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, 1998

     [ ]  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 of incorporation               (I.R.S. Employer
                  or organization)                          Identification No.)

                 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-KB
or any amendment to this Form 10-KB. [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 $3,142,559 computed on the basis of the average bid and asked
prices of the Common  Stock of $1.75 per share as  reported by NASDAQ on January
31, 1999.

     Number of common shares outstanding of the issuer's classes of Common Stock
as of January 31, 1999: 1,831,167

DOCUMENTS INCORPORATED BY REFERENCE:  NONE


                                                         1
<PAGE>

                                                      PART I
Item 1.   BUSINESS

Development of Business

          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  including real estate
     redevelopment. 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  was opened and all invested
     amounts  had  been  recouped  by ITB and the  Company,  which  the  Company
     provided  no  assurance  could be  achieved,  the Company was to 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  received  100% of the  adjusted  cash  flow  until all
     invested  amounts  had 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,  would have provided 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  were  subject  to  certain  restrictions.  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.
     The plaintiffs sought,  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  sought to block the issuance to LVEN of  additional  shares of ITB
     stock in exchange for LVEN's El Rancho Cash Flow Interest.  This litigation
     was settled and dismissed on January 29, 1999  commensurate with receipt of
     the final  approval of a compromise  and  settlement  with all such parties
     (see Item I, "Description of Current Business, Investment in ITB").

          Upon  the  effectiveness  of the  Settlement  as to  LVEN,  all  prior
     agreements  between or among LVEN and ITB,  including  without  limitation,
     that certain  Bi-Lateral  Agreement,  and that certain Tri-Party  Agreement
     pursuant to which ITB issued to LVEN 2,093,868  shares of ITB Common Stock,
     were  terminated  and the  Company  returned  all  such  shares  to ITB for
     cancellation.  In return,  the Company has the right to market and sell the
     El Rancho  Property  and may retain such net cash  proceeds  from that sale
     over and  above  $44.6  Million,  if any,  or it has the  right to  provide
     financinig or a joint  venture  partner to redevelop the Property (see Item
     I, "Description of Current Business, Investment in ITB").

          The Company has also  identified a major  business  opportunity  to be
     developed  in  Brazil,  when if  implemented,  for  which  there  can be no
     assurance,  will substantially alter the direction of the Company (See Item
     I,  "Description  of Current  Business,  Development  of  Electronic  Bingo
     Machines Business in Brazil").


                                                         2
<PAGE>

          Description of Current Business

Investment in ITB .

     On January 22, 1996, the Company sold the assets and  liabilities of the El
Rancho Hotel and Casino in Las Vegas, Nevada (the "El Rancho" or "the Property")
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) the assumption by ITB 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").

     On May 22, 1997, the Company,  ITB and Credit Suisse First Boston  Mortgage
entered into a certain Bi- lateral agreement and a certain Tri-lateral agreement
whereby 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 the El Rancho Cash
Flow Interest. In order to effect such transaction, ITB was 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.

     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 sought,  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 sought to block the issuance to LVEN of additional
shares of ITB stock in  exchange  for LVEN's El Rancho  Cash Flow  Interest.  On
January 29, 1999, all such parties gave their final  approval a Stipulation  and
Agreement  of  Compromise  (described  below) and all such  litigation  has been
settled and dismissed

     On July 2, 1998,  the Company  entered into a Stipulation  and Agreement of
Compromise  with all such parties.  Pursuant to the  Settlement  Stipulation  as
finally  approved by the Delaware  Court in October,  1998;  (i) the Company was
granted  the  exclusive  right to market  and sell the El  Rancho  for a 120-day
period,  which period expired on November 20, 1998;  (ii) from November 20, 1998
until April 19, 1999, the Company has a right,  coextensive  with ITB, to market
and sell the El Rancho Property site,  (iii) if the Company closes a sale of the
El Rancho  prior to April 19,  1999,  then the Company  receives the proceeds of
such sale in excess of $44.2 million;  (iv) in order to exercise its coextensive
rights,  ITB must close a sale of the El Rancho  prior to April 19,  1999 for at
least $56.2, out of which amount  approximately $10 million would be paid to the
Company,  (v) if, on or  before  April  17,  1999,  the  Company  consummates  a
refinancing  of the El Rancho  that  results in loan  proceeds of at least $44.2
million, then the Company may continue to market the El Rancho for an additional
period that is 50% of the period of the  refinancing  loan.  In exchange for the
foregoing  rights,  the Company is obligated to; (i) release all claims  against
the parties to the  litigation,  CSFB and the certain law firms;  (ii) return to
ITB for  cancellation  the  2,093,  868  shares of ITB  common  stock  that were
previously  issued to Casino-Co  Corporation,  a subsidiary  of the Company,  in
consideration for the prior cancellation of a $10.5 million promissory note from
ITB to the Company;  (iii)  release any interest in certain  shares of ITB stock
held by NPD, Inc. which shares are to be repurchased by ITB; (iv) pay 50% of the
carrying  cost on the El Rancho  during a portion  of the  period  for which the
Company has the right to market and sell the El Rancho  (presently  estimated to
be $50,000 per  month);  and (v) consent to the  cancellation  of all  contracts
between   ITB   and   the   Company,    including   those    involving    future
profit-participation   rights  in  the  El  Rancho  as  well  as  the  Company's
entertainment  management  contract for the El Rancho Property Site. All parties
agreed to the terms of this settlement agreement on January 29, 1999.


                                                         3
<PAGE>


     Upon the  effectiveness  of the Settlement as to LVEN, all prior agreements
between  or among  LVEN and ITB,  including  without  limitation,  that  certain
Bi-Lateral Agreement, and that certain Tri-Party Agreement pursuant to which ITB
issued to LVEN  2,093,868  shares of ITB Common Stock,  were  terminated and the
Company returned all such shares to ITB for cancellation.

     Pursuant to the  Company's  rights  under the  settlement,  the Company has
developed  three  alternatives  of which  there can be no  assurance  any can be
achieved.  The first  alternative is to repurchase and resell the Property.  The
remaining  two  alternatives  are  redevelopments  under which the Company would
receive a similar  participation  as described  in the initial ITB  transaction.
Each  redevelopment  plan requires the potential  partners to finance either the
construction and  redevelopment of additional rooms and gaming and entertainment
attractions  and/or the remodeling of the existing  facilities  which consist of
approximately  20 acres,  100 hotel rooms,  a 52-lane  bowling  alley, a parking
structure  for 600 cars and  approximately  100,000  square  feet of gaming  and
retail space.  The Company expects to finalize a partnership plan or an outright
sale of the  Property  by the  end of the  second  fiscal  quarter,  however  no
assurance can be made that such plan or outright sale can be made.

Development of Electronic Bingo Machine Business in Brazil

     On May  25,  1998,  the  Company's  Casino-Co  subsidiary  entered  into an
agreement with MG  Entertainment,  a Brazilian  Company ("MG"), to provide Bingo
Machines to MG. The  opportunity to provide bingo machines to Brazil was created
when the Brazilian  government  legalized  their use in limited  quantities  for
existing  bingo  halls.  MG is  currently  operating  bingo halls and  therefore
qualifies for the  deployment of machines under this law. MG is located in Porta
Alagre, Brazil and has planned developments for multiple locations in which they
will commence deployment of the machines.

     Under terms of the agreement,  Casino-Co will sell and deliver to MG 10,000
electronic  bingo machines to be delivered at  approximately  1,000 machines per
month over a twelve month  period.  The schedule and number of machines may vary
according  to  development  and  successful  implementation  of  the  plan.  The
agreement  provides that the Company will be the exclusive provider to MG of the
machines,  or any other gaming  machines,  through 2008. The total expected cash
payment  for each  machine  will be  $141,317  which  shall be made by MG in 120
monthly installments as follows; four consecutive monthly installments of $1,307
starting 30 days after each machine is delivered,  and  thereafter,  116 monthly
installments  as  follows;  25  monthly  installments  of $932,  then 25 monthly
installments of $1,065;  and the remainder in monthly  installments  $1,331. For
financial  statement  purposes,  if the contract and business plan goes forward,
the Company will reflect a sales price of approximately $81,000 for each machine
(based upon an imputed  interest  rate of 10%) with  $64,317 to be  reflected as
interest income over the life of the contract.

     The Company does not have a formal agreement for the purchase and financing
of the Bingo machines,  but has entered into discussions with several  companies
for the purchase of up to 10,000 of these machines. The Company anticipates that
the cost to the Company for each machine will  approximate  $12,000,  which cost
may vary  depending  on the style  and  accessories  provided.  The  Company  is
currently  seeking  financing  for  the  purchase   of  these  machines  and  is
currently negotiating the final terms of such a financing arrangement.     Under
the terms of one  agreement,  the  potential  lender  has  committed  on a  firm
basis to the financing  of a  minimum  of 3,600  machines  over a twelve   month
period to be financed in traunches of a minimum of 300 units,  dependent    upon
the receipt of all necessary credit insurance.  Under the potential   agreement,
the Company will receive net proceeds of $2,500 per machine after all costs  (in
traunches of 300 machines).   If  the  Company  completes this financing,  which
there can be no assurance, the lender would receive a 10% interest in Casino-Co.
However the Company can give no assurance  that any funding will  ultimately  be
obtained,  that the Company can ultimately  enter into an acquisition  agreement
for the machines,  that the machines will  ultimately be installed,  or that any
revenue  will be  received  from MG. 






                                                         4

<PAGE>

          Nordic Gaming (Fort Erie Racing Operations)

     During 1997,  the Company was granted an option to acquire from Mr.  Nunzio
P. DeSantis, formerly the Chairman of the Board of ITB, his eighty percent (80%)
of the  voting  equity of Nordic  Gaming  Corporation,  a  Canadian  corporation
("Nordic").  The  remaining  20% of Nordic was 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  offers live, as
well as simulcast,  thoroughbred horse racing.  Additionally,  the racetrack was
notified by the Ontario Lottery  Corporation that it was 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 were to be received,
the racetrack and the Provincial Government of Ontario, Canada had 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.

     In consideration for receiving the option,  which expired 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 entitled 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  expended  $134,548 for financing and legal costs in connection with the
proposed acquisition.

     The  Company  advanced  $1,300,000  to Nordic  pursuant to a Line of Credit
Agreement dated as of August 27, 1997. Such advances, which were due and payable
on August 27, 1998,  were to bear interest at a rate of 10% per annum,  and were
secured  by a first  mortgage  lien on and a security  interest  in the real and
personal property assets comprising the Fort Erie Racetrack.  On August 27, 1998
the Company assigned its debt,  mortgage and all other security in the Fort Erie
Racetrack to an Ontario, Canada Limited Corporation. The Company also waived its
option to acquire the 80% interest in Nordic Gaming.  The  consideration for the
assignment  and waiver was  $1,025,000 in cash and the assumption of $100,000 of
debt.  The Company has reflected a charge of $168,000 on the  assignment of this
debt during the year ended October 31, 1998.  Concurrent  with the assignment of
the debt,  and the waiver by the Company to acquire  the 80%  interest in Nordic
Gaming,  the Company  canceled the 1,000,000  shares of Series A Preferred Stock
issued to Mr. DeSantis.

Electronic Media Delivery

     The Company formed a subsidiary,  Electric Media Company Inc.  ("EMC"),  to
develop  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, formerly Chairman of the Board of ITB.

     In prior years,  EMC entered into  agreements  for the  development of this
technology  with two joint  venture  partners/developers.  The  first  agreement
called for the development of video,  voice and data communication over existing
power  lines.  This  project  has been  abandoned  by the  Company.  The  second
agreement  called for the development of a  communications  network in Guatemala
and Central  America for the  provision of telephone,  video,  voice and/or data
communications. In accordance with the joint venture agreement, if EMC proceeds,
the Company  was to 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. As of October 31, 1998, all operational contracts have now been voided,
and this project has been put on hold by the Company,  pending final development
of the Company's other gaming projects.



                                                         5
<PAGE>

     For the years  ended  October  31,  1998 and  1997,  the  company  expended
$503,000 and  $1,031,000,  respectively  in  developing  this  technology.  Such
amounts have been reflected in the accompanying financial statements as research
and development costs,.

Live Entertainment Management

     As part of the sale of the El Rancho  Property to ITB in 1996,  the Company
obtained a contract to manage all aspects of the entertainment activities at the
proposed "CountryLand" Hotel and Casino.  Concurrent with the ITB settlement and
stipulation  agreement  entered into on July 2, 1998,  this  agreement  has been
canceled.

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 has entered into an  investment  banking  agreement to raise  additional
working  capital for its  wholly-owned  Casino-Co  subsidiary  and its Brazilian
gaming  machine  project.  Pursuant  to a proposed  offering,  the  Company  may
distribute shares of Casino-Co to current shareholders.  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 and Licensing

     The ownership and operation of casino gaming  facilities are subject to the
laws of each local territory,  state or Country 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,  provinces and Countries in connection with their
inquiry into the financing, business transactions and financial reporting.

     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  Item I,  "Description  of  Current  Business,
Investment in ITB").  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. As a
result of this,  the  Company was  assessed a $40,000  penalty by the New Jersey
Gaming Commission which is payable by the Company by March 1, 1999.

     The Company, or its subsidiaries,  may 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.




                                                         6
<PAGE>




Employees

     The Company currently has 2 officers and 2 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. Additional personnel may be hired as needed, or on a project by
project  basis.  None of the  Company's  current  employees are  represented  by
unions, and the Company believes that its employee relations are good.

Year 2000 Disclosure

     The Company has developed a plan to ensure its systems are  compliant  with
the  requirements to process  transactions in the year 2000. The majority of the
Company's internal  information systems have been upgraded or are in the process
of being upgraded or replaced with fully  compliant new systems.  The total cost
of the software and  implementation  will be insignificant and is expected to be
completed  by July 31,  1999.  The  Company  is in the  process  of  making  the
necessary  updates to this  equipment to ensure it will be effective in the year
2000.  The  Company  is also  working  with its  processing  banks  and  network
providers to ensure their  systems are year 2000  compliant.  All of these costs
will be or have been borne by the processors and network  companies.  Should the
Company,  its vendors or the processing  banks fail to resolve year 2000 issues,
the Company may lose certain financial and operating data. The Company is in the
process of  developing a contingency  plan,  which it expects to be completed by
October 31, 1999.

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 2,000 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 $2,500 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 President,  Joseph A.
Corazzi,  as  defendants.  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
Zappala,  Joseph  A.  Corazzi  and Las Vegas  Entertainment  Network,  Inc.  and
International Thoroughbred Breeders, Inc., C.A. No. 15919-NC,  ("Quigley") was a
derivative suit brought by two former  directors of  International  Thoroughbred
Breeders,  Inc.  ("ITB")  and an  investment  trust which  alleged,  among other
things,  that certain ITB directors  beached their fiduciary  duties to ITB. The
Quigley complaint sought (i) a declaratory judgment that (a) the shares of ITB's
common  stock  held by a  company  named  NPD,  Inc.  could  not be voted at any
stockholders'  meeting;  (b) all actions  taken by the current board of ITB were
null and void; and c) certain  purported  "super-majority"  voting provisions in
ITB's by-laws  remained 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 involved the Company.

     Specifically,  with respect to the Company, the Quigley Complaint sought to
(i) rescind the issuance of 2,093,868  shares of ITB stock to the Company,  (ii)
invalidate certain contingent profit  participation rights that existed in favor
of the  Company  relative  to the El Rancho  Hotel and Casino  project  (the "El
Rancho"),  and (ii) rescind certain agreements entered into between or among the
Company, ITB and/or Credit Suisse First Boston Mortgage Capital LLC ("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.  Thereafter, the parties engaged in limited discovery in
the Quigley action.  While the Company  believed it had meritorious  defenses to
this action and had been 
                                                         7
<PAGE>

     vigorously  defending  itself,  the Company  entered  into an  out-of-court
settlement  as  discussed  below  involving  all of the  parties to the  Quigley
action, and on January 29, 1999 all such claims were dismissed.

     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)  was a  derivative  suit which
repeated  the  allegations  in the  Quigley  Complaint  verbatim  and sought the
identical  relief.  The Company entered into an  out-of-court  settlement in the
Rekulak action, and on January 29, 1999 all such claims were dismissed.

     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
has also entered  into an  out-of-court  settlement  on this matter as discussed
below, and on January 29, 1999 all such claims were dismissed.

     On July 2, 1998,  Las Vegas  Entertainment  Network,  Inc.,  certain of its
subsidiaries,  CountryLand Properties, Inc., Casino-Co Corporation, and LVCC and
the  Company's  Chairman and CEO,  entered into a  Stipulation  and Agreement of
Compromise,  Settlement  and Release (the  "Stipulation  and  Agreement") by and
among the Company and such affiliates, on the one hand, and Frank A. Leo, Robert
J. Quigley, Francis W. Murray, Charles R. Dees, Jr., The Family Investment Trust
(Henry Brennan, Trustee), NPD, Inc. ("NPD"), Nunzio P. DeSantis, Anthony Coelho,
Michael  Abraham,  Joseph  Zappala,  Joseph  A.  Corazzi,   Kenneth  S.  Scholl,
International Thoroughbred Breeders, Inc. ("ITB"), D&C Gaming Corporation, James
J. Murray,  John Mariucci,  Frank Koenemund,  Robert W. Green, Robert E. Brennan
and Orion  Casino  Corporation,  on the  other  hand,  to  resolve  the  pending
stockholder  derivative  litigation  brought in the name of ITB in the  Delaware
Court  of  Chancery.  The  effectiveness  of  the  settlement  described  in the
Stipulation and Agreement (the  "Settlement"),  as it relates to the Company and
its  affiliates,  was subject,  among other things,  to Delaware  Chancery Court
approval of all of the terms and conditions of the Settlement  following  notice
to ITB's  stockholders,  the  consent of ITB's  primary  lender (the "ITB Lender
Approval),  and LVEN's  approval of the terms and  conditions of the ITB Lender
Approval.

     Pursuant to the Settlement  Stipulation as finally approved by the Delaware
Court in October,  1998;  (i) the Company  was  granted the  exclusive  right to
market  and sell the El Rancho for a 120-day  period,  which  period  expired on
November 20, 1998; (ii) from November 20, 1998 until April 19, 1999, the Company
has a right,  coextensive  with ITB,  to market and sell the El Rancho  Property
site,  iii) if the  Company  closes a sale of the El  Rancho  prior to April 19,
1999,  then the Company  receives  the  proceeds of such sale in excess of $44.2
million; (iv) in order to exercise its coextensive rights, ITB must close a sale
of the El Rancho prior to April 19, 1999 for at least $56.2, out of which amount
approximately  $10 million  would be paid to the  Company,  (v) if, on or before
April 17, 1999,  the Company  consummates  a  refinancing  of the El Rancho that
results  in loan  proceeds  of at least  $44.2  Million,  then the  Company  may
continue  to market the El Rancho for an  additional  period  that is 50% of the
period of the  refinancing  loan.  In exchange  for the  foregoing  rights,  the
Company is  obligated  to; (i)  release  all claims  against  the parties to the
litigation,  CSFB and the certain law firms; (ii) return to ITB for cancellation
the  2,093,  868  shares of ITB  common  stock  that were  previously  issued to
Casino-Co  Corporation,  a subsidiary of the Company,  in consideration  for the
prior  cancellation of a $10.5 million  promissory note from ITB to the Company;
(iii)  release  any  interest in certain  shares of ITB stock held by NPD,  Inc.
which shares are to be  repurchased by ITB; (iv) pay 50% of the carrying cost on
the El Rancho during a portion of the period for which the Company has the right
to market and sell the El Rancho (presently  estimated to be $50,000 per month);
and  (v)  consent  to the  cancellation  of all  contracts  between  ITB and the
Company, including those involving future  profit-participation rights in the El
Rancho as well as the  Company's  entertainment  management  contract for the El
Rancho  Property  Site.  All  parties  agreed  to the  terms of this  settlement
agreement on January 29, 1999.



                                                         8
<PAGE>



     An  objecting to the  Settlement  was filed by an individual  with the
Delaware  Court  of  Chancery  in  August  1998.  The individual claims  to be a
stockholder  of LVEN,  and in his Brief,  he outlines what he  characterizes  as
"potentially  meritorious  claims"  which the Company,  or a  stockholder  suing
derivatively on behalf of the Company or  individually  and on behalf of a class
could assert,  including claims for breach of fiduciary in selling the El Rancho
Property to ITB; for breach of fiduciary  duty in  converting  the $10.5 million
ITB note into ITB stock;  for breach of  fiduciary  duty,  waste of assets,  and
usurpation of corporate opportunity in various dealings with Nunzio P. DeSantis;
for breach of fiduciary  duty in entering into the  Settlement  for allegedly no
consideration  or  grossly  inadequate  or  illusory  consideration;  and  other
possible claims arising out of assertedly questionable money losing transactions
which the  Company  has  engaged in over the past  several  years.  The  Company
believes these claims are without merit and intends to vigorously defend itself.

     The Company  has filed an action  against  American  Pastime  West  ("APW")
seeking  among other  things to collect  advance  deposits  it made to APW,  and
seeking  clarification of any APW rights pertaining to the Stipulation Agreement
and the sale of the El Rancho.  This  matter is still  pending  and the  Company
intends to vigourously pursue its rights.

     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

     During the last quarter of the year ended October 31, 1998, shareholders of
the  Company  approved  a 1 for 20  reverse  stock  split of the  shares  of the
Company's common stock.

                                                         9
<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, 1996 to October 31, 1998.




                                                High              Low
                                                ----              ---
Fiscal 1997
Quarter ended January 31, 1997                  $11.20           $3.60
Quarter ended April 30, 1997                    $16.20           $7.40
Quarter ended July 31, 1997                     $11.80           $5.00
Quarter ended October 31, 1997                  $ 8.00          $ 4.20

Fiscal 1998
Quarter ended January 31, 1998                  $ 5.00           $1.25
Quarter ended April 30, 1998                    $ 4.36           $1.88
Quarter ended July 31, 1998                     $ 6.25           $1.25
Quarter ended October 31, 1998                  $ 5.63           $1.88

     The number of record  holders of Common  Stock as of January  31,  1999 was
approximately  764. On January 31,  1999,  the high and low bid asked prices for
the Common Stock were $1.75 and $1.375 respectively.

     On October 16, 1998,  the  stockholders  of the Company  ratified a one for
twenty  reverse  stock split of the shares of the Company's  Common  Stock.  All
disclosures  and applicable per share data have been  retroactively  restated to
reflect this reverse split.

     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.

                                                       10
<PAGE>

Results of Operations

Year Ended October 31, 1998 Compared to Year Ended October 31, 1997

     Research and Development expenses which relate to the development of voice,
video and data  communication  technology  increased $528,059 to $503,187 during
the year ended October 31, 1998 as compared to $1,031,246 for the  corresponding
period in 1997.  The majority of the costs  related to the payment of consulting
fees  paid to  individuals  developing  technology  to be used in the  Company's
intended telephone operations in Brazil. The Company has temporarily put on hold
further development of this project.

     Write-Downs  and Reserves for the year ended October 31, 1998 consists of a
charge of  $126,000  on the sale of the  Nordic  Gaming  Line of  Credit  and an
allowance of $57,000  relating to advances  made to ITB,  Inc.  Write-Downs  and
Reserves for the year ended  October 31, 1997  consisted of a charge of $417,356
to reflect the estimated  carrying value of the note receivable from Malbec Inc;
a  charge  of  $167,800  to  reflect  the  estimated  carrying  value  of a note
receivable  from Tee One Up , and; a charge of $805,061 to reflect the estimated
carrying value of notes receivable from Lake Tropicana.

     Programming  costs,  which  related to  write-downs  made to the  Company's
television  programming  library to  reflect  management's  estimate  of its net
realizable  value,  were $180,000 during the year ended October 31, 1997.  There
were no such costs in the corresponding period in 1997.

     General and Administrative expenses decreased $975,747 to $3,043,621 during
the year ended October 31, 1998 as compared to  $4,019,368 in the  corresponding
period in 1997. The majority of the decrease related to travel and entertainment
costs which  decreased  $724,000 to $321,000 for the year ended October 31, 1998
as  compared  to  $1,045,000  for the  corresponding  period in 1997.  Wages and
Salaries  decreased  $170,000  to  $1,226,000  during  the during the year ended
October 31, 1998 as compared to $1,396,000 in the corresponding  period in 1997.
These  decreases were offset by an increase in legal and  professional  costs of
$101,000 to $899,000 for the year ended October 31, 1998 as compared to $798,000
in the comparable  period in 1997. The increase related mostly to costs incurred
in connection with the actions filed by certain former and current  directors of
ITB (see  "Litigation")  as well as legal and  professional  costs  incurred  in
developing certain of the Company's projects in Brazil.  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, 1998 consists of a
charge of $496,000 on the default of the Nordic Gaming  Aircraft lease; a charge
of $195,000 on the  liquidation  of a  certificate  of deposit used to secure an
aircraft  purchase by Stan Irwin  Enterprises,  and; a charge of $200,000  for a
finders  fee  incurred on a  potential  sale of the El Rancho  Hotel and Casino.

     Interest  Income and Expense.  Interest  income earned on cash balances and
marketable  securities decreased $292,054 to $135,999 for the year ended October
31,  1998 as  compared to $428,053  for the  corresponding  period in 1997.  The
decrease is  consistent  with the  decrease in the average  cash and  marketable
securities outstanding during the year ended October 31, 1998 as compared to the
corresponding  period in 1997.  The Company  incurred  realized  and  unrealized
losses from marketable  securities of $140,109 during the year ended October 31,
1998 compared to a gain of $15,666 in the  comparable  period in 1997.  Interest
expense  and  finance  costs  decreased  $107,535  to $81,973 for the year ended
October 31, 1998 as compared to $189,508 for the  corresponding  period in 1997.
Finance costs for the year ended  October 31, 1997 included a $110,000  stand-by
financing  fee.  There  was no such cost for the  corresponding  period in 1998.
Interest Expense for the for the year ended October 31, 1998 remained consistent
with the corresponding  period in 1997 as the average  indebtedness  outstanding
during the year ended  October 31, 1998 was  consistent  with the  corresponding
period in 1997.




                                                        11
<PAGE>

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.

     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.

     Write-Down  and Reserves 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  Tropicana  notes  receivable,  and a $417,356  charge to  reflect  the
estimated carrying value of the note receivable from Malbec Inc.

     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,
formerly  the  Chairman  of the Board of ITB,  to acquire  75,000  shares of the
Company's  Common Stock at an exercise  price of $20 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;  $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>

Liquidity and Capital Resources

     The Company's  financial  statements  have been prepared on a going concern
basis which, which contemplates the realization of assets and liabilities in the
normal course of business. For the fiscal years ended October 31, 1998 and 1997,
the Company  experienced net losses of $4,754,530 and $6,752,405,  respectively,
and  has  experienced   operating  losses  since  its  inception.   The  Company
anticipates that it will continue to experience significant losses and cash flow
needs as it continues working on its development plans. Even after the Company's
development plans are completed, there can be no assurance that the Company will
be profitable. The Company's capital requirements have been and will continue to
be  significant.  As a  result,  and  until  financing  arrangements  have  been
finalized,  the Company's  independent auditors have expressed substantial doubt
about the Company's ability to continue as a going concern.

     Cash  Requirements.  The Company's capital  requirements have been and will
continue to be  significant.  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.  At October 31, 1998,  the
Company had cash and cash  equivalents  of $553,000  and trading  securities  of
$106,000.   The  Company's  current  monthly  operating  cash  requirements  are
approximately  $150,000,  consisting  of general  and  administrative  expenses,
salary and consulting  fees, El Rancho  carrying costs,  legal and  professional
fees,  marketing and travel costs.  As of February 1, 1999,  the Company  became
responsible  for managing and paying one half of the  operating  costs of the El
Rancho Hotel and Casino which currently  approximates  $50,000 per month but may
increase to a greater  amount if renovation of the property  begins (see Item I,
"Description of Current Business,  Investment in ITB"). In addition, the Company
may be required to fund, or obtain financing for, the acquisition of up to 1,000
electronic  bingo machines per month (up to 10,000  machines in total) that cost
approximately  $12,000 each to meet delivery  requirements  to MG  Entertainment
under the Company's  agreement with them. In order to preserve  working capital,
the Company has reduced the number of its employees,  deferred  compensation  to
certain of its  officers,  deferred or delayed  the payment of certain  accounts
payable,  and reduced  operating and capital  expenditures.  The Chairman of the
Board has  indicated,  if  necessary,  he would secure up to $200,000 of working
capital to fund  operations up through the second quarter of 1999, at which time
the Company  believes  that the  financing  for MG  contracts  will be in place.
However,  at this time  Management  feels  that  these  funds are not  necessary
pending the closing of certain financing agreements.

     The Company's  sources and uses for  financing  during 1999 and beyond will
vary based upon a number of  factors,  some of which are  outside the control of
the Company.  These factors  include;  the success of the Company in meeting its
delivery  requirements  to MG  Entertainment  for the sale of up to 10,000 bingo
machines  (See  Item  I,  "Description  of  Current  Business,   Development  of
Electronic  Bingo Machine  Business in Brazil");  the  potential  sale of the El
Rancho Property and receipt of proceeds  therefrom (see Item I,  "Description of
Current Business,  Investment in ITB" ); the ultimate  realization of other LVEN
assets;  and potential legal and political  issues.  In addition,  the Company's
business plans may change based on changes in technology,  new  developments  in
the  marketplace  or unforseen  events which could  require the Company to raise
additional funds. The  unavailability of additional funds under acceptable terms
and conditions when needed could have a material adverse effect on the Company.

Notes Receivable.

     As of October 31, 1998,  the Company 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,  1998,
$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 has  previously
provided a $812,606  allowance  against this  advance,  for a net  investment of
$100,000 as of October 31, 1998.

     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.




                                                        13
<PAGE>

     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.

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

            None
                                                        14
<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        49       Chairman of the Board, President, Chief
                                        Executive Officer and Director of the
                                        Company
      Carl A. Sambus           48       Chief Financial Officer, Chief
                                        Operating Officer, Secretary, Treasurer
                                        and Director of the Company
      Paul Whitford            57       Director of the Company
      Jefferson Simmons        55       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 various other  entertainment,  communications
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.

     Jefferson  Simmons - Jefferson  Simmons has been a Director  since February
20th,  1998.  He is a creator of  television  and film  productions  and founded
Interstar,  a feature film financing and  distribution  company which he sold to
Westinghouse   Broadcasting.   Previously,  he  was  President  of  Golden  West
Television Productions and also a partner

                                                        15
<PAGE>

     in Consolidated Theaters in Charlotte,  North Caroline. His business career
began when he developed All-American Sports, which televised prime-time sporting
events across the country.  Since October 1, 1994 through  January 31, 1998, Mr.
Simmons  and  his  company,   Zephyr  Consulting,   provided  the  company  with
entertainment consulting services.

Compliance with Section 16(a)

         There were no corresponding transactions.

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,  1998.

<TABLE>
<CAPTION>
<S>                      <C>       <C>            <C>             <C>      <C>            <C>       <C>            <C>


                           SUMMARY COMPENSATION TABLE

                       ANNUAL COMPENSATION                                      LONG TERM COMPENSATION(2)

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


Joseph A. Corazzi, CEO       1998    $550,000       -0-          -0-           -0-        -0-         -0-         $124,000
President and Chairman(5)   
                             1997   $550,000        -0-          -0-         $520,000    200,000       0-          $124,000

                             1996   $500,000        -0-          -0-            -0-        -0-        -0           $124,000


Carl A. Sambus, Executive Vice1998  127,0000      , -0-          -0-            -0-        -0-          -0-          -0-
 President, Chief Financial Officer
 and Secretary               1997   $101,000        -0-          -0-            -0-        -0-         -0-           -0-

                             1996   $96,667         -0-          -0-            -0-        -0-         -0-           -0-

All executive officers
 as a group (2 Persons)      1998   $677,000        -0-          -0-            -0-        -0-         -0-        $124,000

                             1997   $651,000        -0-          -0-         $520,000    200,000       -0-        $124,000

                             1996   $646,667        -0-          -0-            -0-        -0-           -0-      $124,000

</TABLE>


     The Company  also paid or accrued to Mr. Paul  Whitford,  director  fees of
$52,500  and  $36,500  during  the  years  ended  October  31,  1998  and  1997,
respectively.  The Company paid to Zephyr  Consulting Inc., a company 100% owned
by Mr. Jeffrey Simmons, directors fees of $35,000 during the year ended October
31,  1998.  Mr.  Simmons  became a director  of the Company in February of 1998.
Prior to becoming a director, Mr. Simmons was paid entertainment consulting fees
of $25,000 during the year ended October 31, 1998.

     (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

(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  75,000 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.




                                                        16
<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                       
                    Options   to Granted mployees  Exercise      Expiration
    Name            Granted       Fiscal Year        Price          Date
    ----            -------       -----------       -----          ----
                    
                                  
              

Options Granted in Fiscal 1998

None

Options Granted in Fiscal 1997

Joseph Corazzi       200,000*         100%      $20 per share  Sept. 30, 2002

* 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, 1998 by the named executive officers:

Options Exercises and Year-end Value Table
<TABLE>
<CAPTION>
<S>                      <C>                   <C>          <C>             <C>                 <C>    
                                                                                       Value of Unexercised
                                                          Number of Unexercised         In-the-Money Options
                                                            Options & Warrants          at October 31, 1998
                         Shares
                         Acquired On           Value            
Name                     Exercise            Realized(1)  Exercisable   Non-exercisable     Exercisable(2)
----                     --------            -----------  -----------   ---------------     --------------

Joseph Corazzi           -0-                   -0-          206,500          -0-                 - 0-
Carl Sambus              -0-                   -0-           12,500          -0-                  -0-
________________________________________________________

</TABLE>

(1) Market Value at time of exercise less exercise price.

(2)  The  average  of the  closing  bid and ask  prices of the  Common  Stock at
     October 31, 1998 was $1.87.  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, and payments relating
to accrued  compensation  from prior years was reported on Form 1099. 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.  As of January 1, 1999, Mr. Corazzi has suspended payments of
any salary  amounts due him, but will continue to accrue such amounts until such
time further funding has been received by the Company.



                                                        17
<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.  As of October 31, 1998, Mr. Corazzi agreed
to terminate any past or future amounts due him under his retirement  benefit in
exchange for cash  payment of $192,000 and the 85,000  shares of common stock of
the Company yet to be issued and to be registered.

     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, 1999,  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, 1998 or 1997 other than as described above for Mr. Corazzi.

     On March 1, 1995, Mr. Corazzi was issued options to purchase 200,000 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  200,000   CountryLand   Properties  Inc.  warrants  are  fully
transferable  and  convertible  into  options to purchase  LVEN Common  Stock at
$20.00  per  share.  On October 1, 1997 the  Company  canceled  this  option and
granted  to Mr.  Corazzi  an  option to  purchase  up to  200,000  shares of the
presently authorized but unissued shares of the Company's common stock at $20.00
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.

     On December 11, 1996,  Mr.  Nunzio  DeSantis,  formerly the Chairman of the
Board of ITB,  was granted  75,000  options to acquire  shares of the  Company's
Common Stock at an exercise  price of $20 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.  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.

     A total of 50,000  shares are reserved for issuance  under the Stock Option
Plan,  of which 4,500 shares are issuable  under options which have been granted
to employees, and 36,500 shares under options granted to officers and directors,
all with an  exercise  price of $14.  20 to $20.00 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

                                                       18
<PAGE>

     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 41,000 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.


                                                        19
<PAGE>

Item 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth, as of January 31, 1999, 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)                            239,794       11.8.%
505 Marquette
Albuquerque, New Mexico  87102

Carl A. Sambus(2)                                14,625            *
88 10th Street
Garden City, NY 11530

Jefferson Simmons                                     -            *

Paul Whitford
1208 Cochise Drive
Arlington, Texas 76012                                -            *

All Directors and Executive Officers            254,419        11.8%
as a Group (4 persons)(3)

* Less than 1%

(1) Includes 33,294 shares owned by Mr. Corazzi;  6,500 shares issuable pursuant
to an option granted to Mr.  Corazzi under the Company's  Stock Option Plan, and
200,000  shares  issuable under options not granted under the Stock Option Plan.
See "Executive Compensation."

(2) Includes  options to purchase  12,500  shares of Common Stock granted to Mr.
Sambus.

(3) Includes  options to purchase  12,500  shares of Common Stock granted to Mr.
Sambus, and options to purchase 206,500 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.


                                                        20
<PAGE>

Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Compensation due Joseph A. Corazzi  amounting to $518,134 was accrued as of
October 31, 1997. The Company has also accrued $294,379 and $363,000 for amounts
due Mr. Corazzi under his retirement plan which is reflected as accrued officers
benefits as of October 31, 1998 and 1997.  The Company paid and  reimbursed  Mr.
Corazzi $1,070,658 and $438,488 for accrued and current  compensation during the
years  ended  October 31,  1998 and 1997,  respectively.  Such sums were due Mr.
Corazzi  from  inception of the Company to October 31,  1998.  In addition,  the
Company also paid to Mr. Corazzi $192,000 to terminate his retirement plan.

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

     The Company paid or accrued to Mr. Paul Whitford,  director fees of $52,500
and  $36,500  during the years ended  October  31, 1998 and 1997,  respectively.
During the year ended  October 31, 1998 and 1997,  the Company  paid  $35,000 to
Zephyr  Consulting  Inc., a company 100% owned by Jeffrey  Simmons.  Mr. Simmons
became a  director  of the  Company in  February  of 1998.  Prior to  becoming a
director, the Company paid entertainment  consulting fees of $25,000 and $60,000
during the years ended October 31, 1998 and 1997,  respectively,  to Mr. Simmons
or his affiliated company.

     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 his expense.  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.  On August 8, 1998, the seller repurchased
the  aircraft for net sales  proceeds of  $577,491.  Such funds were paid to the
bank and the  certificate of deposit was  extinguished,  and the remaining funds
were returned to the Company. The Company reflected a charge of $195,000 related
to the above during the year ended October 31 1998.

     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 was the chairman of the Board of International  Thoroughbred
Breeders Inc. at time these  transactions  were  concluded.  These  transactions
included:

     On December  11,1996,  Mr. Nunzio  DeSantis,  was granted 75,000 options to
acquire  shares of the  Company's  Common Stock at an exercise  price of $20 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.

     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

                                                      21
<PAGE>

     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
CFS 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 July 2,  1998,  as part of
settlement  agreement,  all  prior  agreements  between  or among  LVEN and ITB,
including  without  limitation,  that  certain  Bi-Lateral  Agreement,  and that
certain  Tri-Party  Agreement  pursuant  to which ITB  issued to LVEN  2,093,868
shares of ITB Common Stock,  were  terminated and the Company  returned all such
shares to ITB for cancellation.  In return,  the Company has the right to market
and sell the El Rancho  Property and may retain such net cash proceeds from that
sale over and  above  $44.6  Million,  if any,  or it has the  right to  provide
financinig  or a joint  venture  partner to redevelop  the Property (see Item I,
"Description of Current Business, Investment in ITB").

     On June 30,  1997,  the Company  was granted an option to acquire  from Mr.
Nunzio P.  DeSantis,  formerly  the  Chairman  of the Board of ITB,  his  Eighty
percent  (80%) of the voting  equity of Nordic  Gaming  Corporation,  a Canadian
corporation.  In consideration  for receiving the option,  which expired 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  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.  On August 27, 1998, the Company assigned its interest in the line
of credit to a Canadian Company  realizing a $126,000  charge.  The Company also
waived its option to acquire  Nordic.  Concurrently,  the Company  canceled  the
1,000,000 shares of Preferred Stock issued to Mr. DeSantis.

     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  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)





                                                      22
<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  Amendment to Certificate of Incorporation for
                  reverse Stock Split (14)

        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, nc.(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 the Company 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 Company, with exhibits(10)


                                                      23
<PAGE>

             10.25      Subordination Agreement dated as of January 22, 1996
                        between the Company,
                        CountryLand Properties, International Thoroughbred
                        Breeders, Inc., Orion Casino
                        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
                        Corporation.(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. 132)
             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)
             10.44      Stipulation and Agreement of Compromise, Settlement and
                        Release between LVEN,
                        International Thoroughbred Breeders Inc, Robert Quigley,
                        etc. dated July 2, 1998 (14))


        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-KSB
        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.

                                                      24
<PAGE>

(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)    Incorporated by reference to the Company's Annual Report on Form 10-KSB
        for the year ended October 31, 1997
(14)    Filed herewith


                                                      25
<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, 1999.


                    LAS VEGAS ENTERTAINMENT NETWORK, INC.


                    \s\ 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 12, 1999.


Signature


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


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


\s\ Paul Whitford
Director


\s\Jefferson Simmons
Director

                                                      26
<PAGE>















                          INDEX TO FINANCIAL STATEMENTS




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


Consolidated Balance Sheets as of October 31, 1998 and
     October 31, 1997 ..........................................F-2


Consolidated Statements of Operations for the
     Years  Ended October 31, 1998 and 1997........... .........F-3


Consolidated Statement of Stockholders' Equity for the Years
      Ended October 31, 1998 and 1997........ ..................F-4


Consolidated Statements of Cash Flows for the
     Years Ended October 31, 1998 and 1997.. .......... ...... .F-5


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













                                                         1
<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, 1998 and 1997 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, 1998 and 1997 and
the consolidated results of its operations,  stockholders' equity and cash flows
for the years then ended,  in  conformity  with  generally  accepted  accounting
principles.

     The accompanying  financial statements have been prepared assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
consolidated  financial  statements,  under  existing  circumstances,  there  is
substantial  doubt  about the  ability  of the  Company to  continue  as a going
concern at October  31,  1998.  The  consolidated  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.



     HOLLANDER, LUMER & CO. LLP



Los Angeles, California
February 8, 1999

                                       F-1



<PAGE>



             LAS VEGAS ENTERTAINMENT NETWORK, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                         
                            OCTOBER 31, 1998 AND 1997


<TABLE>
<CAPTION>
<S>                                                    <C>        <C>
                                               
                                                    1998           1997
                                                    ----           ----

                                     ASSETS

 CURRENT ASSETS
   CASH AND CASH EQUIVALENTS                      $ 553,525    $ 2,399,491
   TRADING SECURITIES                               106,199      1,087,890
                                                -----------    -----------
       TOTAL CURRENT ASSETS                         659,724      3,487,381


INVESTMENT IN & ADVANCES TO INTERNATIONAL
   THOROUGHBRED BREEDERS INC. - Note 3            3,500,000      3,604,564

   INVESTMENT IN AND ADVANCES TO NORDIC
     GAMING - Note 4                                   --        1,047,548

   OTHER INVESTMENTS & ADVANCES                     100,000        100,000

   PROPERTY AND EQUIPMENT
      net of accumulated depreciation
      of $259,547 (1998) and $192,509
      (1997)                                         89,404        141,536

    DEPOSITS AND OTHER - Note 5                      56,652      1,389,893
                                                -----------     -----------

                                                 $4,405,780     $9,770,922
                                                ===========     ===========



                      LIABILITIES AND STOCKHOLDERS' EQUITY

  CURRENT LIABILITIES
    ACCOUNTS PAYABLE AND ACCRUED EXPENSES         $ 308,181     $  452,137
    NOTES PAYABLE - Note 6                             --          775,753
    ACCRUED INTEREST PAYABLE - Note 6                  --          154,354
    ACCRUED OFFICER'S SALARY                           --          482,885
                                                 -----------    -----------
       TOTAL CURRENT LIABILITIES
                                                     308,181     1,865,129

   ACCRUED OFFICER'S BENEFITS
                                                     294,379       363,000

  STOCKHOLDERS' EQUITY - Note 7
    PREFERRED STOCK - SERIES A, AUTHORIZED
     30,000,000 SHARES, $.001 PAR VALUE;
     ISSUED AND OUTSTANDING, -0- SHARES (1998)
     AND 1,000,000 SHARES (1997)
     SHARES                                             --           1,000
    COMMON STOCK - AUTHORIZED 50,000,000
     SHARES, $.001 PAR VALUE; ISSUED AND
     OUTSTANDING - 1,831,167 SHARES (1998)            36,620        34,895
      1,744,917 (1997)
    ADDITIONAL PAID-IN CAPITAL                    48,459,312    47,445,080
    LONG TERM INVESTMENT RESERVE                  (2,400,000)   (2,400,000)
    DEFICIT                                      (42,292,712)  (37,538,182)
                                                 -----------    -----------
        TOTAL STOCKHOLDERS' EQUITY                 3,803,220     7,542,793
                                                 -----------    -----------
                                                 $ 4,405,780   $ 9,770,922
                                                 ===========   ===========
</TABLE>

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

                                      F-2
<PAGE>

             LAS VEGAS ENTERTAINMENT NETWORK, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                     YEARS ENDED OCTOBER 31, 1998 AND 1997





<TABLE>
<CAPTION>
<S>                                                    <C>                 <C>
                                                   1998                  1997
                                                  -----                   ----


 REVENUES                                        $    -               $
                                               ----------            -----------
 COSTS AND EXPENSES
     Research & Development - Note 8              503,187             1,031,246
     Write-off and Reserves - Note 9              180,318             1,390,217
     Programming                                                        180,000
     General & Administrative                   3,043,958             4,019,368
                                               ----------           -----------
   TOTAL COSTS AND EXPENSES                     3,727,463             6,620,831
                                               ----------           -----------
  LOSS BEFORE OTHER
        INCOME AND (CHARGES)                   (3,727,463)          (6,620,831)

 OTHER INCOME AND (CHARGES):
        Interest Income                           135,999               428,053
        Gain (Loss) on Trading Securities        (140,109)               15,666
        Other Charges - Note 10                  (940,983)             (385,785)
        Interest and Finance Costs                (81,974)             (189,508)
                                               -----------           -----------
                                                (1,027,067)            (131,574)
                                               -----------           -----------

NET LOSS                                        (4,754,530)          (6,752,405)
                                               ============          ===========


 WEIGHTED AVERAGE NUMBER OF SHARES
 OF COMMON STOCK OUTSTANDING                     1,746,055             1,744,917
                                               ============          ===========

BASIC AND DILUTED LOSS PER SHARE
 OF COMMON STOCK                                $  (2.72)             $   (3.87)
                                               ============          ===========


</TABLE>


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

                                      F-3

<PAGE>




             LAS VEGAS ENTERTAINMENT NETWORK, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                     YEARS ENDED OCTOBER 31, 1998 AND 1997





<TABLE>
<CAPTION>
<S>                                     <C>        <C>        <C>    <C>        <C>       <C>        <C>       <C>




                                        Preferred Stock           Common Stock         Unrealized
                                                                             Additional  Loss on
                                         Number             Number            Paid-in   Long-Term
                                       of Shares  Amount  of Shares  Amount   Capital   Investment  Deficit          Total
                                       ---------  ------  ---------  ------   -------   ----------  -------          -----


BALANCE - November 1, 1996                       $        1,744,917 $34,895 $47,280,080 $           $(30,785,777   $16,529,198

Issuance of Options- Note 7                                                     165,000                                165,000

Issuance of Preferred Stock - Note 7   1,000,000  1,000                                                                  1,000
  
Market value adjustment to ITB Stock                                                    (2,400,000)                 (2,400,000)

Net Loss for the Year Ended
 October 31, 1997                                                                                    (6,752,405)    (6,752,405)

                                        ---------  -----  ----------  ------ ---------- ----------  -----------    -----------
BALANCE - October 31, 1997              1,000,000  1,000   1,744,917  34,895 47,445,080 (2,400,000) (37,538,182)     7,542,793

Issuance of shares for conversion of debt                     85,000   1,700  1,006,757                              1,008,457

Issuance of shares for services -
Note 7                                                         1,250      25      7,475                                  7,500
ancellation of Preferred Stock -
Note 7                                 (1,000,000)(1,000)                                                               (1,000)
 
Net Loss for the year ended
 October 31, 1998                                                                                       (4,754,530) (4,754,530)
                                       ---------   ----- ----------  ------  ---------- ----------    ------------  -----------

BALANCE - October 31, 1998                     -    $  -  1,831,167  $36,620 $48,459,312 $(2,400,000) $(42,292,712)  $3,803,220
                                       =========   =====  =========  ======= =========== ============  ============ ===========

</TABLE>


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


                                      F-4


<PAGE>



             LAS VEGAS ENTERTAINMENT NETWORK, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                     YEARS ENDED OCTOBER 31, 1998 AND 1997




<TABLE>
<CAPTION>
<S>                                                     <C>             <C>



                                                       1998             1997
                                                     -----              ----

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss                                           $(4,754,530)      (6,752,405)
Loss (Gain) from Marketable Securities                 138,908          (87,890)
Loss on Investments                                    180,319        1,390,216
Loss on Other Asset                                    691,731
Issuance of Common Stock for Services                    7,500
Depreciation                                            67,038           73,887
Amortization of Program Inventory                                       180,000
Adjustments to reconcile net loss to net cash
used in operating activities:
  (Increase) in Other Assets                                             10,770
    Increase (Decrease) in;
      Accounts Payable                                (144,955)         307,486
      Interest Payable                                  79,103           52,008
      Accrued Officer's Salaries                      (482,884)          76,262
      Accrued Officer's Benefits                       (68,621)         124,000
                                                    -----------      -----------
CASH USED IN OPERATING ACTIVITIES                   (4,286,391)      (4,625,666)
                                                    -----------      -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of Trading Securities                      (423,129)      (1,000,000)
  Sale of Trading  Securities                        1,265,912
  Advances to Nordic Gaming                           (200,000)        (881,547)
  Proceeds from  Assignment of Advances
   to Nordic Gaming                                  1,121,548
  Collections from ITB Inc.                             50,245          157,142
  Investments & Advances - Other                                         78,879
  Advances on Airplane Deposits                        (39,558)      (1,389,893)
  Collections on Airplane Deposits                     681,068
  Acquisition of Property and  Equipment               (14,908)         (44,025)
                                                   -----------      -----------

CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES       2,441,178      (3,079,444)
                                                    -----------      -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayment of  Notes Payable                             (753)        (280,691)
                                                    -----------      -----------
 CASH USED IN FINANCING ACTIVITIES                        (753)        (280,691)
                                                    -----------      -----------

DECREASE IN CASH                                    (1,845,966)      (7,985,801)

CASH BALANCE - BEGINNING                             2,399,491        10,385,292
                                                    -----------      -----------
CASH BALANCE - ENDING                                  553,525         2,399,491
                                                    ===========      ==========

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 (Cancellation) of Preferred Stock for
  Option to acquireNordic Gaming                    $   (1,000)      $    1,000
 Issuance of Common Stock for cancellation of debt  $1,008,457
 Issuance of Common Stock for services              $    7,500

CASH PAID FOR
 Interest                                                            $    27,500
                                                                               


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




                                      F-5
<PAGE>


                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       BUSINESS AND GOING CONCERN

     Business - 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  including  real estate
redevelopment.  The Company has also identified a major business opportunity for
the  distribution  of bingo machines in Brazil,  when if  implemented,  for which
there  can be no  assurance,  will  substantially  alter  the  direction  of the
Company.  The  Company is also  investigating  other  potential  businesses  for
acquisition  in  the   entertainment,   gaming,   lodging,   and  communications
industries.

     Going Concern - The accompanying financial statements have been prepared on
a  going  concern  basis  which  contemplates  the  realization  of  assets  and
liabilities in the normal course of business. For the fiscal years ended October
31,  1998 and  1997,  the  Company  experienced  net  losses of  $4,754,530  and
$6,752,405,  respectively,  and  has  experienced  operating  losses  since  its
inception.   The  Company  anticipates  that  it  will  continue  to  experience
significant  losses  and  cash  flow  needs  as  it  continues  working  on  its
development plans.

     The  Company's  capital  requirements  have  been and will  continue  to be
significant.  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.  At October 31, 1998, the Company had cash
and cash  equivalents  of  $553,000  and  trading  securities  of  $106,00.  The
Company's   current  monthly   operating  cash  requirements  are  approximately
$150,000, composed of general and administrative expenses, salary and consulting
fees, legal and professional fees, marketing and travel costs. As of February 1,
1999, the Company became  responsible to for managing and paying one half of the
operating  costs of the El Rancho Hotel and Casino (see Note 3) which  currently
approximates  $50,000  per  month  but  may  increase  to a  greater  amount  if
renovation of the property begins.  In addition,  the Company may be required to
fund, or obtain  financing for, the acquisition of up to 1,000  electronic bingo
machines  per month (up to 10,000  machines  in total)  that cost  approximately
$12,000  each  to meet  delivery  requirements  to MG  Entertainment  under  the
Company's agreement with them. In order to preserve working capital, the Company
has reduced the number of its employees, deferred compensation to certain of its
officers,  deferred  or delayed  the payment of certain  accounts  payable,  and
reduced  operating  and capital  expenditures.  The  Chairman  of  theBoard  has
indicated,  if necessary,  he would secure up to $200,000 of working  capital to
fund operations up through the second quarter of 1999, at which time the Company
believes that the financing for MG contracts will be in place.  However, at this
time Management feels that these funds are not necessary  pending the closing of
certain financial agreements.

     The Company's  sources and uses for  financing  during 1999 and beyond will
vary based upon a number of  factors,  some of which are  outside the control of
the Company.  These factors  include;  the success of the Company in meeting its
delivery  requirements  to MG  Entertainment  for the sale of up to 10,000 bingo
machines;  the potential sale of the El Rancho  Property and receipt of proceeds
therefrom  (as  described  in Note 3); the  ultimate  realization  of other LVEN
assets,  and;  potential legal and political issues. In addition,  the Company's
business plans may change based on changes in technology,  new  developments  in
the  marketplace  or unforseen  events which could  require the Company to raise
additional funds. The  unavailability of additional funds under acceptable terms
and conditions when needed could have a material adverse effect on the Company.

     The Company's  significant  operating losses and capital requirements raise
substantial  doubt about the Company's  ability to continue as a going concern..
The  financial  statements  do  not  include  any  adjustments  relating  to the
recoverability  of the recorded assets or the  classification of the liabilities
that might be  necessary  should the  Company not be able to continue as a going
concern.








                                       F-6

<PAGE>

                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


2.       SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES

          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  includes  the
          Company's investment in the common stock of International Thoroughbred
          Breeders Inc. (see Note 3) 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.

          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.

          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,  1998,  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
          shares of common  stock of a publicly  traded  company.  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, 1998, the Company had  approximately  $530,000 on deposit 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.

          Earnings  (Loss) Per Share - During the year ended  October 31,  1998,
          the Company adopted  Statement of Financial  Accounting  Standards No.
          128 "Earnings Per Share." As a result,  all  previously  reported loss
          per share  amounts have been  restated.  Basic loss per share  amounts
          have been computed by dividing net loss by the weighted average number
          of  shares  outstanding  during  the  period.  Diluted  loss per share
          amounts have been computed  assuming the exercise of stock options and
          their  related  income tax  effect.  For all  periods  presented,  all
          outstanding warrants,  options and other common stock equivalents were
          anti-dilutive,  and  accordingly,  were  excluded  from the per  share
          calculation.


                                       F-7


<PAGE>

                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


          Stock Split - On October 16,  1998,  the  stockholders  of the Company
          ratified a one for  twenty  reverse  stock  split of the shares of the
          Company's  Common Stock. All disclosures and applicable per share data
          have been retroactively restated to reflect this reverse split.

          Stock-based Compensation - The Company accounts for stock-based awards
          to employees using the intrinsic  value method based under  Accounting
          Principles  Board  ("APB")  No.  25,  Accounting  for Stock  Issued to
          Employees, and recognizes compensation expense for certain stock based
          awards  granted to employees.  The Company has adopted the  disclosure
          provisions of SFAS No. 123,  Accounting for Stock Based  Compensation,
          which requires  disclosure of certain pro forma  information as if the
          Company  adopted the fair value method of  accounting  for stock based
          compensation prescribed by FASB No. 123 (See Note 7 ).

          Recently  Issued  Accounting  Standards - In June 1997,  the Financial
          Accounting   Standards   Board   issued  SFAS  No.   130,   "Reporting
          Comprehensive  Income."  SFAS No. 130  establishes  standards  for the
          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.  The Company  believes  adoption of this  statement
          will not have a material  effect on its  operations for the year ended
          October 31, 1998. 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.

          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.

          Re-classifications  - Certain 1997 amounts have been  re-classified to
          conform with the 1998 financial statement presentation.

3.       INVESTMENT IN AND ADVANCES TO INTERNATIONAL THOROUGHBRED
         BREEDERS INC (ITB).

          On January 22, 1996,  the Company sold the assets and  liabilities  of
          the El Rancho  Hotel and Casino in Las Vegas,  Nevada (the "El Rancho"
          or "the Property") 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) the assumption by ITB 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,  the  Company,  ITB and Credit  Suisse  First Boston
          Mortgage  entered into a certain  Bi-lateral  agreement  and a certain
          Tri-lateral   agreement  whereby  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  the El
          Rancho Cash Flow Interest.  In order to effect such  transaction,  ITB
          was  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.

          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 sought, 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  sought to block the issuance to LVEN of additional  shares of
          ITB stock in  exchange  for LVEN's El Rancho  Cash Flow  Interest.  On
          January  29,  1999,  all such  parties  gave  their  final  approval a
          Stipulation and Agreement of Compromise (described below) and all such
          litigation has been settled and dismissed

          On July 2, 1998, the Company  entered into a Stipulation and Agreement
          of  Compromise  with  all such  parties.  Pursuant  to the  Settlement
          Stipulation  as finally  approved  by the  Delaware  Court in October,
          1998;  (i) the Company was granted the  exclusive  right to market and
          sell the El Rancho  for a 120-day  period,  which  period  expired  on
          November 20, 1998;  (ii) from  November 20, 1998 until April 19, 1999,
          the Company has a right,  coextensive with ITB, to market and sell the
          El Rancho  Property site,  iii) if the Company closes a sale of the El
          Rancho prior to April 19, 1999, then the Company receives the proceeds
          of such sale in excess of $44.2 million; (iv) in order to exercise its
          coextensive  rights,  ITB must close a sale of the El Rancho  prior to
          April 19, 1999 for at least $56.2,  out of which amount  approximately
          $10 million  would be paid to the Company,  (v) if, on or before April
          17, 1999, the Company  consummates a refinancing of the El Rancho that
          results in loan proceeds of at least $44.2  Million,  then the Company
          may continue to market the El Rancho for an additional  period that is
          50% of the  period  of the  refinancing  loan.  In  exchange  for  the
          foregoing rights,  the Company is obligated to; (i) release all claims
          against the parties to the litigation, CSFB and the certain law firms;
          (ii)  return to ITB for  cancellation  the  2,093,  868  shares of ITB
          common stock that were previously issued to Casino-Co  Corporation,  a
          subsidiary of the Company, in consideration for the prior cancellation
          of a $10.5  million  promissory  note from ITB to the  Company;  (iii)
          release any interest in certain  shares of ITB stock held by NPD, Inc.
          which  shares  are to be  repurchased  by  ITB;  (iv)  pay  50% of the
          carrying  cost on the El Rancho  during a portion  of the  period  for
          which  the  Company  has the  right to  market  and sell the El Rancho
          (presently  estimated to be $50,000 per month); and (v) consent to the
          cancellation of all contracts  between ITB and the Company,  including
          those involving future profit-participation rights in the El Rancho as
          well as the  Company's  entertainment  management  contract for the El
          Rancho  Property  Site.  All  parties  agreed  to the  terms  of  this
          settlement agreement on January 29, 1999.

          Upon  the  effectiveness  of the  Settlement  as to  LVEN,  all  prior
          agreements   between  or  among  LVEN  and  ITB,   including   without
          limitation,  that  certain  Bi-Lateral  Agreement,  and  that  certain
          Tri-Party  Agreement  pursuant  to which ITB issued to LVEN  2,093,868
          shares of ITB Common Stock,  were terminated and the Company  returned
          all such shares to ITB for cancellation.






                                       F-9

<PAGE>

                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


          Pursuant to the Company's rights under the settlement, the Company has
     developed three  alternatives of which there can be no assurance any can be
     achieved.  The first  alternative is to repurchase and resell the Property.
     The remaining two alternatives are  redevelopments  under which the Company
     would  receive a similar  participation  as  described  in the  initial ITB
     transaction.  Each  redevelopment  plan requires the potential  partners to
     finance either the construction  and  redevelopment of additional rooms and
     gaming and entertainment  attractions and/or the remodeling of the existing
     facilities  which consist of  approximately  20 acres,  100 hotel rooms,  a
     52-lane bowling alley, a parking  structure for 600 cars and  approximately
     100,000  square feet of gaming and retail  space.  The  Company  expects to
     finalize a partnership  plan or an outright sale of the Property by the end
     of the second  fiscal  quarter,  however no assurance can be made that such
     plan or outright sale can be made. As of October, 31, 1998, the Company has
     valued  its  interest  in its right to sell the El Rancho  Property  at its
     historical carrying cost, which approximates market value.

4.     INVESTMENTS AND ADVANCES TO NORDIC GAMING CORPORATION

          During  1997,  the Company  was granted an option to acquire  from Mr.
          Nunzio P.  DeSantis,  the then  Chairman  of the Board of ITB,  eighty
          percent  (80%) of the voting equity of Nordic  Gaming  Corporation,  a
          Canadian  corporation  ("Nordic").  Nordic owned certain real property
          and assets known as the "Fort Erie Racetrack" which is situated on 143
          acres in Fort Erie,  Ontario,  Canada.  In consideration for receiving
          the option,  which  expired  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 twenty
          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 had been valued at the aggregate par value of $1,000.

          The  Company  advanced  $1,300,000  through  April 30,  1998 to Nordic
          pursuant to a Line of Credit  Agreement  dated as of August 27,  1997.
          Such advances,  which were due and payable on August 27, 1998, were to
          bear interest at a rate of 10% per annum,  and were secured by a first
          mortgage  lien on and a  security  interest  in the real and  personal
          property assets comprising the Fort Erie Racetrack. On August 27, 1998
          the Company assigned its debt,  mortgage and all other security in the
          Fort Erie  Racetrack to an Ontario,  Canada Limited  Corporation.  The
          Company  also waived its option to acquire the 80%  interest in Nordic
          Gaming.  The  consideration for the assignment and waiver was $975,000
          in cash and the  assumption  of  $100,000  of debt.  The  Company  has
          reflected a charge of $126,000 on the assignment of this debt which is
          reflected  in write- offs and reserves  during the year ended  October
          31, 1998.  Concurrent  with the assignment of the debt, and the waiver
          by the  Company to acquire  the 80%  interest  in Nordic  Gaming,  the
          company  canceled  the  1,000,000  shares of Series A Preferred  Stock
          issued to Mr. DeSantis.


5.   DEPOSITS AND OTHER

     Deposits and other consist of the following as of October 31;

                                                     1998           1997
                                                     ----           ----

(A)    Deposit on Nordic Gaming Aircraft Lease      $     -    $ 600,000
(B)    Deposit on Stan Irwin Enterprises
       Aircraft Purchase                             56,000       789,893
                                                    --------    ---------

                                                     $56,000   $1,389,893
                                                    ========    =========



                                                       F-10




<PAGE>

                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(A)  The Company provided to Nordic Gaming  Corporation ( see Note 4) 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 was to 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  in  September  2004.  However,   Nordic  Gaming  became
     delinquent  in  its  lease  payments,  and  the  aircraft  leasing  company
     exercised its rights under the lease  arrangement  and repossessed and sold
     the plane because of such default.  On April 28, 1998, the Company received
     net  sales  proceeds  of  $151,000  after all  costs  and  expenses  of the
     repossession  and sale  (including the payment of delinquent loan payments)
     had been deducted.  The Company  reflected a charge of $496,000  related to
     the above which is included in other charges  during the year ended October
     31 1998.

     (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. 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 his  expense.  On August 8, 1998,  the  seller  repurchased  the
     aircraft for net sales  proceeds of  $577,491.  Such funds were paid to the
     bank and the  certificate  of deposit was  extinguished,  and the remaining
     funds were  returned  to the  Company.  The  Company  reflected a charge of
     $195,000 related to the above which is included in other charges during the
     year ended October 31 1998.

6.   NOTES  PAYABLE

     Notes  payable  outstanding  as of October  31, 1997  consisted  of six (6)
     one-year  unsecured  notes  payable  to two  different  lenders.  The notes
     accrued  interest at a rate of 8% per annum until the principal and accrued
     interest were paid. The notes and any accrued interest were 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 was
     less,  at any time prior to the  repayment by the  Company.  On October 19,
     1998, the Lenders  converted all outstanding  debt and accrued interest due
     under these notes into 85,000  restricted  shares of LVEN Common Stock.  In
     addition,  the lenders are to receive,  in  aggregate,  a 6% royalty of the
     gross  income of the first 3,000 bingo  machines  the Company  sells in the
     Brazil  market  place for a 10 year  period;  or  instead  of the  royalty,
     one-time  aggregate payment of $725,000 due and payable on the 6th month of
     operation  of the first  2,000  bingo  machines  operated by the Company in
     Brazil.  The  Company  has  not  reflected  any  accounting  effect  to the
     additional  amount  that may be payable  on the sale of the Bingo  machines
     until such time that such sale, if any, is consumated.

     Consolidated  interest  expense on these notes for the years ended  October
     31, 1998 and 1997 was $79,000 and $79,500, respectively.

7.   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  1,831,167  and  1,744,917  shares of common  stock  were  issued and
     outstanding as of October 31, 1998 and 1997, 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, in connection  with an option  acquire an 80% interest in
     Nordic  Gaming  Inc.  (see  Note 4) the  Company  issued  to Mr.  Nunzio P.
     DeSantis,  formerly  the  Chairman  of the  Board of ITB,  a new  series of
     Preferred  Stock  designated  Series  A  Preferred  Stock  (the  "Series  A
     Preferred")  consisting of One Million shares that entitled Mr. DeSantis to
     certain  voting  rights  in a ratio  of  twenty  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 had been valued at the

                                      F-11



<PAGE>

                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     aggregate par value of $1,000. Concurrent with the waiver by the Company on
     August 27, 1998 to acquire the 80% interest of Nordic  Gaming,  the Company
     canceled  the  1,000,000  shares of Series A Preferred  Stock issued to Mr.
     DeSantis.

     Shares  Issued for Debt - During  the year  ended  October  31,  1998,  the
     Company  issued  85,000  shares of its Common  Stock in  extinguishment  of
     $775,000 of notes payable and $233,457 of accrued interest.

     Shares  Issued for Services - During the year ended  October 31, 1998,  the
     Company issued 1,250 shares of its Common Stock for services provided.  The
     shares  were valued at $7,500 and were issued at price of $6 per share (the
     average bid market price for the shares 10 days prior to issuance).

     Outstanding  Warrants - The Company has issued and outstanding 80,019 Class
     A warrants and 63,156 Class B warrants as of October 31, 1998 and 1997. 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
     $80.00.  The holder of each Class B Warrant is  entitled  to  purchase  one
     share of Common Stock at an exercise  price of $132.00.  The exercise dates
     of both the Class A and Class B warrants,  which  expired on  February  20,
     1999, have been extended until June 1, 1999.

     The Class A Warrants  are  subject to  redemption  on not less than  thirty
     days'  notice,  at a price of $1.00  per  Warrant,  at any time  after  the
     average  closing price of the Common Stock shall have  exceeded  $80.00 per
     share  with  respect  to the Class A Warrants  and  $132.00  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  30,000  shares of its Common  Stock at $2.00 per
     share.

     Stock Options- Outstanding stock options consist of the following;

     Chairman  of the Board - On  October  1, 1997 the  Company  granted  to Mr.
     Corazzi  an option  to  purchase  up to  200,000  shares  of the  presently
     authorized but unissued shares of the Company's  common stock at $20.00 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 $2.60 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:



                                                     F-12

<PAGE>

                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


       Net loss, as reported                         $(6,752,405)
       Net loss, pro forma                           $(7,272,405)
       Loss per share, as reported                      $(3.87)
       Loss per share, pro forma                        $(4.20)

     Other - On December 11, 1996, Mr. Nunzio DeSantis, formerly the Chairman of
     the Board of ITB,  was  granted  options  to acquire  75,000  shares of the
     Company's Common Stock at an exercise price of $20 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,  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.

     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
     50,000  shares are reserved for  issuance  under the Stock Option Plan,  of
     which 4,500 shares are issuable  under  options  which have been granted to
     employees,  and  36,500  shares  under  options  granted  to  officers  and
     directors,  all with an exercise price of $14. 20 to $20.00 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 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, 1998;

                                     Number of          Price Per
                                       Shares              Share
                                       ------              -----

     November 1, 1996                 41,000         $14.20 - $20.00
     Canceled                        -
      Granted                                                    -

     October 31, 1997                41, 000
      Canceled                            -
      Granted
                                   ----------        ---------------

      October 31, 1998                41, 000        $14.20 - $20.00
                                   ==========        ===============

9.       RESEARCH AND DEVELOPMENT

     The Company formed a subsidiary,  Electric Media Company Inc.  ("EMC"),  to
     develop  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, formerly Chairman of the Board of ITB.

     In prior years,  EMC entered into  agreements  for the  development of this
     technology with two joint venture partners/developers.  The first agreement
     called for the  development  of video,  voice and data  communication  over
     existing power lines.  This project has been abandoned by the Company.  The
     second agreement called for the development of a communications  network in
     Guatemala and Central America for the provision of telephone,  video, voice
     and/or data communications. 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,




                                                      F-13
<PAGE>

                    LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     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.  All former
     operational  contracts have now been voided,  and this project has been put
     on hold by the Company as of October 31, 1998, pending final development of
     the Company's other gaming projects.

     During the years  ended  October 31,  1998 and 1997,  the company  expended
     $503,000 and $1,031,000,  respectively in developing this technology.  Such
     amounts have been  reflected in the  accompanying  financial  statements as
     research and development costs,.

9.       WRITE-DOWNS AND RESERVES

     Write-downs  and Reserves for the year ended October 31, 1998 consists of a
     charge of $126,000 realized on the sale of the Nordic Gaming Line of Credit
     (Note 4) and an allowance of $57,000 relating to advances made to ITB, Inc.
     (see Note 3).  Write-downs and reserves 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; a charge of $167,800 to reflect the
     estimated  carrying  value of a note  receivable  from Tee One Up , and;  a
     charge  of  $805,061  to  reflect  the  estimated  carrying  value of notes
     receivable from Lake Tropicana.

10.      OTHER CHARGES

     Other charges for the year ended October 31, 1998  primarily  consists of a
     charge of $496,000 on the Nordic Gaming  Aircraft  lease (Note 5); a charge
     of $195,000 on the  liquidation  of a certificate of deposit used to secure
     an  aircraft  purchase  by Stan  Irwin  Enterprises  (Note  5); a charge of
     $200,000 for a financing fee incurred on a potential  sale of the El Rancho
     Hotel and Casino  (Note 3).  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, formerly the Chief Operating Officer of ITB
     (see  note 7); 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,  and; a charge for  $45,785  from the loss on the
     sale of certain fixed assets.

11.      INCOME TAXES

     The  Company  has  available   unused   operating  loss   carryforwards  of
     approximately  $30,700,000  at October 31,  1998 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 2013.  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.

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,

                                                       F-14
<PAGE>

                                     LAS VEGAS ENTERTAINMENT NETWORK INC.

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     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.  As of January 1, 1999,  Mr. Corazzi has suspended
     payments of any salary  amounts due him,  but will  continue to accrue such
     amounts until such time further funding has been received by the Company.

          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. As of October
     31, 1998,  Mr.  Corazzi  agreed to terminate any past or future amounts due
     him under his  retirement  benefit in exchange for cash payment of $192,000
     and 85,000 shares of common stock of the Company yet to be issued and to be
     registered..

     Compensation due Joseph A. Corazzi  amounting to $518,134 was accrued as of
     October 31, 1997.  The Company has also  accrued  $294,379 and $363,000 for
     amounts due Mr.  Corazzi  under his  retirement  plan which is reflected as
     accrued officers benefits as of October 31, 1998 and 1997. The Company paid
     and reimbursed Mr. Corazzi  $1,070,658 and $438,488 for accrued and current
     compensation   during  the  years   ended   October   31,  1998  and  1997,
     respectively.  Such sums were due Mr. Corazzi from inception of the Company
     to October 31,  1998.  In addition,  the Company  also paid to Mr.  Corazzi
     $192,000 to terminate his retirement plan.

     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
     President,  Joseph  A.  Corazzi,  as  defendants.  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 Zappala,  Joseph A. Corazzi and Las Vegas
     Entertainment Network, Inc. and International  Thoroughbred Breeders, Inc.,
     C.A. No. 15919-NC,  ("Quigley") was a derivative suit brought by two former
     directors  of  International  Thoroughbred  Breeders,  Inc.  ("ITB") and an
     investment  trust which  alleged,  among  other  things,  that  certain ITB
     directors  beached  their  fiduciary  duties to ITB. The Quigley  complaint
     sought (i) a declaratory judgment that (a) the shares of ITB's common stock
     held by a company named NPD, Inc.  could not be voted at any  stockholders'
     meeting;  (b) all actions  taken by the current  board of ITB were null and
     void; and c) certain purported  "super-majority" voting provisions in ITB's
     by-laws  remained 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 involved the Company.

     Specifically,  with respect to the Company, the Quigley Complaint sought to
     (i) rescind the issuance of  2,093,868  shares of ITB stock to the Company,
     (ii) invalidate certain contingent profit participation rights that existed
     in favor of the Company  relative to the El Rancho Hotel and Casino project
     (the "El Rancho"), and (ii) rescind certain agreements entered into between
     or among the  Company,  ITB and/or  Credit  Suisse  First  Boston  Mortgage
     Capital LLC  ("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.  Thereafter,  the  parties  engaged  in  limited
     discovery  in  the  Quigley  action.  While  the  Company  believed  it had
     meritorious  defenses  to this  action  and had been  vigorously  defending
     itself,  the Company entered into an  out-of-court  settlement as discussed
     below  involving all of the parties to the Quigley  action,  and on January
     29, 1999 all such claims were dismissed.





                                      F-15



                                     <PAGE>

                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     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") was a derivative
     suit which repeated the allegations in the Quigley  Complaint  verbatim and
     sought the  identical  relief.  The Company  entered  into an  out-of-court
     settlement in the Rekulak  action,  and on January 29, 1999 all such claims
     were dismissed.

     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 has also entered into
     an  out-of-court  settlement  on this  matter as  discussed  below,  and on
     January 29, 1999 all such claims were dismissed.

     On July 2, 1998,  Las Vegas  Entertainment  Network,  Inc.,  certain of its
     subsidiaries, CountryLand Properties, Inc., Casino-Co Corporation, and LVCC
     and  the  Company's  Chairman  and  CEO,  entered  into a  Stipulation  and
     Agreement  of  Compromise,  Settlement  and Release (the  "Stipulation  and
     Agreement") by and among the Company and such affiliates,  on the one hand,
     and Frank A. Leo,  Robert J. Quigley,  Francis W. Murray,  Charles R. Dees,
     Jr.,  The Family  Investment  Trust (Henry  Brennan,  Trustee),  NPD,  Inc.
     ("NPD"),  Nunzio P.  DeSantis,  Anthony  Coelho,  Michael  Abraham,  Joseph
     Zappala, Joseph A. Corazzi, Kenneth S. Scholl,  International  Thoroughbred
     Breeders,  Inc.  ("ITB"),  D&C Gaming  Corporation,  James J. Murray,  John
     Mariucci,  Frank  Koenemund,  Robert W. Green,  Robert E. Brennan and Orion
     Casino  Corporation,  on the other hand, to resolve the pending stockholder
     derivative  litigation  brought in the name of ITB in the Delaware Court of
     Chancery.  The effectiveness of the settlement described in the Stipulation
     and  Agreement  (the  "Settlement"),  as it relates to the  Company and its
     affiliates,  was subject,  among other things,  to Delaware  Chancery Court
     approval of all of the terms and  conditions  of the  Settlement  following
     notice to ITB's stockholders, the consent of ITB's primary lender (the "ITB
     Lender  Approval"),  and LVEN's approval of the terms and conditions of the
     ITB Lender Approval.

     Pursuant to the Settlement  Stipulation as finally approved by the Delaware
     Court in October,  1998; (i) the Company was granted the exclusive right to
     market and sell the El Rancho for a 120-day period, which period expired on
     November 20, 1998;  (ii) from  November 20, 1998 until April 19, 1999,  the
     Company has a right, coextensive with ITB, to market and sell the El Rancho
     Property site,  iii) if the Company closes a sale of the El Rancho prior to
     April 19,  1999,  then the Company  receives  the  proceeds of such sale in
     excess of $44.2 million;  (iv) in order to exercise its coextensive rights,
     ITB must close a sale of the El Rancho prior to April 19, 1999 for at least
     $56.2, out of which amount  approximately  $10 million would be paid to the
     Company,  (v) if, on or before April 17, 1999,  the Company  consummates  a
     refinancing  of the El Rancho  that  results in loan  proceeds  of at least
     $44.2,  then the  Company  may  continue  to market  the El  Rancho  for an
     additional  period that is 50% of the period of the  refinancing  loan.  In
     exchange for the foregoing rights, the Company is obligated to; (i) release
     all claims against the parties to the litigation,  CSFB and the certain law
     firms;  (ii) return to ITB for  cancellation  the 2,093,  868 shares of ITB
     common  stock  that were  previously  issued to  Casino-Co  Corporation,  a
     subsidiary of the Company, in consideration for the prior cancellation of a
     $10.5 million  promissory  note from ITB to the Company;  (iii) release any
     interest in certain  shares of ITB stock held by NPD, Inc. which shares are
     to be  repurchased  by ITB;  (iv)  pay 50% of the  carrying  cost on the El
     Rancho  during a portion of the period for which the  Company has the right
     to market and sell the El Rancho  (presently  estimated  to be $50,000  per
     month);  and (v) consent to the  cancellation of all contracts  between ITB
     and the Company,  including  those  involving  future  profit-participation
     rights in the El Rancho as well as the Company's  entertainment  management
     contract for the El Rancho  Property  Site. All parties agreed to the terms
     of this settlement agreement on January 29, 1999.



                                      F-16

                                     <PAGE>

                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




     An  objecting to the  Settlement  was filed by an individual with the
     Delaware  Court of Chancery in August  1998. The individualclaims to be a
     stockholder of LVEN, and in his Brief, he outlines what he characterizes as
     "potentially  meritorious claims" which the Company, or a stockholder suing
     derivatively  on behalf of the Company or  individually  and on behalf of a
     class could assert, including claims for breach of fiduciary in selling the
     El Rancho  Property to ITB; for breach of fiduciary  duty in converting the
     $10.5 million ITB note into ITB stock;  for breach of fiduciary duty, waste
     of assets, and usurpation of corporate opportunity in various dealings with
     Nunzio P.  DeSantis;  for breach of  fiduciary  duty in  entering  into the
     Settlement for allegedly no consideration or grossly inadequate or illusory
     consideration;   and  other  possible  claims  arising  out  of  assertedly
     questionable  money  losing  transactions  which the Company has engaged in
     over the past several years.  The Company believes these claims are without
     merit and intends to vigorously defend itself.

     The Company  has filed an action  against  American  Pastime  West  ("APW")
     seeking among other things to collect advance  deposits it made to APW, and
     seeking  clarification  of any APW  rights  pertaining  to the  Stipulation
     Agreement  and the sale of the El Rancho.  This matter is still pending and
     the Company intends to vigourously pursue its rights.

     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, 1998 and
     1997 was $153,000 and $147,000 respectively.

13.    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 was the Chairman of the Board of International
     Thoroughbred  Breeders  Inc.  at the  time  of  these  transactions.  Those
     transactions include:

     On December  11,1996,  Mr. Nunzio  DeSantis,  was granted 75,000 options to
     acquire  shares of the Company's  Common Stock at an exercise  price of $20
     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.

     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 of 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

                                      F-17



                                     <PAGE>

                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     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 July 2, 1998, as part of settlement  agreement,  all prior
     agreements  between or among LVEN and ITB,  including  without  limitation,
     that certain  Bi-Lateral  Agreement,  and that certain Tri-Party  Agreement
     pursuant to which ITB issued to LVEN 2,093,868  shares of ITB Common Stock,
     were  terminated  and the  Company  returned  all  such  shares  to ITB for
     cancellation.  In return,  the Company has the right to market and sell the
     El Rancho  Property  and may retain such net cash  proceeds  from that sale
     over and above $44.6 Million, if any (see Note 3).

     During 1997,  the Company was granted an option to acquire from Mr.  Nunzio
     P. DeSantis,  the then Chief Operating Officer of ITB, eighty percent (80%)
     of the voting equity of Nordic Gaming Corporation,  a Canadian  corporation
     ("Nordic").  Nordic  owned  certain  real  property and assets known as the
     "Fort Erie Racetrack" which is situated on 143 acres in Fort Erie, Ontario,
     Canada. In consideration for receiving the option, which was to expire 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 twenty  votes for each share of stock on  matters of stock  splits
     and certain  other  matters as  designated  by the Board of  Directors.  As
     described  below, the option to acquire Nordic was canceled by the Company,
     and the issuance of the preferred shares to Mr. DeSantis has been canceled.

     The Company advanced  $1,300,000  through April 30, 1998 to Nordic pursuant
     to a Line of Credit  Agreement  dated as of August 27, 1997. Such advances,
     which were due and payable on August 27, 1998,  were to bear  interest at a
     rate of 10% per annum,  and were secured by a first  mortgage lien on and a
     security  interest in the real and personal  property assets comprising the
     Fort Erie  Racetrack.  On August 27,  1998 the Company  assigned  its debt,
     mortgage and all other  security in the Fort Erie  Racetrack to an Ontario,
     Canada Limited  Corporation.  The Company also waived its option to acquire
     the 80% interest in Nordic Gaming. The consideration for the assignment and
     waiver was  $975,000 in cash and the  assumption  of $100,000 of debt.  The
     Company has  reflected a charge of $126,000 on the  assignment of this debt
     which is  reflected  in  write-downs  and  reserves  during  the year ended
     October 31, 1998.  In addition to the line of credit,  the Company has also
     provided  a  certificate  of  deposit as  security  for a certain  aircraft
     leasing arrangement.  However, Nordic Gaming became delinquent in its lease
     payments,  and the aircraft leasing company  exercised its rights under the
     lease  arrangement  and  repossessed  and sold the  plane  because  of such
     default..  Due to the above,  the  Company  reflected  a charge of $496,000
     which is included in other  charges  during the year ended  October 31 1998
     (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 EMC Project.

                                      F-18

<PAGE>

                      LAS VEGAS ENTERTAINMENT NETWORK INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     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 at his cost. 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.  On August 8, 1998, the seller  repurchased  the
     aircraft for net sales  proceeds of  $577,491.  Such funds were paid to the
     bank and the  certificate  of deposit was  extinguished,  and the remaining
     funds were  returned  to the  Company.  The  Company  reflected a charge of
     $195,000 related to the above which is included in other charges during the
     year ended October 31 1998. Additionally during the years ended October 31,
     1998 and 1997,  the Company  paid  consulting  fees of $36,000 and $42,500,
     respectively, to Stan Irwin Enterprises.

     During the year ended  October 31, 1998,  the Company paid director fees of
     $35,000 to Zephyr Consulting Inc., a company 100% owned by Jeffrey Simmons.
     Mr Simmons  became a director of the Company in February of 1998.  Prior to
     becoming a director,  the Company  paid  entertainment  consulting  fees of
     $25,000  and  $60,000  during the years  ended  October  31, 1998 and 1997,
     respectively, to Mr. Simmons or his affiliated company.

                                      F-19

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