  of  all   stock-based   awards  on  the  date  of  grant.
         Alternatively,  SFAS No. 123 also allows  entities to continue to apply
         the  provisions  of APB Opinion No. 25 and provide pro forma net income
         and pro forma net  income  per share  disclosures  for  employee  stock
         option  grants made in 1997 and future years as if the fair value based
         method  described  in SFAS No. 123 had been  applied.  The  Company has
         elected to continue to apply the  provisions  of APB Opinion No. 25 and
         provide the pro forma disclosure required by SFAS No. 123.

                                                        F-7

<PAGE>


                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



         Recently Issued Accounting  Standards - In February 1997, the Financial
         Accounting  Standards Board released Statement of Financial  Accounting
         Standards  ("SFAS)" No. 128,  "Earnings Per Share",  which requires the
         disclosure of basic earnings per share and diluted  earnings per share.
         The Company  expects to adopt SFAS No. 128 during the fiscal year ended
         1998,  and  anticipates  that it will not  have a  material  impact  on
         previously reported loss per share.

          In June 1997, the Financial Accounting Standards Board issued SFAS No.
          130,  "Reporting   Comprehensive  Income.  SFAS  No.  130  establishes
          standards for reporting  and display of  comprehensive  income and its
          components in a full set of general-purpose financial statements. SFAS
          No. 130 is  effective  for  financial  statements  issued for  periods
          beginning  after December 15, 1997.  Had the Company  adopted SFAS No.
          130  during  the  year  ended  October  31,  1997,  the  Statement  of
          Comprehensive Income would be:

        Net loss for the year ending October 31, 1997              $(6,752,405)
        Other Comprehensive loss, Unrealized loss on investment     (2,400,000)
                                                                   ------------ 
         Comprehensive loss, October 31, 1997                      $(9,152,405)
                                                                   ===========  
         
         In  June  1997,  the  Financial  Accounting  Standards  Board  released
         Statement of Financial Accounting Standards No. 131, "Disclosures about
         Segments of an Enterprise and Related Information",  which requires the
         disclosure  of  business  segments  of the  Company.  SFAS  No.  131 is
         effective for financial  statements  issued for periods beginning after
         December 15, 1997. The Company expects to adopt SFAS No. 131 during the
         fiscal year ended 1998 and anticipates that it will not have any impact
         on the Company's segment disclosure.

         Re-classifications  - Certain 1996 amounts have been  re-classified  to
         conform with the 1997 financial statement presentation.

2.       INVESTMENT IN AND ADVANCES TO INTERNATIONAL THOROUGHBRED
         BREEDERS INC.

          Investments  in and  advances  to ITB consist of the  following  as of
          October 31, 1997 and 1996:

                                               1997                1996
                                               ----               ----
         (A)      Note Receivable, ITB         -                $5,900,000
         (A)      Investment in ITB Stock    $5,900,000                 -
                   Less Valuation to Market  (2,400,000)                -
                                             -----------        ---------- 
                                              3,500,000          5,900,000
         (B)      Advances to ITB               104,564            261,706
                                             -----------        -----------
                                              $3,604,564        $6,161,706
                                             ===========         ===========

     (A)  On January 22, 1996,  the Company sold the assets and  liabilities  of
          the El Rancho Hotel and Casino (the "El Rancho" or the  "Property") to
          International  Thoroughbred  Breeders Inc.("ITB") for consideration of
          $43,500,000,  consisting of (i)  $12,500,000  paid at closing in cash;
          (ii) the issuance of an 8% unsecured  promissory note in the principal
          amount of $6,500,000 the  ("A-Note")  which A-Note was paid in full on
          March 15,  1996;  (iii) the issuance of an 8%  promissory  note in the
          principal  amount of $10,500,000 (the "B-Note") and (iv) assumption of
          existing mortgage indebtedness and accrued interest of $14,000,000. In
          addition, once the Property was developed, the Company was entitled to
          share in a percentage  of the ongoing  adjusted  cumulative  cash flow
          from the operation of the Property up to $160,000,000,  as provided in
          the ITB Sale Agreement (the "El Rancho Cash Flow Interest").

                                                        F-8

<PAGE>


                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


          On May 22, 1997, LVEN converted the $10.5 Million receivable evidenced
          by the B-Note, together with accrued interest thereon of $1.1 Million,
          into 2,093,868  restricted shares of ITB common stock (the "Conversion
          Shares").  On May 22,  1997,  LVEN and ITB  also  agreed,  subject  to
          approval  of their  respective  Boards of  Directors,  that as soon as
          practicable, ITB would acquire LVEN's El Rancho Cash Flow Interest. In
          order to effect  such  transaction,  ITB is  required to issue to LVEN
          that number of shares of ITB common stock (the  "Acquisition  Shares")
          equal  to (i)  the  fair  market  value  of the El  Rancho  Cash  Flow
          Interest,  as determined  in a fairness  opinion to be obtained from a
          nationally  recognized  investment  banking firm,  divided by (ii) the
          average  bid price for ITB Stock  during the 20 trading  days prior to
          the closing. Both the Conversion shares and the Acquisition shares are
          subject to certain restrictions as described below.  Management in the
          future may consider  distributing  all or a portion of these shares to
          the  shareholders  of the Company as a dividend.  In  accordance  with
          certain  regulatory  and  gaming  commissions,  no person  may hold or
          acquire, directly or indirectly,  beneficial ownership of more than 5%
          of the voting securities of ITB without the approval of the New Jersey
          Racing Commission. LVEN is in the process of obtaining this approval.

          On or about October 10, 1997,  certain former or current  directors of
          ITB filed an action against ITB and its other directors,  the Company,
          the Company's  Chairman and certain other  individuals in the Delaware
          Court of  Chancery,  alleging,  among other  things,  that the Company
          acted improperly in connection with various transactions with ITB. The
          plaintiffs  are  seeking,  among  other  things,  the  recision of the
          issuance of the  2,093,068  shares of ITB common  stock to LVEN on May
          22, 1997, and further seek to block the issuance to LVEN of additional
          shares  of ITB  stock in  exchange  for  LVEN's  El  Rancho  Cash Flow
          Interest (see Note 12).

          ITB has also agreed that the $55 Million of  financing  provided to it
          by Credit Suisse First Boston Mortgage Capital L.L.C.  ("CSFB") on May
          22, 1997 the ("CSFB Loan") was arranged by LVEN's subsidiary, CasinoCo
          Corporation,  as the "Alternative Financing" contemplated by, pursuant
          to, and in satisfactory of, the provisions of ITB Sale Agreement.  ITB
          has  informed  the  Company  that it will  begin  the  renovation  and
          redevelopment  of the El Rancho Property as a  country-western  themed
          destination  resort to be known as "CountryLand".  However,  it is not
          expected  that funds from the CSFB  financing  will be  sufficient  to
          begin  the  construction  and  the  renovation  of the  Property,  and
          additional funding will be required. Any such additional funding would
          be subject to the execution of a definitive loan agreement between ITB
          and any  potential  lenders,  which the Company can give no  assurance
          will occur.

          As a condition precedent to the issuance of the Acquisition Shares for
          LVEN's Cash Flow  Interest,  LVEN is required to have  received one or
          more  valuation  opinions  from one or more  investment  banking firms
          satisfactory to LVEN respecting the fair market value of the El Rancho
          Cash Flow  Interest.  If LVEN is  unsatisfied  with the  highest  fair
          market value of the El Rancho Cash Flow Interest as established by the
          valuation  opinions,  then it shall have the right, within 180 days of
          the date thereof,  to make a secured  first  mortgage loan to ITB, and
          ITB must then repay the CSFB Loan in full. If LVEN were to make such a
          loan to ITB,  the loan would  mature on the date that the CSFB Loan is
          scheduled to mature and would bear interest at the rate  applicable to
          CSFB Loan, and LVEN would have the right to develop the property.

          The  Company  has  executed  an  irrevocable  proxy in  respect of the
          Conversion  Shares,  and has agreed to execute such an  instrument  in
          respect of the Acquisition Shares, in each case in favor of Mr. Nunzio
          P.  DeSantis,  Chairman of the Board of ITB,  which  proxies  shall be
          irrevocable  until the  earlier of (i) the date on which the CSFB Loan
          and all of the other  obligations  of ITB owing to CSFB under the CFSB
          Loan have been repaid in full, (ii) the date on which LVEN distributes
          the Acquisition Shares to its shareholders  generally,  (iii) the date
          on which LVEN sells the Conversion Shares or Acquisition Shares to, or
          LVEN is acquired  by, or merged with or into,  a person or entity that
          is not affiliated with LVEN or Mr. Joseph A. Corazzi,  Chairman of the
          Board of LVEN, and (iv) the date on which Mr. DeSantis dies or becomes
          mentally  incompetent.  LVEN  and ITB  have  agreed  to  enter  into a
          registration rights agreement

                                                        F-9

<PAGE>


                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


          respecting  the  Conversion  Shares  and the  Acquisition  Shares  and
          providing for demand rights,  unlimited  piggyback  rights,  and other
          customary provisions.

          As provided in the ITB Sale Agreement,  if by October 25, 1996 (i) ITB
          had not closed on or received  permanent  financing  and  obtained the
          required lease commitments to develop the Property under the "Starship
          Orion"  theme,  and (ii) had not closed or received a firm  commitment
          for alternative financing to develop the Property , and if the Company
          had  arranged  for the  refinancing  and also  placed  into an  escrow
          account  amounts  sufficient to cover the financing and carrying costs
          of the  Property  for either a six month or year period  (the  "Option
          Period"),  LVEN may either  (i)  appoint  and  authorize  a  reputable
          commercial real estate broker to sell the Property at an amount, after
          expenses, in excess of the underlying mortgage and invested amounts of
          both ITB and LVEN,  or (ii)  arrange on behalf of ITB,  in  conformity
          with  prevailing  financing terms and conditions for a major Las Vegas
          hotel/casino   project,   alternative   financing  of  not  less  than
          fifty-five  million dollars  ($55,000,000).  On October 25, 1996, LVEN
          advised that it was  asserting its rights  afforded  during the Option
          Period by establishing the referenced  escrow account.  On October 28,
          1996,  ITB announced  that LVEN had forfeited its rights under the ITB
          Sale  Agreement  because of the  alleged  failure  to satisfy  certain
          contractual  preconditions  and  LVEN  advised  ITB  that it  strongly
          disputed  and would  vigorously  contest  ITB's  stated  position.  On
          February 2, 1997,  the Company and ITB announced that they had settled
          their disagreement. As described above, and with the assistance of the
          Company,  ITB has  announced  its  plans  for the  development  of the
          Property as "CountryLand".  If the Property is not so developed, or if
          the additional funding is not completed,  the Company believes that it
          retains its rights as described above.

(B)       Advances to ITB Inc.  represent amounts currently due LVEN for monthly
          property  management  fees,  and for  the  reimbursement  for  certain
          operational and financing advances made for the El Rancho Property.

3.     INVESTMENTS AND ADVANCES TO NORDIC GAMING CORPORATION

          Investments and advances to Nordic Gaming  Corporation  consist of the
          following as of October 31, 1997:


       (A)        Purchase Option and related Costs              $    1,000
       (B)        Advances under line of credit Agreement         1,046,548
                                                                ----------- 
             
                                                                 $1,047,548
                                                                =========== 

     (A)  During  1997,  the Company  was granted an option to acquire  from Mr.
          Nunzio P.  DeSantis,  the Chief  Operating  Officer of ITB, his eighty
          percent  (80%) of the voting equity of Nordic  Gaming  Corporation,  a
          Canadian corporation ("Nordic").  The Company's Chairman of the Board,
          Mr. Joseph A. Corazzi, as a bonus for services rendered in negotiating
          the  potential  acquisition  of  the  operations  of  Nordic,  may  be
          allocated a portion of the ownership as agreed to by Mr.  DeSantis and
          LVEN's Board of  Directors.  The  remaining  20% of Nordic is owned by
          Canadian citizens not affiliated with the Company. On August 23, 1997,
          Nordic  acquired  certain real  property and assets known as the "Fort
          Erie Racetrack" which is situated on 143 acres in Fort Erie,  Ontario,
          Canada.  Fort  Eric  Racetrack  currently  offers  live,  as  well  as
          simulcast,  thoroughbred horse racing. Additionally, the racetrack has
          been notified by the Ontario Lottery  Corporation  that it is eligible
          to receive 621 video  lottery  terminals  ("VLTs")  and may receive an
          additional 130 VLTs or more based upon  performance.  However,  before
          any of these  VLTs are  received,  the  racetrack  and the  Provincial
          Government  of Ontario,  Canada have to come to an agreement as to the
          percentage  of the net revenues  from the VLTs that can be kept by the
          race track.  Furthermore,  the Company and Nordic would have to obtain
          the necessary gaming licenses.



                                                       F-10

<PAGE>


                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         In consideration for receiving the option,  which expires June 1, 1998,
         the Company;  (i) paid to Nordic  $182,000 that was used as the advance
         deposit used to acquire the racetrack,  (ii) agreed to provide Nordic a
         working  capital  line of credit  (see  below) and (iii)  agreed to the
         issuance to Mr. Nunzio P. DeSantis of 1,000,000  shares of a new Series
         A Preferred  Stock that entitles Mr.  DeSantis to certain voting rights
         in a ratio of 20 votes for each share of preferred  stock on matters of
         stock splits and certain other matters to be designated by the Board of
         Directors.  The  shares of been  valued at the  aggregate  par value of
         $1,000.  In  addition to the deposit  above,  the Company has  expended
         $134,548 for financing and legal costs in connection  with the proposed
         acquisition  (these  costs are  included as advances  under the line of
         credit discussed in "B"below).

         The exercise  price of the option,  subject to further  evaluation  and
         appraisal is payable (i) $1,000,000  cash at closing,  (ii)  $2,600,000
         payable in equal  monthly  installments  of $100,000  commencing on the
         last date of the  month on which the  closing  occurs,  and (iii)  upon
         exercise,  the entire issuance of the Series A Preferred Stock shall be
         converted  into that number of  restricted  shares of LVEN common stock
         equal to the positive  difference  between (a) eighty  percent (80%) of
         the fair  value of the Fort Erie  Racetrack  as set forth in a fairness
         opinion  prepared  by an  investment  banking  firm and (b)  $3,600,000
         divided by (c) the average  closing  price of LVEN Common Stock for the
         twenty  trading days  proceeding  the giving of the notice of exercise.
         However,  it is the intention of LVEN to only exercise its option based
         upon its due  diligence,  a valuation of the ongoing  operations of the
         property, the valuation of potential revenue from the addition of video
         lottery  terminals,  and the availability of financing.  If the Company
         does  exercise  its option to acquire the 80%  interest  in Nordic,  of
         which there can be no  assurance,  and if it decides to  maintain  full
         racing operations,  it would be responsible for maintaining  operations
         at the  track  through  the end of the  1998  racing  season  which  is
         currently projected at a cash flow deficit of approximately  $2,000,000
         for a  seventy  five day  racing  schedule,  excluding  any  additional
         revenues that may be generated by the introduction of the VLTs.

     (B)  As of October 31, 1997, the Company had advanced  $1,046,548 to Nordic
          pursuant to a Line of Credit  Agreement  dated as of August 27,  1997,
          providing for advances of up to $1,300,000.  Such advances,  which are
          due and payable on August 27, 1998, bear interest at a rate of 10% per
          annum,  and are  secured  by a first  mortgage  lien on and a security
          interest in the real and personal  property assets comprising the Fort
          Erie  Racetrack.  Subsequent to October 31, 1997, the Company has made
          an additional  $200,000 of advances  under this credit  facility.  The
          Company  has  notified  Nordic  that it will not  fund any  additional
          advances.  In  addition  to the line of credit,  the  Company has also
          provided  to Nordic a  certificate  of deposit  for a certain  leasing
          arrangement (see Note 6)

4.     OTHER INVESTMENTS AND ADVANCES

          Other  Investments and advances consist of the following as of October
          31, 1997 and 1996:

                                      1997           1996
                                      ----           ----

       (A)        Malbec, Inc.       $ 100,000    $ 462,606
       (B)        Tee One Up, Inc                   300,000
                                     ---------    ---------
 
                                     $100,000     $ 762,606
                                     ========     =========   




                                                       F-11

<PAGE>


                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


          (A)  The  Company  made  accumulated  advances  to  Malbec,  Inc.,  an
          unaffiliated  company, of $959,284 and $912,606 as of October 31, 1997
          and October 31, 1996, respectively,  for the purpose of developing and
          operating a hotel  project in Miami  Beach,  Florida.  $46,678 of such
          advances have been returned to the Company as of October 31, 1997. The
          advances  accrue  interest  at the rate of 8% per annum,  and were due
          July 31, 1997. Due to difficulties in finalizing a purchase agreement,
          and on going litigation involving the hotel property,  the Company and
          Malbec Inc. have  discontinued  any attempt to develop this  property.
          The  Company's  advances  were  secured  by an  interest  in an escrow
          account (which had a balance of $300,000 as of October 31, 1997) and a
          $600,000 lien against the subject  property.  The Company  expects the
          escrow account to be liquidated with the net amounts, after payment of
          all  expenses,  to be  returned  to the  Company.  For the years ended
          October 31, 1997 and 1996, the Company provided allowances of $812,606
          and $450,000, respectively, against this advance, for a net investment
          of   $100,000   and   $462,606  as  of  October  31,  1997  and  1996,
          respectively.

(B)    The Company loaned $300,000 to Tee One Up, Inc., an unaffiliated  company
       developing  television  footage of actual golf "hole in ones" at selected
       golf courses. The loan was secured by the assets of Tee One Up. Principal
       and  interest  at a rate of 17%  per  annum  was to be  paid  in  monthly
       installments of $14,832 until maturity,  November 1, 1998. In March 1997,
       Tee One Up  became  delinquent  in making  its  monthly  payments  and no
       further  payments have been received  since then. As of October 31, 1997,
       the  principal  balance  due under this note was  $267,000  for which the
       Company has provided a reserve of the same amount.

5.     NOTES  RECEIVABLE - LAKE TROPICANA

          Notes  receivable  - Lake  Tropicana  consist of the  following  as of
          October 31, 1997 and 1996;

                                                1997          1996
                                                ----          ----

         Lake Tropicana                       $3,736,000   $3,736,000
         Less allowances for valuation
           and imputed interest                3,736,000    2,929,511
                                             -----------    ---------  
                                              $        -   $  806,489
                                             ===========    ==========


       As of  October  31,  1997 and 1996,  Notes  Receivable  - Lake  Tropicana
       represent  two (2) separate  notes  payable to the Company of  $1,868,000
       each from a venture that owns a 184 unit apartment  complex in Las Vegas,
       Nevada.  The complex is being converted into vacation interval  ownership
       (time-share)  project.  The  venture has been  attempting  to develop the
       project since 1994.  The first note payable to the Company bears interest
       at a rate of 8% per  annum,  payable  monthly,  and is secured by a fifth
       position in a deed of trust.  The first interest payment is due one month
       after  the  borrower  has  completed  certain  refinancing  currently  in
       process. The second note is unsecured and non-interest bearing. Principal
       payments  for both notes will be at a rate of $205 ($410 for both  notes)
       as each time-share interval sold until August 1, 1998, when any remaining
       outstanding  principal is due in full. The notes contain a  cross-default
       provision so that a default under one note shall also be deemed a default
       on the other.

       During the year ended October 31, 1997, the venture had  reorganized  its
       debt position, and with such refinancing,  had hoped it would to have the
       funds to  necessary  to commence  development  and sale of the time share
       units. However, as of October 31, 1997 such refinancing did not result in
       any  significant  progress in the  conversion  of the  property  into its
       intended use as a vacation  interval  ownership  site.  Accordingly,  the
       Company  reflected a charge of $806,489 during the year ended October 31,
       1997 to fully reserve the remaining receivable.



                                                       F-12

<PAGE>


                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


       6.  DEPOSITS AND OTHER

          Deposits and other consist of the following as of October 31, 1997 and
          1996;

                                                           1997          1996

       (A)  Deposit on Nordic Gaming Aircraft Lease      $ 600,000     $    -
       (B)  Deposit on Stan Irwin Enterprises Aircraft
                Purchase                                   789,893          -
            Other                                                       10,770
                                                           --------    -------- 
                                                         $1,389,893    $10,770
                                                          =========    ========
    

     (A)  The  Company  has  provided to Nordic  Gaming  Corporation  a $600,000
          certificate  of deposit as  collateral  for an  irrevocable  letter of
          credit in favor of an aircraft  leasing  company.  The  certificate of
          deposit  shall be  returned  to the  Company  upon the earlier of; (i)
          receipt  of any  permanent  financing  relating  to the Fort Erie Race
          Track, (ii) any other capital infusion of $1,000,000 or more, or (iii)
          at the expiration of the aircraft  leasing  agreement which expires in
          September  2004.  In the event of  default or other  foreclosure,  the
          entire  amount  of the cash  collateral  shall be  deemed to have been
          loaned to Nordic Gaming upon the terms and  conditions of the existing
          credit  facility with them, and secured by the assets of the Fort Erie
          Racetrack (see Note 3).

     (B)  The Company  provided a certificate of deposit of $778,000 as security
          to a bank for a term loan of $778,000  that was obtained by Stan Irwin
          Enterprises  Inc.  on July 16, 1997 that was used to acquire a 12 1/2%
          undivided   interest  in  an  aircraft.   The  Company   provided  the
          certificate  of deposit on behalf of Stan Irwin  Enterprises to enable
          Mr. Joseph Corazzi,  the Company's Chairman of the Board, the personal
          use of up to fifty  hours of private  air travel  service at a cost to
          Mr. Corazzi of approximately $1,200 per hour. The Company may also use
          the plane up to twenty  five  hours per year at cost of  approximately
          $1,200  hour.  The  certificate  of deposit at all times  remains  the
          property of the  Company and will earn  interest to the benefit of the
          Company. At the end of two years from the date of purchase, Stan Irwin
          Enterprises has the option of returning the aircraft to the seller and
          receive  the fair  market  value  price.  It is  anticipated  that the
          certificate  of deposit and all accrued  interest  ($11,894 at October
          31, 1997) will be returned to the Company at that time.

       7.  NOTES  PAYABLE

          Notes  payable  consist of the  following  as of October  31, 1997 and
          1996;

                                             1997               1996

          Convertible Bridge Loans       $ 775,753           $ 1,050,249
          Other                                -                   6,195
                                         ---------           -----------
                                   
            Total                       $  775,753            $1,056,444
                                        ==========            ==========
   
          Convertible  bridge loans  outstanding as of October 31, 1997 and 1996
          consist of six (6)  one-year  unsecured  notes.  The notes,  which are
          currently due and payable,  accrue  interest at a rate of 8% per annum
          until the principal and accrued  interest are paid.  The notes and any
          accrued interest are convertible,  at the lender's option, into shares
          of the  Company's  common  stock  at a price of $1.25  per  share,  or
          approximately 90% of the market price,  whichever is less, at any time
          prior to the repayment by the Company.  Consolidated  interest expense
          on these  notes  for the years  ended  October  31,  1997 and 1996 was
          $79,508 and $205,352 respectively.

                 F-13

<PAGE>


                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


       8.     STOCKHOLDERS' EQUITY

       Description  of  securities  - The  Company's  authorized  capital  stock
       consists of  50,000,000  shares of Common  Stock,  at $.001 per share par
       value,  of which  34,898,349  shares  of common  stock  were  issued  and
       outstanding as of October 31, 1997 and 1996,  respectively.  In addition,
       the Company has also authorized 30,000,000 shares of Preferred Stock, par
       value $.001 per share,  1,000,000 shares of which was outstanding  during
       the year ended October 31, 1997. The Board of Directors of the Company is
       authorized to determine the number and  designation of one or more series
       of  Preferred   Stock  and  the  voting  powers,   rights,   preferences,
       qualifications,  limitations or  restrictions  and the shares of any such
       series.

       On June 30, 1997,  the Company  issued to Mr. Nunzio P.  DeSantis,  Chief
       Operating  Officer  of ITB, a new series of  Preferred  Stock  designated
       Series A Preferred  Stock (the "Series A  Preferred")  consisting  of One
       Million shares. The holder of the Series A Preferred shall be entitled to
       twenty  (20) votes for each share of the Series A  Preferred  standing in
       the name of the holder on the stock  record books of the  Corporation  on
       the record date for the determination of stockholders  entitled to notice
       of and to vote at any annual or special  meeting of the  stockholders  of
       the Corporation, but only as to (i) stock splits (including reverse stock
       splits) and  repurchase  programs,  and (ii) any other  matter or matters
       from  time-to-time  to be designated by the Company's Board of Directors.
       Holders of the Series A Preferred shares shall not be entitled to receive
       any dividends or other  distributions.  In the event that the Corporation
       exercises  the Option  granted to it  pursuant  to the Option  Agreement,
       dated as of June 30, 1997, by and between the  Corporation  and Nunzio P.
       DeSantis ( See Note 3 ), each share of the  Series A  Preferred  shall be
       converted  into the  number  of  shares of  Common  Stock  determined  in
       accordance with the provisions of the Option Agreement.

       Issuances of common stock - The Company has made the following  issuances
       of common stock during the year ended October 31, 1996;

      Shares Issued for Services - The Company  issued  2,752,588  shares of its
       Common Stock for services  provided and to settle accounts payable during
       the year ended October 31, 1996. The shares were valued at $1,369,135 and
       were  issued at prices  ranging  from $.40 to $.63 per share.  The shares
       were valued at the average bid market  price for the shares 10 days prior
       to issuance or the estimated selling price. Since inception,  the Company
       has issued  5,230,885  shares  valued at  $5,860,677  at an average price
       ranging from $.40 to $5.63 per share.

      Sales of Common  Stock - The Company sold  3,034,294  shares of its Common
       Stock  during  the year  ended  October  31,  1996 in a series of private
       placements made to non-U.S. (foreign) purchasers,  under the exemption of
       Regulation  S of the  Securities  Act of 1933.  The Company  received net
       proceeds of  $1,242,500  in 1996 from these  sales.  The sales prices per
       share ranged from $.50 to $.55 per share.

      Shares issued in lieu of Notes Payable and Accrued  Interest - The Company
       issued  604,651  shares of its common  stock to  extinguish  $252,500  of
       outstanding  notes  payable  and accrued  interest  during the year ended
       October 31, 1996.

       Outstanding  Warrants - The Company has issued and outstanding  1,600,385
       Class A warrants  and  1,263,115  Class B warrants as of October 31, 1997
       and 1996.  The holder of each Class A Warrant is entitled to purchase one
       share of  Common  Stock of the  Company  and one  Class B  Warrant  at an
       exercise  price of $4.00.  The holder of each Class B Warrant is entitled
       to purchase one share of Common Stock at an exercise price of $6.60.  The
       exercise dates of both the Class A and Class B warrants, which expired on
       February 20, 1997, have been extended until June 1, 1998.


                                                     F-14

<PAGE>


                                       LAS VEGAS ENTERTAINMENT NETWORK INC.

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


       The Class A Warrants are subject to redemption commencing on February 20,
       1996,  on not  less  than  thirty  days'  notice,  at a price of $.05 per
       Warrant,  at any time after the average closing price of the Common Stock
       shall have exceeded  $4.00 per share with respect to the Class A Warrants
       and $6.60 per  share  with  respect  to the Class B  Warrants  for any 30
       consecutive  business days ending within 15 days of the date on which the
       notice of redemption is given. Holders of the Warrants will automatically
       forfeit their rights to purchase the shares of Common Stock issuable upon
       exercise of such Warrants  unless the Warrants are exercised  before they
       are  redeemed.  All of the  outstanding  Warrants of a class,  except for
       those  underlying  the Unit Purchase  Option,  must be redeemed if any of
       that  class  are  redeemed.  The  Company  shall  not be able to call the
       Warrants unless a registration statement covering the securities issuable
       upon  exercise of the Warrants is, and remains,  current  throughout  the
       period fixed for redemption.

       On January 22, 1996,  in connection  with  arranging the financing of the
       sale of the El Rancho  Hotel and  Casino,  the  Company  issued  warrants
       valued at $256,200,  based on the current market price at the date of the
       grant, to a third party to purchase 600,000 shares of its Common Stock at
       $.10 per share.

       Stock Options- Outstanding stock options consist of the following;

         Chairman of the Board - On March 1, 1995, Mr. Joseph Corazzi,  Chairman
       of the Board, was granted  4,000,000  options to purchase Common Stock of
       CountryLand Properties Inc., which was transferable to any new subsidiary
       formed to operate the gaming assets of the Company,  including Casino-Co.
       The   4,000,000   CountryLand   Properties   Inc.   warrants  were  fully
       transferable  and convertible  into options to purchase LVEN Common Stock
       at $1.00 per share.  On October 1, 1997 the Company  canceled this option
       and granted to Mr.  Corazzi an option to purchase up to 4,000,000  shares
       of the presently  authorized but unissued shares of the Company's  common
       stock at $1.00 per share, subject to adjustment that may result in future
       changes in the  Company's  outstanding  common or other stock,  that will
       preserve  the benefit to Mr.  Corazzi.  These  shares are not issuable in
       connection with the Stock Option Plan described below. The Option expires
       on September 30, 2002

       The  Corporation  has adopted the disclosure only provisions of Statement
       of Financial  Accounting  Standards No. 123,  "Accounting for Stock-Based
       Compensation."  Accordingly, no compensation cost has been recognized for
       the stock  options.  The fair value of the option  granted to Mr. Corazzi
       has been  estimated  as of the date of the grant using the  Black-Scholes
       option pricing model with the following  assumptions:  risk free interest
       rate of 6%, expected life for the option of five years, expected dividend
       yield of 0%, and expected volatility of 82%. Under these assumptions, the
       fair value of the option was $.13 per share.  If the  Company had elected
       to recognize  compensation  cost based upon the fair value of the options
       granted at the grant date as  prescribed  by SFAS No. 123, the  Company's
       net loss and net loss per share would have been as follows:

                  Net loss, as reported                 $(6,752,405)
                  Net loss, pro forma                   $(7,272,405)
                  Loss per share, as reported                $(.19)
                  Loss per share, pro forma                  $(.21)

       Other - On  December  11,  1996,  Mr.  Nunzio  DeSantis,  now  the  Chief
       Operating Officer of ITB, was granted options to acquire 1,500,000 shares
       of the Company's Common Stock at an exercise price of $1 per share, which
       expire  in  December  1999.  The  options  were  issued  as  part  of the
       consideration for providing a $6,000,000  standby funding  commitment for
       replacement  financing on the El Rancho Property Site. The Company valued
       these options at $165,000 and, accordingly, has reflected a charge during
       the year ending  October 31, 1997 for such  amount.  These shares are not
       issuable in connection with the Stock Option Plan described below.

                                                       F-15

<PAGE>


                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                  Stock Option Plan - The Company adopted a Stock Option Plan in
       July  1994.  The  Stock  Option  Plan  enables  the  Company  to offer an
       incentive  based   compensation   system  to  key  employees,   officers,
       directors, consultants and to employees of companies who do business with
       the Company.  A total of 1,000,000 shares are reserved for issuance under
       the Stock Option Plan, of which 90,000 shares are issuable  under options
       which have been granted to  employees,  and 730,000  shares under options
       granted to officers and directors, all with an exercise price of $. 71 to
       $1.50 per share.  The Company may increase the number of shares  reserved
       for  issuance  under the Stock  Option  Plan or may make  other  material
       modifications  to the Stock  Option Plan  without  stockholder  approval.
       However,  no amendment  may change the  existing  rights of any option or
       award holder. The following table summarizes option transactions  through
       October 31, 1997;

                                    Number of                Price Per
                                     Shares                    Share
       October 31, 1995               880,000                  $1.00
        Canceled                     (100,000)                 $1.00
        Granted                        40,000                  $0.71
                                     --------                  ------  
       October 31, 1996              820, 000
        Canceled                           -
        Granted                            -
                                     ---------                   ------
       October 31, 1997              820, 000                $0.71 - $1.00
                                     =========              ==============  

       9.         RESEARCH AND DEVELOPMENT  - EMC

         The Company has formed a new  subsidiary,  Electric  Media Company Inc.
         ("EMC"), which is developing technology,  that if successful,  of which
         the Company can give no assurance,  will allow  delivery of video voice
         and/or data  communications over electric power lines or other forms of
         transmission including cable, telephone and microwave. EMC is 75% owned
         by the Company and 25% owned by Mr.  Nunzio  DeSantis,  Chairman of the
         Board of ITB.

         EMC  has  entered  into  two  agreements  for the  development  of this
         technology with two joint venture  partners/developers.  The agreements
         are for a term of 25 years,  and can be extended to successive  25-year
         terms  at the  election  of EMC.  The  first  agreement  calls  for the
         development of video,  voice and data communication over existing power
         lines.  Field testing of this  technology  will occur during 1998. Upon
         successful  completion  of all field  tests,  EMC will begin  worldwide
         marketing of this  technology,  including the sale and  distribution of
         addressable  receiver  boxes that are  necessary  to  receive  the data
         communication. LVEN will receive, in perpetuity, a $25 per unit royalty
         for each  receiver  box  sold,  if any.  In  accordance  with the joint
         venture  agreement,  EMC is committed  to deliver to the joint  venture
         partner/developer;  (i) 500,000  restricted shares of LVEN common stock
         upon successful completion of the field test, (ii) monthly renumeration
         of  $25,000  upon  successful  completion  of the field  test  (iii) an
         additional 500,000 restricted shares of LVEN common stock each time the
         sale of these units  generates  $10,000,000 of net after tax profits to
         LVEN,  up to a maximum  of  2,500,000  shares,  and (iv) 20% of the net
         profits  once EMC has  recouped  all its  costs,  plus a  return  of 6%
         thereon.

         The second  agreement  calls for the  development  of a  communications
         network  in  Guatemala  and  Central   America  for  the  provision  of
         telephone,  video, voice and/or data  communications.  Field testing of
         this  technology  will occur during 1998. In accordance  with the joint
         venture  agreement,  if EMC  proceeds,  it will  deliver  to the  joint
         venture partner/developer;  (i) up to $500,000 for general start up and
         market costs, (ii) 500,000  restricted shares of LVEN common stock upon
         successful  completion  of the  field  test  and  demonstration  of its
         economic  viability,   (iii)  monthly   renumeration  of  $15,000  upon
         successful completion

                                                       F-16

<PAGE>


                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         of the field test and demonstration of its economic viability,  (iv) an
         additional  500,000  restricted  shares of LVEN  common  stock for each
         150,000 telephones installed,  up to a maximum of 2,500,000 shares, and
         (v) 20% of the net profits once EMC has recouped all its costs,  plus a
         return of 6% thereon.  The Company  has engaged an  investment  banking
         firm to raise $15 million,  for which it can give no  assurance  can be
         achieved, for the full implementation of this project.

         To date,  the  company  has  expended  $1,031,246  in  developing  this
         technology.   Such  amounts   have  been   reflected  as  research  and
         development costs for the year ended October 31, 1997.

       10.        LOSS ON INVESTMENTS

       Loss on  Investments  for the year ended  October 31, 1997  consists of a
       charge of $417,356 to reflect the  estimated  carrying  value of the note
       receivable from Malbec Inc.(see Note 4 ); a charge of $167,800 to reflect
       the estimated  carrying value of the note receivable from Tee One Up (see
       Note 4),  and; a charge of $805,061  to reflect  the  estimated  carrying
       value of the Lake  Tropicanna  notes  receivable  (see  Note 5).  Loss on
       Investments  for the year ended October 31, 1996  represents an allowance
       of $450,000 relating to advances made to Malbec, Inc. (see Note 4).

       11.        OTHER CHARGES

       Other charges for the year ended October 31, 1997 consists of a charge of
       $165,000 to reflect the value of options granted to Mr. Nunzio  DeSantis,
       now the Chief Operating  Officer of ITB, to acquire  1,500,000  shares of
       the Company's  Common Stock at an exercise  price of $1 per share,  which
       expire  in  December  1999,  as part of  consideration  for  providing  a
       $6,000,000  standby funding  commitment (see note 8); a charge of $75,000
       for a reserve for  management  fees disputed by ITB; a charge of $100,000
       on a settlement  agreement entered into with a third party (see Note 12),
       and; a charge  for  $45,785  from the loss on the sale of  certain  fixed
       assets.  Included in other charges for the year ended October 31, 1996 is
       $625,000 which represents cash and the value of 800,000 restricted shares
       of the  Company's  Common  Stock and  167,000  shares of Common  Stock of
       Satellite  Networks Inc. paid in connection  with settling claims arising
       from  arranging   certain   financing  in  connection  with  the  initial
       acquisition  of the El  Rancho  Property  site;  $295,000  related  to an
       adjustment  to  reflect  the value of  certain  shares  of  common  stock
       previously  issued for  services;  and $150,000 to settle an  outstanding
       loan and stock purchase agreement.

       12.        COMMITMENTS AND CONTINGENCIES

       Employment  Agreements  - On  March 1,  1995,  the  Company  and its LVCC
       subsidiary entered into two (2) separate five-year employment  agreements
       with Joseph  Corazzi,  the  Chairman of the Board of the  Company,  which
       provided for an annual  aggregate  salary of $550,000.  These  agreements
       were  terminated  on October  1, 1997,  and  replaced  with (2)  separate
       non-exclusive  agreements  with Mr.  Corazzi  which also  provide  for an
       annual  aggregate  salary of $550,000.  The term of the agreement ends on
       September  30,  2002,  provided,  however,  that if the Company  fails to
       notify  Mr.  Corazzi  in writing by October 1, 2001 of its desire to have
       this agreement expire at the end of its initial term, the agreement shall
       automatically  extend for another term ending on the sixth anniversary of
       the date upon which Mr.  Corazzi  received  written  notification  of the
       Company's election to terminate the agreement.  The employment agreements
       are  subject to annual  increases  and bonuses at the  discretion  of the
       Board  of  Directors.   The  agreements   also  entitle  Mr.  Corazzi  to
       participate  in any  employee  benefit  plans which may be offered in the
       future,  such as group life, health,  hospitalization and life insurance.
       Under the agreements,  Mr. Corazzi's employment  terminates upon death or
       disability and may be terminated by the Company for cause. Termination by
       the Company for any other  reason  entitles  the  employee to receive his
       salary for the remaining term of the agreements.


                                                       F-17

<PAGE>


                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


       The employment agreements also provide for the following;  (i) a lump sum
       payment of $2,000,000 upon the consummation of a definitive  agreement by
       the Company and  potential  purchaser  providing for a change of control,
       (ii), an annual retirement benefit starting with the calendar month after
       his  retirement  or  termination,  equal to fifty  percent of his average
       annual  LVEN  salary and bonus  received  in the  twenty-four  (24) month
       period prior to his termination  (plan becomes effective once Mr. Corazzi
       has  been  employed  10  years,   including  any  time  pre-dating  these
       agreements),  and (iii) an annual  lump sum cash  payment  equal to 5% of
       earnings before income taxes,  depreciation  and amortization of the LVCC
       subsidiary.

       Compensation  due Joseph A.  Corazzi  amounting to $ 518,134 and $406,222
       have been  accrued as of October  31,  1997 and 1996,  respectively.  The
       Company  has also  accrued  $363,000  and  $239,000  for  amounts due Mr.
       Corazzi under his retirement plan which is reflected as accrued  officers
       benefits as of October 31, 1997 and 1996. The Company paid and reimbursed
       Mr.  Corazzi  $438,488 and $730,177 for accrued and current  compensation
       during the years ended October 31, 1997 and 1996, respectively. Such sums
       were due Mr.  Corazzi from  inception of the Company to October 31, 1997.
       Subsequent to year end, the Company paid to Mr.  Corazzi  $432,000 of the
       remaining amounts due him.

       Litigation - On or about  September  10, 1997,  two actions were filed in
       the Delaware  Court of Chancery,  each of which named the Company and its
       Chairman  as a  defendant.  The first such  action,  captioned  Robert J.
       Quigley,  Frank A. Leo and The Family  Investment Trust (Henry Brennan as
       Trustee) v. Nunzio P. DeSantis,  Michael Abraham, Anthony Coelho, Kenneth
       W. Scholl,  Joseph Zapalla,  Joseph A. Corazzi,  Las Vegas  Entertainment
       Network,  Inc. and International  thoroughbred  Breeders,  Inc., C.A. No.
       15919-NC,  ("Quigley")  is  a  derivative  suit  brought  by  two  former
       directors  of ITB and an  investment  trust  which  alleges,  among other
       things,  that certain ITB directors have breached their fiduciary  duties
       to ITB. The Quigley complaint seeks: (i) a declaratory  judgment that (a)
       the  share  of  ITB's  common  stock  held by NPD may not be voted at any
       stockholders'  meeting; (b) all actions taken by the current board of ITB
       are null and void;  and (c)  certain  purported  "super-majority"  voting
       provisions  in ITB's  By-laws  remain in full force and effect,  and (ii)
       rescission  of certain  actions  taken by ITB's Board,  including but not
       limited to certain  contractual  rights or entitlements  that involve the
       Company.

       Specifically,  with respect to the Company, the Quigley Complaint alleges
       that the Company  and its  Chairman  were part of a  concerted  effort to
       divert  the stock and  assets of ITB to the  Company,  its  Chairman  and
       Messrs.  DeSantis  and Coelho,  and seeks to (i) rescind the  issuance of
       2,093,868  shares of ITB stock to the Company,  (ii)  invalidate  certain
       rights  presently  existing  in favor of the  Company  relative to the El
       Rancho Cash Flow Interest,  and (iii) rescind certain  agreements entered
       into between or among the  Company,  ITB and/or CSFB in  connection  with
       CSFB's refinancing of the El Rancho project.

       On  November  7,  1997,  the  Company  filed  an  Answer  to the  Quigley
       Complaint,  in which the Company denied the  substantive  claims asserted
       against or with respect to the Company.  Discovery in the Quigley  action
       is ongoing.  The Company  believes that the claims against it are without
       merit and is vigorously defending itself in this action.

     The second action,  captioned James Rekulak v. Nunzio P. DeSantis,  Michael
     Abraham,  Anthony  Coelho,  Kenneth W. Scholl,  Joseph  Zappala,  Las Vegas
     Entertainment   Network,   Inc.,   Joseph  A.  Corazzi  and   International
     Thoroughbred Breeders,  Inc., C.A. No. 15920-NC ("Rekulak") is a derivative
     suit which repeats the  allegations in the Quigley  Complaint  verbatim and
     seeks the identical  relief.  The Company is taking the same positions with
     regards to the Rekulak  action as it is taking with  respect to the Quigley
     action.






                                                       F-18

<PAGE>


                                       LAS VEGAS ENTERTAINMENT NETWORK INC.

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


       The Company and its Chairman are named as  defendants  in an action filed
       on November 30, 1997 by Robert William Green ("Green"),  a stockholder of
       ITB,  captioned Robert William Green v. Nunzio DeSantis,  Joseph Corazzi,
       Anthony Coelho, Las Vegas Entertainment Network, Inc. and NPD, Inc., C.A.
       97-5359(JHR)  ("Green"),  in the  United  States  District  Court for the
       District of New Jersey. The Green complaint alleges,  among other things,
       that the defendants have usurped certain  corporate  opportunities at the
       expense of ITB, have diluted Green's interest in ITB through the issuance
       of shares of stock and have  conspired  to deprive him of certain  rights
       under an option  granted  to him by NPD,  which,  subject  to  regulatory
       approval,  grants  Green the right to purchase  approximately  50% of the
       shares of ITB's common stock held by NPD. The Company  believes  that the
       claims  against it are  without  merit and intends to  vigorously  defend
       itself.

       In all  of the  above  actions,  the  Company  is  contemplating  several
       alternatives to settling all outstanding  litigation as it relates to the
       transactions with ITB.

       On October  18,  1996,  an  unaffiliated  third  party  filed a complaint
       against the company in California  Superior Court, County of Los Angeles,
       seeking  damages  of  $1,800,000,  plus  attorney  fees,  for  breach  of
       contract,  breach of implied contract, and certain damages the individual
       claims are due him under terms of a 1992  retainer  agreement.  This case
       was settled for $100,000  during fiscal 1997.  Additionally,  the Company
       has commenced action against the owners of Patmor  Broadcasting  relating
       to an option to  acquire a radio  station in Las  Vegas,  and  intends to
       aggressively  pursue  the  Company's  position  that it still has a valid
       option to purchase the radio station.

       The Company is not involved in, or a party to, any other  material  legal
       proceedings  at  this  time.  At  various  times,  the  Company  and  its
       subsidiaries  are involved in various  matters of  litigation,  including
       matters  involving  settlement  of fees  and  outstanding  invoices,  and
       consider these legal  proceedings  not to be material and in the ordinary
       course of business.

       Leases - The Company  leases on a  month-to-month  basis an office in Los
       Angeles,  California for $8,500 per month. The Company also leases,  on a
       month-to-month  basis, certain other facilities at an aggregate rental of
       $4,500 per month.  Rent expense for the years ended  October 31, 1997 and
       1996 was $147,897 and $257,590 respectively.

       13.        INCOME TAXES

       The  Company  has  available  unused  operating  loss   carryforwards  of
       approximately  $26,000,000  at October 31, 1997 which may be used against
       future  taxable  income.  Certain  amounts  of  the  net  operating  loss
       carryforward  may be  limited  due to  changes  in  the  Company's  stock
       ownership.  The  operating  loss carry  forwards  will  expire in various
       amounts  through the years through 2012.  Generally  Accepted  Accounting
       Principles  require  the  establishment  of a deferred  tax asset for all
       deductible  temporary  differences and operating loss carryforwards.  The
       Company  has  not  provided  for  any  deferred  tax  asset  due  to  the
       doubtfulness of realization due to the uncertainty  that the Company will
       generate  income in the future  sufficient to fully or partially  utilize
       these  carryforwards,  and  because  of  the  more  than  50%  change  in
       ownership.

       14.        RELATED PARTY TRANSACTIONS

          The  Company  entered  into a  series  of  transactions  with  several
          companies  that  were  directly  owned  or  controlled  by Mr.  Nunzio
          DeSantis or his family members. Mr. Nunzio DeSantis is the Chairman of
          the  Board  of   International   Thoroughbred   Breeders  Inc.   Those
          transactions include;




                                                       F-19

<PAGE>


                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


       On December 11,1996,  Mr. Nunzio DeSantis,  was granted 1,500,000 options
       to acquire  shares of the Company's  Common Stock at an exercise price of
       $1 per share.  The options were issued as part of the  consideration  for
       providing  a  $6,000,000   standby  funding  commitment  for  replacement
       financing on the El Rancho Property (see Note 8).

       On January 15,  1997,  the  Company,  through  it's  wholly-owned  Nevada
       subsidiary  Casino-Co,  made a secured loan of  $2,900,000  to NPD,  Inc,
       ("NPD"),  in order to enable  NPD to close the  acquisition  from  Robert
       Brennan of  2,904,016  shares of common stock ITB. At the closing of such
       purchase and sale, the  shareholders  of NPD, Nunzio DeSantis and Anthony
       Coelho,  became the  Chairman of the Board and Chief  Executive  Officer,
       respectively,  of ITB. The loan to NPD and all accrued  interest due, was
       repaid to the Company on June 22, 1997.

       On May 22, 1997, LVEN converted the $10.5 Million receivable evidenced by
       the B-Note,  together with accrued interest thereon of $1.1 Million, into
       2,093,868  restricted shares ITB common stock (the "Conversion  Shares").
       On May 22, 1997,  LVEN and ITB also agreed,  subject to approval of their
       respective  Boards of Directors,  that as soon as practicable,  ITB would
       acquire  LVEN's El Rancho  Cash Flow  Interest.  In order to effect  such
       transaction,  ITB is  required  to issue to LVEN that number of shares of
       ITB common stock (the "Acquisition  Shares") equal to (i) the fair market
       value of the El Rancho Cash Flow  Interest,  as  determined in a fairness
       opinion to be obtained from a nationally  recognized  investment  banking
       firm,  divided by (ii) the average bid price for ITB Stock  during the 20
       trading days prior to the closing. LVEN has executed an irrevocable proxy
       in respect of the  Conversion  Shares,  and has agreed to execute such an
       instrument in respect of the Acquisition Shares, in each case in favor of
       Mr. Nunzio P.  DeSantis,  which proxies  shall be  irrevocable  until the
       earlier  of (I) the date on  which  the  CSFB  Loan and all of the  other
       obligations  of ITB owing to CSFB under the CFSB Loan have been repaid in
       full, (ii) the date on which LVEN  distributes the Acquisition  Shares to
       its  shareholders  generally,  (iii)  the date on which  LVEN  sells  the
       Conversion  Shares or  Acquisition  Shares to, or LVEN is acquired by, or
       merged with or into, a person or entity that is not affiliated  with LVEN
       or Mr.  Joseph A.  Corazzi,  Chairman of the Board of LVEN,  and (iv) the
       date on which Mr. DeSantis dies or becomes mentally incompetent (see Note
       2).

       On June 30,  1997,  the Company was granted an option to acquire from Mr.
       Nunzio P.  DeSantis,  the Chief  Operating  Officer  of ITB,  his  eighty
       percent  (80%) of the  voting  equity of  Nordic  Gaming  Corporation,  a
       Canadian corporation ("Nordic"). The Company's Chairman of the Board, Mr.
       Joseph A. Corazzi,  as a bonus for services  rendered in negotiating  the
       potential  acquisition  of the  operations  of Nordic may be  allocated a
       portion of the ownership as agreed to by Mr. DeSantis and LVEN's Board of
       Directors.  The remaining 20% of Nordic is owned by Canadian citizens not
       affiliated with the Company.  In consideration  for receiving the option,
       which expires June 1, 1998, the Company; (i) paid to Nordic $182,000 that
       was used as the  advance  deposit  used to acquire  the  racetrack,  (ii)
       agreed to provide Nordic a working capital line of credit (see below) and
       (iii) agreed to the issuance to Mr. Nunzio P. DeSantis  1,000,000  shares
       of a new Series A Preferred  Stock that entitles Mr.  DeSantis to certain
       voting  rights in a ratio of 20 votes for each  share of stock on matters
       of stock splits and certain  other  matters as designated by the Board of
       Directors.   The  exercise  price  of  the  option,  subject  to  further
       evaluation and appraisal is payable (i) $1,000,000 cash at closing,  (ii)
       $2,600,000 payable in equal monthly  installments of $100,000  commencing
       on the last date of the month on which the closing occurs,  and (iii) the
       entire  issuance of the Series A Preferred  Stock shall be converted into
       that number of  restricted  shares of LVEN common  stock equal to (i) the
       positive difference between (a) eighty percent (80%) of the fair value of
       the Fort Erie Racetrack as set forth in a fairness opinion prepared by an
       investment  banking firm and (b)  $3,600,000  divided by (ii) the average
       closing price of LVEN Common Stock for the twenty  trading days preceding
       the giving of the notice of exercise (see Note 3).

       As of October 31,  1997,  the Company had advanced  $1,046,548  to Nordic
       pursuant  to a Line of  Credit  Agreement  dated as of August  27,  1997,
       providing for advances of up to $1,300,000. Such advances,

                                                       F-20

<PAGE>


                                       LAS VEGAS ENTERTAINMENT NETWORK INC.

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

       which are due and payable on August 27, 1998,  bear interest at a rate of
       10% per annum,  are  secured by a first  mortgage  lien on and a security
       interest in the real and personal  property  assets  comprising  the Fort
       Erie  Racetrack.  Subsequent to October 31, 1997, the Company has made an
       additional  $200,000 of advances under this credit facility (see Note 3).
       In  addition  to the line of  credit,  the  Company  has also  provided a
       certificate  of  deposit  as  security  for a  certain  aircraft  leasing
       arrangement (see Note 6)

       Mr.   Joseph  A.  Corazzi  and  Mr.  Nunzio  P.  DeSantis  are  the  sole
       stockholders of D&C Gaming Corporation. On July 1, 1997, ITB purchased an
       exclusive option to acquire certain leasehold  interests  relating to two
       New Mexico racetracks,  the Downs at Albuquerque and Farmington Racetrack
       from D&C for a non-refundable deposit of $600,000 which is to be credited
       towards the purchase  price.  In the event that ITB exercises its option,
       the purchase price would be determined by an independent appraiser.

       During the year  ended  October  31,  1997,  the  Company;  (i)  advanced
       $931,247 to its 75% owned EMC  subsidiary,  in which Mr. Nunzio  DeSantis
       owns the remaining 25% interest in EMC (see Note 9), (ii) paid Mr. Nunzio
       DeSantis, or his designated companies, $110,000 in standby loan fees, and
       (iii) paid $351,000 to companies owned or controlled by Mr. DeSantis or
       his family members for actual aircraft costs.

     During the year ended October 31, 1997, ITB reimbursed  Autolend Group Inc.
     (a  company  whose  Chairman,  CEO,  and  principal  shareholder  is Nunzio
     DeSantis)  for  $150,000  it  paid to  Communication  Associates  Inc.  for
     investment  banking  services in  connection  with the location a potential
     financing source for ITB  (Communication  Associates Inc. is a wholly-owned
     company of Mr. Joseph A. Corazzi).

       Mr.  Joseph  Zapalla,  currently a director of ITB, was paid a consulting
       fee by the Company of $100,000 during the year ended October 31, 1997 for
       services rendered in connection with the development of the Company's EMC
       Project.

       The Company  provided a certificate of deposit of $778,000 as security to
       a bank for a term  loan of  $778,000  that  was  obtained  by Stan  Irwin
       Enterprises on July 16, 1997 that was used to acquire a 12 1/2% undivided
       interest in an aircraft.  The Company provided the certificate of deposit
       on behalf of Stan Irwin  Enterprises  Inc. to enable Mr. Joseph  Corazzi,
       the  Company's  Chairman of the Board,  the  personal  use of up to fifty
       hours  of  private  air  travel  service  at a  cost  to Mr.  Corazzi  of
       approximately  $1,200 per hour.  Stan Irwin  Enterprises  is owned by Mr.
       Stan Irwin,  a former  director of the Company's LVCC  subsidiary,  and a
       current consultant to the Company (See Note 6).  Additionally  during the
       years ended October 31, 1997, the Company paid consulting fees of $42,500
       and $177,000, respectively, to Stan Irwin Enterprises.

                                                       F-21
<PAGE>